Chapter 34 - § 34.39 • PLAN FOR DISTRIBUTION

• Jurisdiction: Colorado

§ 34.39 • PLAN FOR DISTRIBUTION

If there are specific devises, they, of course, will be satisfied in kind with the devised property. If there are pecuniary devises, they will be paid in cash with or without interest, and the necessary sum will need to be arranged for unless an agreement has been reached with the devisees to accept property of another kind in satisfaction of part or all of the devises, and the representative is prepared for the tax consequences of such an arrangement (see § 21.2.3).

If there is but one residuary devisee or a single heir, the question of whether the balance of the personal estate will be distributed in kind or in cash is of little importance since whatever the single beneficiary wishes may be complied with easily.

If, however, there are a number of heirs or residuary devisees, a problem may arise. If there are a number of persons entitled to participate in the distribution of the personal property in the estate, it is obvious that some arrangement must be made to make a fair allocation of the values among them. It has been said that the primary purpose of administration is to reduce the personal estate to cash so that debts, administration expenses, and taxes may be paid and the remainder of the gross estate divided among those entitled to it (see § 1.3). It has been said many times in the cases and the other literature on the subject that it is presumed, unless otherwise indicated by a will or by statute, that testamentary benefits are to be satisfied in cash, but that if the instrument or statute indicates otherwise, the provisions of the will or statute should be given effect.¹¹⁵ It also has been said that a beneficiary is not required without consent to take a distribution in kind, but may require a sale and satisfaction in cash, particularly if the property in the estate is uncertain in value, but that if a beneficiary wishes a distribution in kind, he or she is entitled to have it, in the absence of contrary provisions in the governing instrument, particularly if the beneficiary makes it appear that a sale would be disadvantageous to him.¹¹⁶

The Code, however, provides powers to the representative to make distributions in kind and there is nothing in the Code that suggests that all nonspecifically devised personal property be sold and reduced to cash to facilitate distribution.

Indeed, the Code displays a preference for distribution of residue in kind if possible, both on principle and for tax reasons. It provides...