Listmates:

    The probated will of a New York decedent provides (a) for the distribution from the estate to a trust for the benefit of the decedent's widow, (b) after she dies the trustees are to distribute the principal and income to a trust for the benefit of the decedent's  daughter and grandchildren, and (c) after the daughter dies the trustees are to distribute the principal and income to the grandchildren. However, neither of these trusts is GST exempt. Trustees were appointed by the court of the trust for the widow but not yet for the daughter's trust. The estate never distributed anything to the widow's trust because of pending litigation, but is now finally in a position to do so, but the widow died many years ago (after the decedent died).  The trustees have the power to distribute principal and income to the daughter, but to avoid the eventual GST tax after the daughter dies, the daughter would prefer that the executors of the decedent's estate distribute directly to her rather than petition the court for a trust to be established under the will for her and her children's benefit, and her children are all in agreement with her.  

   So, after this lengthy introduction, my question to you is this: If the executors distribute directly to the daughter and simply bypass the in-between steps of (i) distributing first to the widow's trust, which was never funded, (ii) and then the trustee of that trust distributes to the trustee to be appointed of the daughter's trust, and (iii) the trustee of the daughter's trust distributes the principal and income to the daughter, will the tax authorities treat the direct distribution from the estate to the daughter as the distribution of income from the estate and honor the income distribution deduction that the executors would want to claim?

I welcome your thoughts.

Thank you.

Jim