If the income was distributed to the beneficiaries of the estate, the estate gets a deduction for this Distributable Net Income and the beneficiaries are responsible for the taxes on the income. Because of this, for income received and distributed during the estate's tax year, the estate can't pay the taxes on the income. Distributions to beneficiaries come first from the income received by the estate that year, making that income taxable to the beneficiaries.
In general, it is beneficial to have the income taxed at the typically lower beneficiaries' tax rates.
