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In Re Estate of Hall

OPINION FILED SEPTEMBER 21, 1984.

IN RE ESTATE OF ODE HALL, DECEASED (JOHN WARNER BANK, EX'R OF THE ESTATE OF ODE HALL, PETITIONER-APPELLEE,

v.

EDWARD A. HALL, JR., ET AL., RESPONDENTS (TED HALL, RESPONDENT-APPELLEE; GERTRUDE CONNORS, RESPONDENT-APPELLANT)).



Appeal from the Circuit Court of De Witt County; the Hon. Donald R. Parkinson, Judge, presiding.

PRESIDING JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 2, 1984.

Testamentary trust.

Title to land vests upon death of the testator.

Trust income during probate should have gone to the income beneficiary and not used for costs of administration.

We reverse.

The will of Ode Hall devised all of Ode's real estate to the John Warner Bank of Clinton, Illinois, as trustee. Ode's sister, Gertrude Connors, and brother, William Hall, were the income beneficiaries of the trust. William predeceased Ode, leaving Gertrude as the sole income beneficiary.

The estate became indebted for State and Federal estate taxes approaching one-half million dollars. To pay the taxes, the bank — acting as executor — sold 200 acres of a 520-acre farm. The proceeds from the sale were insufficient to pay the taxes so the bank borrowed money. The indebtedness on the borrowed money was paid off through the operation of the farm during the administration period.

Gertrude Connors, the income beneficiary of a testamentary trust, appeals from an order of the trial court approving the executor's final report.

I

She argues on appeal that she was entitled to the farm income from the date of the decedent's death and that the bank improperly used this income to pay estate taxes.

We held in In re Estate of Enright (1982), 106 Ill. App.3d 914, 436 N.E.2d 681, that under section 5 of the Principal and Income Act (Ill. Rev. Stat. 1979, ch. 30, par. 163) an income beneficiary of a residual testamentary trust is entitled to income produced from probate property and that the income may not be used to satisfy claims against the estate such as expenses of administration, estate and inheritance taxes and legacies. The Principal and Income Act was amended in 1982, and the provisions of section 5 of the former Act, on which the Enright decision was based, now appear in section 6(a) of the Act. This section states:

"[A]ll expenses incurred in connection with the settlement of a decedent's estate, including debts, funeral expenses, estate taxes, family allowances, fees of attorneys and representatives, and court costs shall be charged against the principal of the estate." Ill. Rev. Stat. 1983, ch. 30, par. 506(a).

• 1 There have been no substantive changes to the Act which would affect our decision in Enright. It is clear then that under section 6(a) of the Principal and Income Act and our holding in Enright that the income from the farm should not have been used to pay estate taxes. The bank argues, however, that the provisions of the Principal and Income Act are subject to the ...


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