Estate Tax Question

The decedent's will states that a grandson, who is the sole beneficiary, may not receive distributions from the estate until he reaches age 40 (i.e. in about ten years). The decedent had about $400,000 in taxable qualified annuities, for which the estate was the beneficiary. The annuities were cashed out and 1099-Rs were issued to the estate.

Rather than having the estate pay the taxes at 37%, would it be an option that the estate could K-1 the entire $400K to the grandson so he could pay the tax at a much lower tax rate even though the money would not actually be distributed to him?

The grandson would have to pay the taxes, but he would be saving himself about $35-40K in the long run.

Thanks.

The gain to get taxed by the beneficiary is limited to the amount of cash that was passed out?? Maybe??

You can probably get an attorney and go before the probate judge and get the distribution approved.

Of course you would have to actually distribute the income to make that work.