Bill > S742

This bill establishes a standardized method for calculating interest on specific types of bequests, known as pecuniary legacies (gifts of a fixed amount of money from a will) and pecuniary distributions (similar fixed monetary payments from a trust). The interest rate will be based on the "Federal short-term rate," which is a benchmark interest rate determined by the U.S. Treasury Secretary under a specific section of the Internal Revenue Code (Section 1274(d)), rounded to the nearest whole percent. This established rate will be applied annually without compounding until the full amount of the legacy or distribution is paid, even if the Federal short-term rate changes later. Generally, interest will start accruing either six months after a distribution is due according to the trust, or after the period for creditors to file claims against an estate has ended, whichever is later, unless the will or trust specifies otherwise. For trusts that might be subject to creditor claims, interest will be payable from the later of these two dates. This new rule will apply to estates of individuals who pass away on or after the bill's effective date.