Planning estate distributions;

              Planning Estate Distributions
by SIG O. JORAANSTAD
Partner, Seattle Office
Presented before The Washington Society of Certified Public Accountants' Annual Tax Seminar, Yakima Chapter—Novem­ber
1961; Spokane and Seattle Chapters—December 1961; and the Estate Planning Council of Seattle—December 1961
ESTATE PLANNING is one of the oldest arts of the civilized world. It is generally considered to comprise lifetime planning for the orderly passing of wealth from one generation to the next, with minimum shrinkage, consistent with the desires and objectives of the testator.
A great deal has been said and written concerning the planning of estates. An important aspect of estate planning that is sometimes neglected or is not given the importance it deserves is planning the administration of an estate.
While this discussion is directed to planning estate distributions, other factors that play such an important part in planning the admin­istration
of an estate cannot be ignored, as they likewise play an im­portant
role in planning distributions.
The executor has the right to make many important elections that will materially alter the tax consequences to the estate and its beneficiaries. One of the important elections is the right he has to deduct administration expenses for either estate tax or income tax purposes. When the estate is created, a new taxable entity comes into being with the rights and privileges of making elections available to new taxpayers. The rules governing the income taxation of estates are such that the timing of an action may alter the tax consequences tremendously. This is true in all areas of taxation, but it is particularly critical in the case of estates. By his decisions, then, the executor can aid greatly in the conservation of the estate and assure the bene­ficiaries
maximum retention of the decedent's bounty.
INCOME TAXATION OF ESTATES
GENERAL PRINCIPLES
Without going into many of the bewildering complexities of the income taxation of estates I should like to review a few of the general principles. Generally speaking, the taxable income of an estate is
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