ÿWPCw S9^Ø ù²ÒŸðºÊ)*'^¨øÞ$DˆKe°œíËò3íVf*¸¶¥ðÕOMCó8’n4@lµÝ‰ï†÷0´‚ȇ÷€,•ƒ¤n°+çkÌÀY"ä$…W2ùFô)'ò!8ø.Õ†÷9Þ#ÍxlÝ[ïÖx¹‰A zŒ$¿4©Æ@”l£4vXPÅîË«dùmʲ¥¿Œò½lIxÈj,@M'5Bbê/ þž<ê7Q¿¥uâÍ¿®×6ÔÌ'pUî¤pcˆ¦GPý©Æò ü‚,lmÅ·yw$ÝÓ  Óà  àòòÚ  Ú1Ú  ÚóóÔ€ô  ò»»ÔÝ  ÝÔ_Ôòòò òSee,€e.g.,óóó ó€òòò òMatter€of€Colliaó óóó,€123€Misc.2d€1014,€475€N.Y.S.2d€237,€240€(N.Y.€Surr.€Ct.€1984).€€While€there€isÐ ° Ðlittle€Tennessee€case€law€on€whether€apportionment€necessarily€follows€as€the€default€rule€when€a€will€directs€taxes€toÐ vÆ Ðbe€paid€from€a€residuary€which€is€determined€to€be€insufficient€to€pay€those€taxes,€New€York€case€law€is€highlyÐ :Š Ðpersuasive€on€this€issue,€as€the€Tennessee€apportionment€statute€was€modeled€after€the€New€York€statute.€€òòò òIn€re€EstateÐ þN Ðof€Caldwell€v.€Woodsó óóó,€No.€1,€1989€WL€11738,€at€*3€(Tenn.€Ct.€App.€Feb.€15,€1989).€òòò òó óóó- ù-(|G2>$¤¤Ý ƒ£ª!ÝÑ€.ÑÑ8€GÜ»»d d 8ÑÑ ý ÑÓ  ÓÝ  Ýà  àòòÚ  Ú0Ú  ÚóóÔ€ô8Hò»»Ô d(|3N $££Ý ƒ£ª!ÝÑ€.ÑÑ8€GÜ»»d d 8ÑÑ ý ÑÓ  ÓÝ  ÝVVVV'ÿÿdxd)!ÈÈÈÈdxdx( ±þ$’’ò òFigure€Ú  Ú1Ú  Úó ó^_X`YEþÿ<<CÿÿƒLevel 1Level 2Level 3Level 4Level 5(|3N $¢¢Ý ƒ£ª!ÝÑ€.ÑÑ8€GÜ»»d d 8ÑÑ ý ÑÓ  ÓÝ  Ý($$””ò òÚ  Ú1Ú  Úó óX[Z&OLE 2.0 Box <=8ÿÿÿÿÿÿÿÿÿÿCÿÿ HKKKKÝ ƒ£ª!ÝÑ€.ÑÑ8€KT»»d dÈ8ÑÑ ý ÑÓ  ÓÝ  ÝÔ_ÔÑ  ÑÔ€¼²¨»»»ÔÑ8€%„XXdê»»d 8ÑÑ  Ñà@ü ü ìàÔ‡î¤Ù²¨ÔIN€THE€COURT€OF€APPEALS€OF€TENNESSEEˆÐ ° Ðà@õõ%ìàAT€JACKSONÔ#†¼²¨»îî¤Ù #ԈРÖ& ÐÓ  ÓAugust€30,€2001€SessionÐ üL ÐÔ‡Xî„X»¼²¨ÔÌò òÔ#†¼²¨»XXî„ò#ÔUNION€PLANTERS€NATIONAL€BANK€as€Executor€and€Trustee€of€the€WillÐ úJ Ðof€JAMES€A.€LeROY,€deceasedòòóó€v.€Ô_ÔBETTYEÔ_Ô€CLAIRE€REINHARDTÐ  ^ ÐDEDMAN,€òòet€alóó.Ô‡Xî„X»¼²¨Ôó óÐ " r ÐÌà@@½½ìàò òDirect€Appeal€from€the€Probate€Court€for€Shelby€CountyÐ " r Ðà@@øøìàNo.€B„13047€€€€€€Robert€S.€Benham,€JudgeÐ ^  ÐÌÌà@@ìì*ìàßA€V) °°` d€÷E<Ñ` AßÐ Ò"  ÐÌà@@TTìàNo.€W2001„00411„Ô_ÔCOAÔ_Ô„R3„CV€„€Filed€October€19,€Ô_Ô2001Ô_ÔÐ Í  ÐÌßA€V) °°` dE<¤` AßÐ ¥õ Ðó óÌÓ  ÓThis€case€is€a€dispute€over€the€correct€valuation€of€the€residuary€portion€of€Testatorððs€estate€forÐ  ð Ðpurposes€of€determining€whether€it€was€sufficient€to€pay€estate€taxes€where€Testator€had€directed€byÐ ŒÜ ÐWill€that€such€taxes€be€paid€from€the€residuary.€€Testatorððs€executor€submits€that€the€correctÐ xÈ Ðvaluation€date€is€the€date€of€death;€that€neither€post„death€income€nor€appreciation€of€assets€in€theÐ d´ Ðresiduary€should€be€included€in€the€valuation;€that€income€tax€paid€by€the€estate€on€income€withÐ P  Ðrespect€to€a€decedent€(IRD)€should€be€included€in€a€calculation€of€the€death€tax€fund€deficiency;€thatÐ <Œ Ðattorneyððs€fees€incurred€as€a€result€of€protracted€litigation€should€be€included€in€the€death€tax€fundÐ (x Ðdeficiency€calculation.€€Executor€asks€us€to€determine€whether€such€deficiencies€are€apportionableÐ d Ðamong€those€receiving€gifts€passing€outside€of€probate.€€We€hold€that€the€correct€valuation€date€ofÐ P Ðthe€residuary€for€the€purpose€of€determining€its€sufficiency€to€pay€the€death€taxes€is€the€date€ofÐ ì< ÐTestatorððs€death.€€Post„death€increases€should€not€be€utilized.€€If€the€residuary€on€the€date€of€deathÐ Ø( Ðwas€insufficient€to€pay€the€estate€taxes,€these€taxes€are€apportionable€among€all€those€interested€inÐ Ä Ðthe€estate.€€We€further€hold€that€although€the€IRD€income€tax€and€attorneyððs€fees€reduce€the€estate,Ð ° Ðthey€are€not€includible€in€the€death€tax€fund€deficiency€so€as€to€be€apportionable€to€recipients€of€outÐ œ ì Ðof€probate€transfers.Ð ˆ!Ø  Ðò òó óÔ#†¼²¨»XXî„#ÔÔ‡Xî„X»¼²¨ÔÓXÓÌò òTenn.€R.€App.€P.€3€Appeal€as€of€Right;€Judgment€of€the€Probate€Court€Affirmed€in€part;Ð `#°" ÐReversed€in€part;€and€Remandedó óÐ L$œ# ÐÌòòÓ  ÓÔ#†¼²¨»àXî„_ #ÔÔ‡Xî„X.¼²¨ÔDavid€R.€Farmer,€J.óó,€delivered€the€opinion€of€the€court,€in€which€òòW.€Frank€Crawford,€P.J.,€W.S.,óóÐ $&t!% Ðand€òòAlan€E.€Highers,€J.óó,€joined.Ð '`"& ÐÌMarion€S.€Boyd,€Jr.,€Memphis,€Tennessee,€for€the€appellant,€Union€Planters€National€Bank,€asÐ è(8$( ÐExecutor€and€Trustee€under€the€Will€of€James€A.€LeRoy,€deceased.Ð Ô)$%) ÐÌAllan€J.€Wade,€Memphis,€Tennessee,€for€the€appellees,€Betty€Claire€Reinhardt€Dedman,€JohnÐ ¬+ü&+ ÐDedman,€Bernice€A.€LeRoy,€Jill€LeRoy€Dimiceli,€and€Sue€LeRoy€Henderson.Ð ˜,è', ÐÓ7 ÓÐ „-Ô(-ý Ðò òOPINIONó óÔ#†¼²¨»XXî„f #ÔÔ‡Xî„X»¼²¨ÔÐ ° ÐÌòòóóÔ#†¼²¨»XXî„)#ÔÓ  ÓÔ€Xî„X»¼²¨Ôà  àDecedent€James€Leroy€executed€his€Last€Will€and€Testament€€in€1977,€eleven€years€prior€toÐ ˆØ Ðhis€death€in1988.€€In€his€Will,€Mr.€Leroy€specifically€directed:Ð tÄ ÐÌà8  à[Ô_ÔT]hereÔ_Ô€shall€be€paid€out€of€that€portion€of€my€residuary€estate€which€is€not€includedÐ L œ Ðin€the€share€qualifying€for€the€marital€deduction,€without€apportionment,€all€estate,Ð 8 ˆ Ðinheritance,€succession,€and€other€taxes€.€.€.€assessed€by€reason€of€my€death€...€inÐ $ t Ðrespect€of€all€property€required€to€be€included€in€my€gross€estate€for€estate€or€like€taxÐ  ` Ðpurposes€.€.€.€whether€the€property€passes€under€this€Will€or€otherwise€.€.€.€.Ðü L Ð Ð  ÐÌHe€further€directed€that€the€residue€and€remainder€of€his€estate€be€held€in€trust€by€Union€PlantersÐ Ô$  ÐBank€of€Memphis.€€The€income€to€this€residuary€trust€was€to€be€distributed€to€Mr.€LeRoyððs€wife€asÐ À  Ðreasonably€required€for€her€support€and€maintenance.€€Debts,€expenses€and€costs€of€administrationÐ ¬ü  Ðwere€to€be€borne€by€the€estate.Ð ˜è  ÐÌà  àMr.€LeRoy€remained€married€to€his€wife,€Bernice,€until€his€death€in€1988.€€In€1978,€however,Ð pÀ Ða€year€after€he€executed€his€will,€Mr.€Leroy€entered€into€a€relationship€with€Appellee€Bettye€ClaireÐ \¬ ÐReinhardt€Dedman€(Ms.€Dedman).€€They€began€living€together€in€1981.€€When€Mr.€LeRoy€died,€Ms.Ð H˜ ÐDedman€was€the€beneficiary€of€a€life€insurance€policy€from€which€she€received€$400,000.€€Ms.Ð 4„ ÐDedman€also€received€a€home€in€Germantown€from€Mr.€LeRoy,€where€they€had€lived€prior€to€hisÐ  p Ðdeath.€€These€out„of„probate€benefits€were€included€in€Mr.€LeRoyððs€gross€estate€for€state€inheritanceÐ  \ Ðand€federal€estate€tax€purposes.€€Mr.€LeRoyððs€total€death€tax€liability€was€approximately€$566,000.€Ð øH ÐFederal€taxes€paid€on€income€in€respect€to€a€decedent€totaled€over€$132,000.Ð ä4 ÐÌà  àUnion€Planters€National€Bank€(ð ðBankðð),€as€executor€for€the€estate€of€Mr.€LeRoy,€filed€anÐ ¼  Ðaction€in€Probate€Court€of€Shelby€County€on€January€5,€1989.€€This€protracted€and€complicatedÐ ¨ø Ðdispute€began€when€Bank€subsequently€filed€suit€for€declaratory€judgment,€alleging€that€the€residuaryÐ ”ä Ðestate€was€insufficient€to€cover€the€tax€liability.€€Bank€sought€restitution€from€Appellees€for€theirÐ €Ð Ðproportional€share.€€Appellees€asserted€that€the€post„death€appreciation€of€the€residuary€estate€andÐ l¼ Ðthe€income€from€those€assets€had€increased€the€value€of€the€residuary€so€that€it€was€sufficient€to€payÐ X ¨ Ðthe€taxes.€€The€trial€court€appointed€a€Special€Master,€who€confirmed€the€sufficiency€of€the€residuaryÐ D!” Ðon€the€date€the€taxes€were€due.€€The€trial€court€then€entered€judgment€for€Appellees.€€Bank€appealed,Ð 0"€  Ðand€this€Court€found€the€valuation€of€the€residuary€as€determined€by€the€trial€court€to€be€in€error€andÐ #l! Ðthe€case€was€remanded.€€This€Court€pretermitted€all€issues€other€than€that€of€the€valuationÐ $X" Ðdetermination.Ð ô$D # ÐÌà  àUpon€remand,€the€trial€court€re„valued€the€residuary,€excluding€post„death€income€butÐ Ì&"% Ðincluding€post„death€appreciation€of€assets.€€The€trial€court€again€found€no€short„fall€in€the€residuaryÐ ¸'#& Ðand€we€find€this€case€once€again€on€appeal.€€Ð ¤(ô#' ÐÌà  àThe€issues€raised€in€this€appeal,€as€we€perceive€them,€are:Ð |*Ì%) ÐÐ h+¸&* Ðà8  àà ` à(1)€Did€the€trial€court€again€err€in€its€valuation€of€the€residuary€in€light€of€theÐ ° Ðholding€of€this€Court€in€1998?€€ÐœìÐ Ð  ÐÌà8  àà ` à(2)€Should€the€$132,392€federal€income€tax€liability€be€included€in€the€deathÐ tÄ Ðtax€fund€deficiency€calculations?Ð`°Ð Ð  ÐÌà8  àà ` à(3)€Should€$50,000€court€approved€attorneyððs€fees€be€allowed€as€a€deductionÐ 8 ˆ Ðfrom€the€residuary€estate€for€purposes€of€determining€the€amount€of€Mr.€LeRoyððsÐ $ t Ðdeath€tax€fund.Ð `Ð Ð  ÐÌà8  àà ` à(4)€Should€a€$90,000€court„approved€supplemental€attorneyððs€fee€be€includedÐ è 8  Ðin€determining€the€amount€of€the€death€tax€fund?ÐÔ$ Ð Ð  ÐÌà8  àà ` à(5)€Should€Bank€recover€pre„judgment€interest€from€Respondents€on€theirÐ ¬ü  Ðrespective€shares€of€the€short„fall€in€the€death€tax€fund€from€the€date€on€which€taxesÐ ˜è  Ðwere€paid,€September€18,€1989,€until€paid?Ð„Ô Ð Ð  ÐÌà8  àIn€sum,€Bank€asks€this€Court€to€(Ô_ÔiÔ_Ô)€determine€whether€the€death€tax€liability€exceedÐ \¬ Ðthe€amount€of€the€death€tax€fund€and€(ii)€to€determine€how€this€shortfall€in€the€deathÐ H˜ Ðtax€fund€must€be€apportioned€among€persons€interested€in€the€estate€as€defined€inÐ 4„ ÐTenn.€Code€Ann.€30„2„614(a).€ò òó óÐ pÐ Ð  ÐÌà8  àà ` à(6)€Appellees€raise€the€additional€issue€as€to€whether€all€issues€other€than€thatÐ øH Ðof€the€valuation€of€the€estate€are€res€judicata€in€light€of€this€Courtððs€1998€instructionsÐ ä4 Ðupon€remand.ÐÐ Ð Ð  ÐÌà  àWe€first€dispense€with€Appelleesðð€assertion€that€issues€raised€in€this€appeal€are€res€judicata.€Ð ¨ø ÐIn€our€1998€opinion,€we€addressed€only€the€issue€of€the€correct€valuation€of€Mr.€LeRoyððs€estate.€€AllÐ ”ä Ðother€issues€were€pretermitted.òòò ò€€Union€Planters€Natððl€Bank€v.€Dedmanó óóó,€No.€02A01„9701„PB„00026,Ð €Ð Ð1998€WL€3342,€at€*3€(Tenn.€Ct.€App.€Jan.€7,€1998)€(òòò òno€perm.€app.€filedóóó ó)€(òòò òUnion€Planters€Ió óóó).€Ð l¼ ÐPretermission€of€an€issue€does€not€make€it€res€judicata.€€Pretermit€is€defined€by€Websterððs€DictionaryÐ X ¨ Ðas€ð ð€to€let€pass€without€mention€or€noticeðð€or€ð ðto€leave€undone.ðð€€ò òòòWebsterððs€Ninth€New€CollegiateÐ D!” ÐDictionary€óóó ó932€(1991).€€Thus€our€remand€instructions€did€not€render€other€issues€raised€in€the€case€Ð 0"€  Ðres€judicata.€These€issues€were€pretermitted,€not€mentioned,€because€the€primary€issue,€as€weÐ #l! Ðperceived€it,€was€that€of€the€correct€valuation€date€of€the€residuary€estate.Ð $X" ÐÌòòÓ  Óò òStandard€of€Reviewó óóóÐ à%0!$ ÐÌà @ àÓ?+Óà  àThe€facts€in€this€case€are€undisputed€and€the€issues€raised€are€matters€of€law.€€With€respectÐ ´'#& Ðto€a€trial€courtððs€legal€conclusions,€our€review€is€de€novo€with€no€presumption€of€correctness.€€òòò òSeeÐ  (ð#' ÐBell€ex€rel.€Snyder€v.€Icard,€Merrill,€Cullis,€Timm,€Furen€and€Ginsburg,€P.A.ó óóó,€986€S.W.2d€550,Ð Œ)Ü$( Ð554€(Tenn.€1999);€Tenn.€R.€App.€P.€13(d).Ð x*È%) ÐÐ d+´&* Ðò òÓ  ÓòòValuation€Date€of€the€Residuaryóóó ó€Ð ° ÐÓe-ÓÌà  àThe€trial€courtððs€determination€of€the€valuation€of€the€residuary€on€remand€reflects€someÐ ˆØ Ðambiguity€in€our€remand€instructions€in€òòò òUnion€Planters€Ió óóó,€which€we€hope€to€clarify€here.€€TheÐ tÄ Ðessence€of€the€question€concerns€the€appropriate€date€on€which€the€value€of€the€residuary€estateÐ `° Ðshould€be€determined.€€An€important€element€of€this€question,€for€the€purposes€of€this€case,€isÐ L œ Ðwhether€income€generated€by€the€residuary,€and€appreciation€of€assets€in€the€residuary,€should€beÐ 8 ˆ Ðconsidered€in€the€valuation€for€the€purposes€of€determining€whether€the€residuary€held€sufficientÐ $ t Ðassets€to€pay€the€tax€liability€of€the€estate.€€We€hold€that€the€date€for€valuation€of€the€residuary€is€theÐ  ` Ðdate€of€death.€€Neither€income€to€the€residuary€nor€the€appreciation€of€assets€in€the€residuary€should€Ð ü L  Ðbe€utilized€to€determine€the€sufficiency€of€the€residuary€to€pay€the€estate€taxes.Ð è 8  ÐÌà  àIn€òòò òUnion€Planters€Ió óóó,€we€found€that€the€trial€court€had€included€post„death€income€andÐ À  Ðappreciation€of€assets€when€it€determined€that€the€residuary€estate€was€sufficient€to€pay€the€taxÐ ¬ü  Ðliability.€òòò òUnion€Planters€Natððl€Bank€v.€Dedmanó óóó,€1198€WL€3342,€at€*2.€€This€Court€held,€ð ðIt€is€inÐ ˜è  Ðthe€disposition€of€this€òòincreaseóó€that€the€trial€court€erred.ðð€€òòò òIdó óóó.€(emphasis€added).€€We€emphasized€thatÐ „Ô  ÐTennessee€has€adopted€the€ð ðMassachusetts€Ruleðð€regarding€the€issue€of€who€is€entitled€to€post„deathÐ pÀ Ðincome€from€the€residuary€estate.€€òòò òIdó óóó.€at€*3.€€Accordingly,€the€beneficiaries€of€a€gift€of€the€netÐ \¬ Ðincome€from€property€receive€the€income€from€the€date€of€the€testatorððs€death.€€òòò òAmerican€NatððlÐ H˜ ÐBank€of€Nashville€v.€Embryó óóó,€181€S.W.2d€356,€404€(Tenn.€Ct.€App.€1944).€€This€includes€all€incomeÐ 4„ Ðearned€during€the€period€of€administration.€€òòò òIdó óóó.€at€403.€€None€of€this€income€should€be€added€to€theÐ  p Ðcapital€of€the€residuary€estate.€€òòò òIdó óóó.€€While€òòò òEmbryóóó ó€addressed€only€the€issue€of€income,€its€reasoningÐ  \ Ðand€the€application€of€the€Massachusetts€Rule€are€equally€applicable€to€the€appreciation€of€assets.€Ð øH ÐÌà  àThe€valuation€date€for€determination€of€the€inheritance€tax€is€the€date€of€death.€€Tenn.€CodeÐ Ð  ÐAnn.€ðð€67„8„412.€Since€the€taxable€value€date€of€the€estate€for€inheritance€tax€purposes€is€the€dateÐ ¼  Ðof€death,€it€seems€consistent€to€find€that€the€residuary€charged€with€paying€those€taxes€should€be€theÐ ¨ø Ðresiduary€as€valued€on€the€same€date,€the€date€of€death.€€Coupled€with€the€assignment€of€income€asÐ ”ä Ðgoverned€by€òòò òEmbryó óóó€and€the€Massachusetts€Rule,€this€would€preclude€utilizing€the€increase€to€theÐ €Ð Ðresiduary€to€satisfy€the€taxes€where€the€income€and€assets€were€disposed€of€otherwise€by€Will,Ð l¼ Ðwhether€that€increase€be€from€income€or€appreciation€of€assets€which€generate€that€income.€Ð X ¨ ÐAccordingly,€we€hold€that€neither€the€income€from€nor€the€post„death€appreciation€of€assets€in€theÐ D!” Ðresiduary€should€be€included€in€the€computation€of€funds€available€to€pay€the€death€taxes.€Ð 0"€  ÐÌÓ  Óò òòòInclusion€of€the€Federal€Income€Tax€Liability€in€the€Death€Tax€Fundó óÐ $X" ÐÓÇ;Óà X àà ° àà  àóóÌà  àBank€here€submits€that€it€was€error€for€the€trial€court€to€exclude€the€$132,392€federal€incomeÐ Ü%,!$ Ðtax€liability€on€ð ðincome€in€respect€of€a€decedent,ðð€(IRD)€as€required€by€I.R.C.€ðð€691,€from€itsÐ È&"% Ðcalculations€to€determine€the€sufficiency€of€the€residuary€estate€to€pay€the€death€taxes.€Ð ´'#& ÐÌà  àIRD€includes€amounts€of€gross€income€to€which€a€decedent€was€entitled€but€that€were€notÐ Œ)Ü$( Ðincludible€in€his€final€income€tax€return€for€the€period€ending€on€the€date€of€his€death.€€2001€(10)Ð x*È%) ÐCCH„Stand.€Fed.€Tax.€Rep.€ðð€24,906.01.€€In€general,€it€is€taxable€to€the€recipient€of€the€income.€€òòò òIdó óóó.€Ð d+´&* ÐThe€value€of€the€IRD€is€includible€in€the€decedentððs€gross€estate€for€estate€tax€purposes.€òòò òIdó óóó.€€If€it€isÐ ° Ðthe€estate€which€actually€receives€the€IRD,€the€estate€is€taxed€on€it.€€òòò òId.€ó óóó€ðð€24,906.023.€€To€avoidÐ œì Ðdouble€taxation€of€IRD,€the€Tax€Code€permits€the€entity€paying€income€tax€on€IRD€to€deduct€theÐ ˆØ Ðestate€tax€attributable€to€it.€òòò òIdó óóó.€ðð€24,906.01;€Treas.€Reg€ðð€1.691(c)„1(a)€.Ð tÄ ЀÌà  àBank€asserts€that€the€amount€of€income€tax€paid€on€the€IRD€should€be€included€in€the€amountÐ L œ Ðof€any€death€tax€fund€deficiency.€€At€this€juncture,€we€note€that€Bank€asks€this€Court€to€determineÐ 8 ˆ Ðhow€any€deficiencies€in€the€death€tax€fund€should€be€apportioned€among€the€respondents.Ð $ t ÐÌà  àIn€Tennessee,€equitable€apportionment€of€estate€taxes€is€the€statutory€default€rule.€€SectionÐ ü L  Ð30„2„614(b)€of€the€Tennessee€Code€provides:Ð è 8  ÐÌà8  àWhenever€the€personal€representative€of€an€estate€has€paid€an€estate€or€death€tax€toÐ À  Ðthe€government€of€the€United€States€under€any€federal€tax€law€...€any€propertyÐ ¬ü  Ðrequired€to€be€included€in€the€gross€estate€of€a€decedent€under€the€provisions€of€anyÐ ˜è  Ðsuch€law,€the€amount€of€the€tax€so€paid,€except€in€a€case€where€a€testator€otherwiseÐ „Ô  Ðdirects€in€his€will,€shall€be€equitably€prorated€among€persons€interested€in€the€estateÐ pÀ Ðto€whom€such€property€is€or€may€be€transferred€.€.€.€òòò òin€the€proportion,€as€near€asÐ \¬ Ðmay€be,€that€the€value€of€the€property,€interest€or€benefit€of€each€such€person€bearsÐ H˜ Ðto€the€total€value€óóó ó.€.€.€received€by€all€such€persons€interested€in€the€estate.€€Ð0€Ð Ð  ÐÌTenn.€Code€Ann.€ðð€30„2„614(b)(2000)€(emphasis€added).Ð X ÐÌà  àThe€statute€further€provides:Ð à0 ÐÌà8  àSo€far€as€is€practicable,€and€unless€otherwise€directed€by€the€will€of€the€decedent,€theÐ ¸ Ðtax€shall€be€paid€by€the€personal€representative,€as€such,€out€of€the€estate€before€itsÐ ¤ô Ðdistribution.€€In€all€cases€in€which€any€property€required€to€be€included€in€the€grossÐ à Ðestate€does€not€come€into€the€possession€of€the€personal€representative,€as€such,€heÐ |Ì Ðshall€be€entitled,€and€it€shall€be€his€duty,€to€recover€from€whomever€is€in€possession,Ð h¸ Ðor€from€the€persons€interested€in€the€estate,€the€proportionate€amount€of€such€taxÐ T ¤ Ðpayable€by€the€persons€interested€in€the€estate€with€which€such€persons€interested€inÐ @! Ðthe€estate€are€chargeable€under€the€provisions€of€this€section.€€Ð,"| Ð Ð  ÐÌTenn.€Code€Ann.€ðð€30„2„614(c)(2000).Ð $T" ÐÌ€à  àIn€this€case,€Mr.€LeRoyððs€clear€direction€in€his€Will€was:Ð Ü%,!$ ÐÌà8  àà ` àI€direct€that€there€shall€be€paid€out€of€that€portion€of€my€residuary€estateÐ ´'#& Ðwhich€is€not€included€in€the€share€qualifying€for€the€marital€deduction,€withoutÐ  (ð#' Ðapportionment,€all€estate,€inheritance,€succession€and€other€taxes€.€.€.€assessed€byÐ Œ)Ü$( Ðreason€of€my€death€.€.€.€whether€the€property€passes€under€this€Will€or€otherwise€.€.Ð x*È%) Ð.€without€contribution€by€any€recipient€of€such€property.€€ò òó óÐd+´&*Ð Ð  ЇÌÌHowever,€if€the€designated€part€of€the€residuary€is€insufficient€to€pay€such€taxes,€the€default€statutoryÐ ˆØ Ðrule€of€apportionment€controls.òòò òó óóó׃×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×Ð tÄ ÐÌà  àWe€have€already€determined€that€the€post„death€appreciation€of€assets€in€the€residuary€shouldÐ L œ Ðnot€be€utilized€to€determine€the€value€of€the€residuary€insofar€as€its€sufficiency€to€pay€the€death€taxes.€Ð 8 ˆ ÐIf€this€reduction€results€in€the€residuary€being€in€fact€insufficient€to€pay€these€taxes,€the€estate€taxesÐ $ t Ðmust€be€equitably€prorated€among€all€those€interested€in€the€estate.€Ð  ` ÐÌà  àHowever,€this€is€not€commensurate€to€saying€that€taxes€on€IRD€should€be€included€in€theÐ è 8  Ðdeath€tax€fund€deficiency€and€likewise€be€apportioned.€€While€the€IRD€value€is€includible€in€theÐ Ô$  Ðvalue€of€the€gross€estate€for€estate€tax€purposes,€the€Tax€Code€allows€the€entity€incurring€the€IRDÐ À  Ðtax€to€deduct€the€estate€tax€attributable€to€it.€(2001)€10€CCH„Stand.€Fed.€Tax€Rep.€ðð€24.900.01;Ð ¬ü  Ð24,911.01€€The€purpose€of€this€deduction€is€to€avoid€double€taxation€of€IRD€by€imposing€bothÐ ˜è  Ðincome€and€estate€taxes€on€it.€€òòò òEstate€of€Wedell€Cherry€v.€United€Statesó óóó,€133€F.Supp.2d€949,€950Ð „Ô  Ð(W.D.€Kentucky€Jan.€24,€2001)€(citing€òòò òUnited€California€Bank€v.€United€Statesó óóó,€439€U.S.€180,€187Ð pÀ Ð(1978)).Ð \¬ ÐÌà  àThe€$132,392€tax€on€income€in€respect€to€a€decedent€is€an€income€tax,€not€an€estate€tax.€€ToÐ 4„ Ðthe€extent€that€Mr.€LeRoyððs€estate€has€paid€estate€taxes€on€the€value€of€this€income,€the€estate€isÐ  p Ðpermitted€a€deduction€from€the€income€tax.€€It€does€not€follow€that€this€income€tax€should€then€beÐ  \ Ðincluded€in€the€ð ðdeath€tax€fund€deficiency,ðð€if€there€is€such€a€deficiency,€so€as€to€be€apportionedÐ øH Ðamong€recipients€of€gifts€passing€outside€of€probate.€As€noted€above,€IRD€taxes€are€income€taxesÐ ä4 Ðpayable€by€the€person€receiving€that€income€which€would€have€been€received€by€the€decedent€hadÐ Ð  Ðhe€lived.€€Ð ¼  ÐÌà  àWe€find€nothing€in€the€statutes€or€cases€indicating€that€this€income€tax€should€be€apportionedÐ ”ä Ðamong€out„of„probate€recipients.€€The€value€of€the€IRD€has€already€been€included€in€the€gross€estate.€Ð €Ð ÐIt€is€the€estate€taxes€on€this€gross€estate€which€are€then€apportioned€under€Tenn.€Code€Ann.€ðð€30„2„Ð l¼ Ð614(a)€(regarding€federal€estate€tax)€and€section€67„8„417(c).€€Persons€benefitting€from€the€grossÐ X ¨ Ðtaxable€estate€are€liable€for€the€estate€taxes€ð ðòòò òin€the€proportion,€as€near€as€may€be,€that€the€value€ofÐ D!” Ðthe€property,€interest€or€benefit€of€each€such€person€bears€to€the€total€valueó óóó.ðð€€Tenn.€Code€Ann.Ð 0"€  Ððð€30„2„614(b)(2000)€(emphasis€added).€€Indeed,€IRD€passing€outside€of€the€estate€is€taxable€to€theÐ #l! Ðperson€receiving€it.€€(2001)€10€CCH„Stand.€Fed.€Tax€Rep.€ðð€24,900.01.€€Further,€if€the€estate€merelyÐ $X" Ðholds€an€instrument€that€gives€rise€to€a€right€of€IRD€and€transfers€that€right€to€a€legatee€before€theÐ ô$D # Ðincome€is€received,€it€is€the€legatee€who€is€taxed€when€the€income€is€in€fact€received.€òòò ò€Idó óóó.òòò ò€ó óóóat€€ððÐ à%0!$ Ð24,900.023.€€If€the€estate€receives€IRD,€it€is€the€estate€which€is€taxed€on€it.€òòò ò€Idó óóó.Ð Ì&"% Їà  àIn€light€of€the€foregoing,€we€cannot€hold€that€the€trial€court€erred€by€declining€to€include€theÐ ° Ð$132,392€in€income€taxes€paid€on€IRD€in€its€calculations€of€a€possible€deficiency€of€the€€death€taxÐ œì Ðfund€in€order€to€apportion€the€deficiency€among€the€respondents.Ð ˆØ ÐÌÓ  Óò òòòInclusion€of€Attorneyððs€Fees€in€the€Death€Tax€Fund€Deficiencyó óÐ `° ÐÓq]Ó€Ìà  àóóBank€also€submits€that€the€$140,000€incurred€in€legal€fees€over€the€past€11€years€should€enjoyÐ 4 „ Ðsuper„priority€status€as€expenses€of€administration,€and€that€these€fees€should€be€included€in€theÐ  p Ðestateððs€death€tax€fund€deficiency.€€We€again€note€that€Bank€asks€this€Court€to€apportion€anyÐ  \ Ðdeficiencies€in€the€death€tax€fund€among€the€Appellees.€€Bankððs€argument,€as€we€understand€it,€isÐ ø H  Ðthat€the€legal€fees€incurred€by€the€estate€reduce€the€residuary€estate,€adding€to€the€deficiency€in€theÐ ä 4  Ðdeath€tax€fund€of€the€estate.€€This€death€tax€fund€deficiency,€Bank€suggests,€should€be€apportionedÐ Ð  Ðamong€respondents€who€received€out„of„probate€gifts€from€Mr.€LeRoy.Ð ¼  ÐÌà  àAs€Bank€points€out,€costs€of€administration€are€given€statutory€priority€as€a€claim€against€anÐ ”ä  Ðestate.€€The€Tennessee€Code€states:Ð €Ð  ÐÌà8  àAll€claims€or€demands€against€the€estate€of€any€deceased€person€shall€be€divided€intoÐ X¨ Ðthe€following€classifications,€which€shall€have€priority€in€the€order€shown:ÐD”Ð Ð  ÐÌà8  àà ` à(1)€First:€Costs€of€administration,€including€.€.€.€reasonable€compensations€toÐ l Ðthe€personal€representative€and€his€counsel.€€ÐXÐ Ð  ÐÌTenn.€Code€Ann.€ðð€30„2„317(a)(1)(2000).€Ð à0 ÐÌà  àWhen€executors€retain€legal€counsel,€they€are€liable€for€the€legal€fees€until€a€court€determinesÐ ¸ Ðthat€the€legal€services€were€required€and€that€the€fee€was€reasonable.€€òòò òIn€re€Estate€of€Wallace€v.Ð ¤ô ÐCollieró óóó,€829€S.W.2d€696,€703€(Tenn.€Ct.€App.€1992).€€Attorneyððs€fees€may€be€charged€to€the€estateÐ à Ðas€an€administrative€expense€if€they€can€be€shown€to€have€been€required€and€to€inure€to€the€benefitÐ |Ì Ðof€the€entire€estate€and€not€to€one€or€more€of€the€interested€parties.€òòò ò€Id.ó óóó€€Administration€expenses€areÐ h¸ Ðordinarily€payable€from€the€general€estate.€€òòò òIn€re€Estate€of€Caldwell€v.€Woodsó óóó,€1989€WL€11738,€atÐ T ¤ Ð*3.€€Here,€the€$140,000€in€attorneyððs€fees€have€been€court€approved.€€It€does€not€necessarily€follow,Ð @! Ðhowever,€that€such€expenses€should€be€included€as€a€charge€against€a€death€tax€fund€per€se.€€Rather,Ð ,"|  Ðsuch€expenses€are€charged€back€to€the€general€estate.€€Ð #h! ÐÌà  àThe€Tennessee€Supreme€Court€addressed€the€question€of€whether€defendants€could€be€heldÐ ð$@ # Ðpersonally€liable€for€the€payment€of€attorneyððs€fees€arising€from€protracted€litigation€regarding€giftsÐ Ü%,!$ Ðwhich€passed€to€them€outside€of€probate€in€òòò òMcAdoo€v.€Dicksonó óóó.òòò ò€€McAdoo€v.€Dicksonó óóó,€136€S.W.2dÐ È&"% Ð517€(Tenn.€1940).€€The€Court€held€that€while€attorney€fees€incurred€in€good€faith€for€the€purpose€ofÐ ´'#& Ðbenefitting€or€protecting€an€estate€are€allowed,€payment€for€such€fees€cannot€be€exacted€from€assetsÐ  (ð#' Ðwhich€did€not€pass€to€the€personal€representative.€€òòò òIdó óóó.€at€519.€€The€Court€held€that€administratorsÐ Œ)Ü$( Ðcannot€incur€expenses€in€excess€of€the€assets€which€belong€to€the€estate.€€òòò òIdó óóó.€at€520.Ð x*È%) ÐÐ d+´&* Ðà  àIn€this€case,€Mr.€LeRoy€directed€in€his€Will€that€costs€of€administration€were€to€be€borne€byÐ ° Ðhis€estate.€€To€the€extent€that€these€expenses€bring€the€residuary€to€zero,€they€are€includible€in€theÐ œì Ðresiduary€deficiency.€€However,€Bank€cites€no€law,€and€we€find€none,€to€support€apportionment€ofÐ ˆØ Ðadministrative€expenses€if€the€residuary€is€insufficient€to€pay€them.€€These€expenses€are€chargeableÐ tÄ Ðto€the€general€estate.€€Ð `° ÐÌò òÓ  ÓòòPrejudgment€Interestó óÐ 8 ˆ ÐÓ¢mÓÌà  àóóBank€here€seeks€prejudgment€interest€on€the€amount€of€death€taxes,€if€any,€due€fromÐ  \ ÐAppellees€upon€apportionment€of€the€death€taxes.€€Bank€contends€that€such€interest€is€necessary€onÐ ø H  Ða€theory€of€unjust€enrichment,€since€Appellees€have€enjoyed€use€of€the€out„of„probate€gifts€for€whichÐ ä 4  ÐBank€has€paid€the€required€death€taxes.ò òó ó€€Appellees€raise€no€response€to€this€issue.Ð Ð  ÐÌà  àA€prejudgment€interest€award€is€within€the€sound€discretion€of€the€trial€court.€€òòò òMyint€v.Ð ¨ø  ÐAllstate€Ins.€Co.ó óóó,€970€S.W.2d€920,€927€(Tenn.€1998).€€The€Court€in€òòò òMyintó óóó€held€that€the€principlesÐ ”ä  Ðof€equity€are€foremost€in€the€decision€to€award€pre„judgment€interest.òò€€ò òSee€id.óóó ó€€The€decision€must€beÐ €Ð  Ðone€of€fairness€under€the€circumstances.€€òòò òSee€idó ó.óó€€The€purpose€of€awarding€pre„judgment€interest€isÐ l¼ Ðto€compensate€the€plaintiff,€not€to€penalize€the€defendant.€€òòò òSee€idó ó.óó€(citing€ò òòòMitchell€v.€Mitchellóóó ó,€876Ð X¨ ÐS.W.2d€830,€832€(Tenn.€1994)).Ð D” ÐÌà  àWe€remand€this€issue€to€the€trial€court€for€a€determination€of€whether€pre„judgment€interestÐ l Ðis€appropriate,€under€all€the€circumstances,€if,€in€light€of€this€opinion,€death€taxes€on€the€LeRoyÐ X Ðestate€are€equitably€apportioned.Ð ôD ÐÌà  àIn€light€of€the€foregoing,€we€reverse€the€trial€courtððs€valuation€of€the€residuary€insofar€as€itÐ Ì Ðincluded€post„death€increases;€we€affirm€the€trial€courtððs€decision€not€to€include€IRD€taxes€in€theÐ ¸ Ðcalculation€of€the€death€tax€fund€deficiency;€we€affirm€the€trial€courtððs€decision€not€to€includeÐ ¤ô Ðattorneyððs€fees€in€the€calculation€of€the€death€tax€fund€deficiency.€€This€case€is€remanded€forÐ à Ðdeterminations€consistent€with€this€opinion.à À àà  àà p àà È àà  àà x àà Ð àÐ |Ì ÐÌà  àCosts€of€this€appeal€are€taxed€one„half€to€Appellant,€Union€Planters€National€Bank,€and€itsÐ T ¤ Ðsurety,€and€one„half€to€Appellees,€Bettye€Claire€Reinhardt€Dedman,€John€Dedman,€Jill€Ô_ÔLeRoyÔ_ÔÐ @! ÐÔ_ÔDimiceliÔ_Ô,€Bernice€A.€Ô_ÔLeRoyÔ_Ô€and€Sue€LeRoy€Henderson.Ð ,"|  ÐÌÌÌà  àà ` àà ¸ àà  àà h àà À àà  à___________________________________€Ð Ü%,!$ Ðà  àà ` àà ¸ àà  àà h àà À àà  àDAVID€R.€FARMER,€JUDGE