- 5 -
the residue of my estate, and no claim shall be made against any
life insurance beneficiary for payment of any part of such
taxes."
Item Ten of decedent's will provides in pertinent part that
the "Executor * * * shall, without order of any court, have the
power to: * * * Borrow money for any purpose that the fiduciary
may deem proper." (Emphasis added.)
On November 17, 1992, the executor borrowed $2 million from
the Trust without the approval of any court. The executor
executed a promissory note (Note) in favor of the Trust in the
amount of $2 million, bearing annual interest at the rate of 5
percent, with principal and interest payable 1 year from the date
the Note was executed. New 1-year notes with differing interest
rates were thereafter executed on November 17, 1993, July 26,
1995, and July 26, 1996. Additional notes dated July 26, 1995,
and July 26, 1996, representing the capitalization of interest
due on the Note, were executed by petitioner in the amounts of
$123,834.44 and $111,070.64, respectively.
Petitioner used the funds borrowed from the Trust to pay
Federal and Georgia estate taxes in the respective amounts of
$1,665,000 and $355,000, as well as to pay expenses for the
ongoing maintenance and preservation of Cane Mill pending the
resolution of the issues in this case. As of the date of trial,
the funds borrowed from the Trust had not been repaid.
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