2.5.1 Subsection (b) permits the personal representative to “retain assets owned by the decedent pending distribution or liquidation, including those in which the representative is personally interested or which are otherwise improper for trust investment.” The ability to retain investments even when the personal representative is also “personally interested” in the investment parallels, in part, the “implied exemption” to fiduciary conflicts. In Goldman v. Rubin, 292 Md. 693 (1982), the testator was the founder of a clothing business which he ran as a family affair with one son as president, a son-in-law as vice-president, and another son-in-law as secretary and counsel of the business. One daughter, Mrs. Goldman, the Plaintiff, was not involved in the business. The testator named as personal representatives, those family members who were also part owners of the business and who served on its board of directors. The will provided that the taxes, funeral and administrative expenses be paid out of a trust which held all of the testator’s stock. The trust was for the benefit of his son who was president and his daughter whose husband was vice-president. The trustees were identical to the board of directors. This arrangement was structured to enable the stock to be redeemed under IRC § 303 to the extent of these expenses, which redemption would get capital gains treatment. Other than the § 303 expenses out of the trust, all remaining expenses were to be paid out of the residuary and the net residuary was to be distributed to all of the children — including Mrs. Goldman, who was to receive 2/9th. Mrs. Goldman did not have any relationship with the company and was not a trust beneficiary. The Trustees/Directors effectuated the redemption in exchange for a note (the company being apparently short of cash). The note paid 6% interest currently, with principal payments deferred for 10 years. A 2/9th interest in this note was then distributed to Mrs. Goldman. Mrs. Goldman sued charging that the personal representatives had a conflict of interest. The trial court agreed. The Court of Appeals held that because the testator created the conflict of interest, this divided loyalty does not constitute a per se breach of duty. This holding (the so-called “implied exemption” rule) means that the conflict, in itself, is not prohibited. Thus, the trial court should have examined the conduct of the personal representatives to see if they acted prudently in issuing the note. Because the trial court decided the case on a per se basis, it was sent down for a hearing to determine whether the note was a proper exercise of the personal representative’s discretion based on a balancing of their duty to the legatees and on the testator’s intention (found in the will) to keep his company intact for those of the family who worked in the business.
2.5.2 Subsection (e) permits the personal representative to deposit funds for the account of the estate in checking accounts, in insured interest-bearing accounts, or in short-term loan arrangements. The Court of Appeals has held: “It is the obligation of an attorney upon receiving funds representing the assets of an estate to deposit those funds in a separate estate account clearly identified by the name of the decedent. Such funds should not be commingled in an escrow account, general or otherwise.” Attorney Grievance Comm’n v. Kenneth L. Boehm, 293 Md. 476, 479 (1982).
2.5.3 Subsection (n) states that the personal representative “may invest in, sell, mortgage, pledge, exchange, or lease property.”
2.5.4 Subsection (s) permits the personal representative to continue an unincorporated business of the decedent for a period of 4 months “where continuation is a reasonable means of preserving the value of the business including goodwill.” With Court approval, the unincorporated business may be continued for a longer period. This procedure permits interested persons to object. If the business becomes incorporated after the death by the personal representative, then the business may be continued throughout the period of administration. Subsections (t) and (u) permit the personal representative to incorporate or create an LLC for the sole proprietorship.