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Hibernia Bank, within 18 months after the decedent's death,
virtually all specific bequests and all Federal and State death
taxes had been paid. The decedent's estate was composed mainly
of a large mansion and shares of Hibernia Bank stock. Hibernia
Bank served as the executor of the estate. Rather than
distribute the remaining assets, Hibernia Bank attempted to sell
the mansion as an accommodation to the beneficiaries of the
estate, who preferred to receive distributions of cash instead of
undivided interests in the property. The estate was held open
for an additional 7 years until the mansion eventually was sold.
There were, apparently, no affairs to be wound up or reasons for
the estate to remain open, other than the sale of the mansion.
In the interim, the executor bank spent approximately $60,000
each year to maintain the mansion and borrowed a total of
$775,000 (approximately 80 percent of which was lent by Hibernia
Bank), rather than selling the publicly traded Hibernia stock to
raise the funds for this purpose.
In Hibernia Bank, the court ruled that the interest on these
loans did not represent expenses actually and necessarily
incurred in the administration of the estate. The personal
representative could have distributed undivided interests in the
mansion to the residuary beneficiaries of the estate, rather then
keeping the estate open until the mansion was sold. The court
determined that the estate administration had been prolonged,
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