AN ACT Relating to references to the Internal
Revenue Code; amending RCW 11.02.005, 11.108.010, 11.108.020, 11.108.025,
11.108.050, 11.110.200, 11.110.210, 11.110.220, 83.100.020, 83.110.010, and
83.110.050; and repealing RCW 11.110.240.
BE
IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1.
RCW 11.02.005 and 1985 c 30 s 4 are each amended to read as follows:
When used in this title, unless otherwise
required from the context:
(1) "Personal representative" includes
executor, administrator, special administrator, and guardian or limited
guardian and special representative.
(2) "Net estate" refers to the real
and personal property of a decedent exclusive of homestead rights, exempt
property, the family allowance and enforceable claims against, and debts of, the
deceased or the estate.
(3) "Representation" refers to a
method of determining distribution in which the takers are in unequal degrees
of kinship with respect to the intestate, and is accomplished as follows:
After first determining who, of those entitled to share in the estate, are in
the nearest degree of kinship, the estate is divided into equal shares, the
number of shares being the sum of the number of persons who survive the
intestate who are in the nearest degree of kinship and the number of persons in
the same degree of kinship who died before the intestate but who left issue
surviving the intestate; each share of a deceased person in the nearest degree
shall be divided among those of the intestate's issue who survive the intestate
and have no ancestor then living who is in the line of relationship between
them and the intestate, those more remote in degree taking together the share
which their ancestor would have taken had he or she survived the intestate.
Posthumous children are considered as living at the death of their parent.
(4) "Issue" includes all the lawful
lineal descendants of the ancestor and all lawfully adopted children.
(5) "Degree of kinship" means the
degree of kinship as computed according to the rules of the civil law; that is,
by counting upward from the intestate to the nearest common ancestor and then
downward to the relative, the degree of kinship being the sum of these two
counts.
(6) "Heirs" denotes those persons,
including the surviving spouse, who are entitled under the statutes of
intestate succession to the real and personal property of a decedent on the
decedent's death intestate.
(7) "Real estate" includes, except as
otherwise specifically provided herein, all lands, tenements, and
hereditaments, and all rights thereto, and all interest therein possessed and
claimed in fee simple, or for the life of a third person.
(8) "Will" means an instrument
validly executed as required by RCW 11.12.020 and includes all codicils.
(9) "Codicil" means an instrument
that is validly executed in the manner provided by this title for a will and
that refers to an existing will for the purpose of altering or changing the
same, and which need not be attached thereto.
(10) "Guardian" or "limited
guardian" means a personal representative of the person or estate of an
incompetent or disabled person as defined in RCW 11.88.010 and the term may be
used in lieu of "personal representative" wherever required by
context.
(11) "Administrator" means a personal
representative of the estate of a decedent and the term may be used in lieu of
"personal representative" wherever required by context.
(12) "Executor" means a personal
representative of the estate of a decedent appointed by will and the term may
be used in lieu of "personal representative" wherever required by
context.
(13) "Special administrator" means a
personal representative of the estate of a decedent appointed for limited
purposes and the term may be used in lieu of "personal
representative" wherever required by context.
(14) "Trustee" means an original,
added, or successor trustee and includes the state, or any agency thereof, when
it is acting as the trustee of a trust to which chapter 11.98 RCW applies.
(15) "Internal Revenue Code" means
the United States Internal Revenue Code of 1986, as amended or renumbered on
the effective date of this act.
(16) Words that import the singular
number may also be applied to the plural of persons and things.
(((16))) (17) Words importing the
masculine gender only may be extended to females also.
Sec. 2.
RCW 11.108.010 and 1990 c 224 s 2 are each amended to read as follows:
Unless the context clearly requires otherwise,
the definitions in this section apply throughout this chapter.
(1) The term "pecuniary bequest"
means a gift in a governing instrument which either is expressly stated as a
fixed dollar amount or is a gift of a dollar amount determinable by the
governing instrument, and a gift expressed in terms of a "sum" or an
"amount," unless the context dictates otherwise, is a gift of a
dollar amount.
(2) The term "marital deduction"
means the federal estate tax deduction allowed for transfers to spouses
under ((section 2056 of)) the Internal Revenue Code.
(3) The term "maximum marital
deduction" means the maximum amount qualifying for the marital deduction.
(4) The term "marital deduction gift"
means a gift intended to qualify for the marital deduction.
(5) The term "governing instrument"
includes a will and codicils, irrevocable, and revocable trusts.
(6) "Fiduciary" means trustee or
personal representative. Reference to a fiduciary in the singular includes the
plural where the context requires.
(7) ((References to the "internal revenue
code" are to the United States internal revenue code of 1986, as in effect
on June 7, 1990.
(8)))
The term "gift" refers to all legacies, devises, and bequests made in
a governing instrument.
Sec. 3.
RCW 11.108.020 and 1988 c 64 s 28 are each amended to read as follows:
If a governing instrument contains a marital
deduction gift, the governing instrument, including any power, duty, or
discretionary authority given to the fiduciary, shall be construed to comply
with the marital deduction provisions of the Internal Revenue Code
((and the regulations thereunder)) in order to conform to that intent.
Whether the governing instrument contains a marital deduction gift depends upon
the intent of the testator, grantor, or other transferor at the time the
governing instrument is executed. If the testator, grantor, or other
transferor has adequately evidenced an intention to make a marital deduction
gift, the fiduciary shall not take any action or have any power that may impair
that deduction, but this does not require the fiduciary to make the election
under section 2056(b)(7) of the Internal Revenue Code that
is referred to in RCW 11.108.025.
Sec. 4.
RCW 11.108.025 and 1991 c 6 s 1 are each amended to read as follows:
Unless a governing instrument directs to the
contrary:
(1) The fiduciary shall have the power to make
elections, in whole or in part, to qualify property for the marital deduction
as qualified terminable interest property under section 2056(b)(7) of the Internal
Revenue Code or, if the surviving spouse is not a citizen of the
United States, under section 2056A of the Internal Revenue Code.
(2) The fiduciary making an election under
section 2056(b)(7) or 2056A of the Internal Revenue Code
or making an allocation under section 2632 of the Internal Revenue
Code may benefit personally from the election or allocation, with no
duty to reimburse any other person interested in the election or allocation.
The fiduciary shall have no duty to make any equitable adjustment and shall
have no duty to treat interested persons impartially in respect of the election
or allocation.
(3) The fiduciary of a trust, if an election is
made under section 2056(b)(7) or 2056A of the Internal Revenue Code,
if an allocation is made under section 2632 of the Internal Revenue
Code, or if division of a trust is of benefit to the persons interested
in the trust, may divide the trust into two or more separate trusts, of equal
or unequal value, provided that the terms of the separate trusts which result
are substantially identical to the terms of the trust before division, and
provided further, in the case of a trust otherwise qualifying for the marital
deduction under the Internal Revenue Code ((and its
regulations)), that the division shall not prevent a separate trust for
which the election is made from qualifying for the marital deduction.
Sec. 5.
RCW 11.108.050 and 1990 c 179 s 3 are each amended to read as follows:
(1) If a governing instrument indicates the
testator's intention to make a marital deduction gift in trust, in addition to
the other provisions of this section, each of the following also applies to the
trust; provided, however, that such provisions shall not apply to any trust
which provides for the entire then remaining trust estate to be paid on the
termination of the income interest to the estate of the spouse of the trust's
creator, or to a charitable beneficiary, contributions to which are tax
deductible for federal income tax purposes:
(a) The only income beneficiary of a marital
deduction trust is the testator's surviving spouse;
(b) The income beneficiary is entitled to all
of the trust income until the trust terminates;
(c) The trust income is payable to the income
beneficiary not less frequently than annually; and
(d) Except in the case of a marital deduction
gift in trust, described in subsection (2) of this section, or property that
has or would otherwise have qualified for the marital deduction only as the
result of an election under section 2056(b)(7) of the Internal Revenue
Code, upon termination of the trust, all of the remaining trust assets,
including accrued or undistributed income, pass either to the income
beneficiary or under the exercise of a general power of appointment granted to
the income beneficiary in favor of the income beneficiary's estate or to any
other person or entity in trust or outright. The general power of appointment
is exercisable by the income beneficiary alone and in all events.
(2) If a governing instrument indicates the
testator's intention to make a marital deduction gift in trust and the
surviving spouse is not a citizen of the United States, subsection (1)(a), (b),
and (c) of this section and each of the following shall apply to the trust:
(a) At least one trustee of the trust shall be
an individual citizen of the United States or ((of)) a domestic
corporation((. However, any distribution from the trust must be approved by
this trustee)), and no distribution, other than a distribution of
income, may be made from the trust unless a trustee who is an individual
citizen of the United States or a domestic corporation has the right to
withhold from the distribution the tax imposed under section 2056A of the
Internal Revenue Code on the distribution;
(b) The trust shall meet such requirements as
the secretary of the treasury of the United States may by regulations prescribe
to ensure collection of estate tax, under section 2056A(b) of the Internal
Revenue Code; and
(c) (a) and (b) of this subsection shall no
longer apply to the trust if the surviving spouse becomes a citizen of the
United States and (i) the surviving spouse is a resident of the United States
at all times after the testator's death and before becoming a citizen, or (ii)
no tax has been imposed on the trust under section 2056A(b)(1)(A) of the Internal
Revenue Code before the surviving spouse becomes a citizen, or
(iii) the surviving spouse makes an election under section 2056A(b)(12)(C) of
the Internal Revenue Code regarding tax imposed on
distributions from the trust before becoming a citizen.
(3) The exercise of the general power of
appointment provided in this section shall be done only by the income
beneficiary in the manner provided by RCW 11.95.060 ((by specifically
referring to this section)).
Sec. 6.
RCW 11.110.200 and 1985 c 30 s 129 are each amended to read as follows:
RCW 11.110.200 through 11.110.260 shall apply
only to trusts which are "private foundations" as defined in section
509 of the Internal Revenue Code ((of 1954)), "charitable
trusts" as described in section 4947(a)(1) of the Internal Revenue Code ((of
1954)), or "split-interest trusts" as described in section
4947(a)(2) of the Internal Revenue Code ((of 1954)). With respect to
any such trust created after December 31, 1969, RCW 11.110.200 through
11.110.260 shall apply from such trust's creation. With respect to any such
trust created before January 1, 1970, RCW 11.110.200 through 11.110.260 shall
apply only to such trust's federal taxable years beginning after December 31,
1971.
Sec. 7.
RCW 11.110.210 and 1985 c 30 s 130 are each amended to read as follows:
The trust instrument of each trust to which RCW
11.110.200 through 11.110.260 applies shall be deemed to contain provisions
prohibiting the trustee from:
(1) Engaging in any act of "self-dealing,"
((())as defined in section 4941(d) of the Internal Revenue Code ((of
1954))), which would give rise to any liability for the tax imposed by
section 4941(a) of the Internal Revenue Code ((of 1954));
(2) Retaining any "excess business
holdings," ((())as defined in section 4943(c) of the
Internal Revenue Code ((of 1954))), which would give rise to any
liability for the tax imposed by section 4943(a) of the Internal Revenue Code
((of 1954));
(3) Making any investments which would
jeopardize the carrying out of any of the exempt purposes of the trust, within
the meaning of section 4944 of the Internal Revenue Code ((of 1954)), so
as to give rise to any liability for the tax imposed by section 4944(a) of the
Internal Revenue Code ((of 1954)); and
(4) Making any "taxable expenditures,"
((())as defined in section 4945(d) of the Internal Revenue Code ((of
1954))), which would give rise to any liability for the tax imposed by
section 4945(a) of the Internal Revenue Code ((of 1954)):
PROVIDED, That this section shall not apply
either to those split-interest trusts or to amounts thereof which are not
subject to the prohibitions applicable to private foundations by reason of the
provisions of section 4947 of the Internal Revenue Code ((of 1954)).
Sec. 8.
RCW 11.110.220 and 1985 c 30 s 131 are each amended to read as follows:
The trust instrument of each trust to which RCW
11.110.200 through 11.110.260 applies, except "split-interest"
trusts, shall be deemed to contain a provision requiring the trustee to
distribute, for the purposes specified in the trust instrument, for each
taxable year of the trust, amounts at least sufficient to avoid liability for
the tax imposed by section 4942(a) of the Internal Revenue Code ((of 1954)).
Sec. 9.
RCW 83.100.020 and 1990 c 224 s 1 are each amended to read as follows:
As used in this chapter:
(1) "Decedent" means a deceased
individual;
(2) "Department" means the department
of revenue, the director of that department, or any employee of the department
exercising authority lawfully delegated to him by the director;
(3) "Federal credit" means (a) for a
transfer, the maximum amount of the credit for state taxes allowed by section
2011 of the ((United States)) Internal Revenue Code ((of 1986, as
amended or renumbered)); and (b) for a generation-skipping transfer, the
maximum amount of the credit for state taxes allowed by section 2604 of the ((United
States)) Internal Revenue Code ((of 1986, as amended or renumbered));
(4) "Federal return" means any tax
return required by chapter 11 or 13 of the ((United States)) Internal
Revenue Code ((of 1986, as amended or renumbered, and any regulations
thereunder));
(5) "Federal tax" means (a) for a
transfer, a tax under chapter 11 of the ((United States)) Internal
Revenue Code ((of 1986, as amended or renumbered)); and (b) for a
generation-skipping transfer, the tax under chapter 13 of the ((United
States)) Internal Revenue Code ((of 1986, as amended or renumbered));
(6) "Generation-skipping transfer"
means a "generation‑skipping transfer" as defined and used in
section 2611 of the ((United States)) Internal Revenue Code ((of
1986, as amended or renumbered));
(7) "Gross estate" means "gross
estate" as defined and used in section 2031 of the ((United States))
Internal Revenue Code ((of 1986, as amended or renumbered));
(8) "Nonresident" means a decedent
who was domiciled outside Washington at his death;
(9) "Person" means any individual,
estate, trust, receiver, cooperative association, club, corporation, company,
firm, partnership, joint venture, syndicate, or other entity and, to the extent
permitted by law, any federal, state, or other governmental unit or subdivision
or agency, department, or instrumentality thereof;
(10) "Person required to file the federal
return" means any person required to file a return required by chapter 11
or 13 of the Internal Revenue Code ((of 1986, as amended or renumbered)),
such as the personal representative of an estate; or a transferor, trustee, or
beneficiary of a generation-skipping transfer; or a qualified heir with respect
to qualified real property, as defined and used in section 2032A(c) of the ((United
States)) Internal Revenue Code ((of 1986, as amended or renumbered));
(11) "Property" means (a) for a
transfer, property included in the gross estate; and (b) for a
generation-skipping transfer, all real and personal property subject to the
federal tax;
(12) "Resident" means a decedent who
was domiciled in Washington at time of death;
(13) "Transfer" means
"transfer" as used in section 2001 of the ((United States))
Internal Revenue Code ((of 1986, as amended or renumbered)), or a
disposition or cessation of qualified use as defined and used in section
2032A(c) of the ((United States)) Internal Revenue Code ((of 1986, as
amended or renumbered)); ((and))
(14) "Trust" means "trust"
under Washington law and any arrangement described in section 2652 of the
Internal Revenue Code ((of 1986, as amended or renumbered.)); and
(15) ((References in this chapter to the
United States internal revenue code of 1986, to a chapter of the code, and to
regulations under the code are to the code, chapters, and regulations in effect
on June 7, 1990)) "Internal Revenue Code" means the United
States Internal Revenue Code of 1986, as amended or renumbered on the effective
date of this act.
Sec. 10.
RCW 83.110.010 and 1989 c 40 s 1 are each amended to read as follows:
As used in this chapter, the following terms
have the meanings indicated unless the context clearly requires otherwise.
(1) "Estate" means the gross estate
of a decedent as determined for the purpose of federal estate tax and the
estate tax payable to this state;
(2) "Excise tax" means the federal
excise tax imposed by section 4980A(d)((, or such section as renumbered,))
of the Internal Revenue Code, ((which was enacted by section 1133(a) of the
tax reform act of 1986, P.L. 99-514 or as subsequently amended,)) and
interest and penalties imposed in addition to the excise tax;
(3) "Fiduciary" means executor,
administrator of any description, and trustee;
(4) "Internal Revenue Code" means the
United States Internal Revenue Code of 1986, as amended or renumbered ((from
time to time)) on the effective date of this act;
(5) "Person" means any individual,
partnership, association, joint stock company, corporation, government,
political subdivision, governmental agency, or local governmental agency;
(6) "Persons interested in retirement
distributions" means any person determined as of the date the excise tax
is due, including a personal representative, guardian, trustee, or beneficiary,
entitled to receive, or who has received, by reason of or following the death
of a decedent, any property or interest therein which constitutes a retirement
distribution as defined in section 4980A(e)((, or such section as
renumbered,)) of the Internal Revenue Code, but this definition excludes
any alternate payee under a qualified domestic relations order as such terms
are defined in section 414(p) of the Internal Revenue Code;
(7) "Person interested in the estate"
means any person, including a personal representative, guardian, or trustee,
entitled to receive, or who has received, from a decedent while alive or by
reason of the death of a decedent any property or interest therein included in
the decedent's taxable estate;
(8) "Qualified heir" means a person
interested in the estate who is entitled to receive, or who has received, an
interest in qualified real property;
(9) "Qualified real property" means
real property for which the election described in section 2032A of the Internal
Revenue Code has been made;
(10) "State" means any state,
territory, or possession of the United States, the District of Columbia, or the
Commonwealth of Puerto Rico; and
(11) "Tax" means the federal estate
tax, the excise tax defined in subsection (2) of this section, and the estate
tax payable to this state and interest and penalties imposed in addition to the
tax.
Sec. 11.
RCW 83.110.050 and 1989 c 40 s 4 are each amended to read as follows:
(1) In making an apportionment, allowances
shall be made for any exemptions granted, any classification made of persons
interested in the estate, and any deductions and credits allowed by the law
imposing the tax.
(2) Any exemption or deduction allowed by
reason of the relationship of any person to the decedent or by reason of the
purposes of the gift inures to the benefit of the person bearing that
relationship or receiving the gift. When an interest is subject to a prior
present interest which is not allowable as a deduction, the tax apportionable
against the present interest shall be paid from principal.
(3) Any deduction for property previously taxed
and any credit for gift taxes or death taxes of a foreign country paid by the
decedent or the decedent's estate inures to the proportionate benefit of all
persons liable to apportionment.
(4) Any credit for inheritance, succession, or
estate taxes or taxes in the nature thereof in respect to property or interests
includable in the estate inures to the benefit of the persons or interests
chargeable with the payment thereof to the extent that or in proportion that
the credit reduces the tax.
(5) To the extent that property passing to or
in trust for a surviving spouse or any charitable, public, or similar gift or
bequest does not constitute an allowable deduction for purposes of the tax
solely by reason of an inheritance tax or other death tax imposed upon and
deductible from the property, the property shall not be included in the
computation provided for in this chapter, and to that extent no apportionment
shall be made against the property. This does not apply in any instance where
the result under section 2053(d) of the Internal Revenue Code ((of 1954 of
the United States)) relates to deduction for state death taxes on transfers
for public, charitable, or religious uses.
(6) In the case of qualified real property, the
apportionment of the tax shall be based on the values that would have been used
to determine the tax without regard to section 2032A of the Internal Revenue
Code. The reduction in the tax attributable to the application of section
2032A shall inure as follows:
(a) First to the benefit of the qualified heirs
in proportion to their relative interests in the qualified real property, until
the tax attributable to the qualified real property is reduced to zero;
(b) Then to the qualified heirs in proportion
to their relative interests in other property of the estate, until the tax attributable
to the property is reduced to zero; and
(c) Then to other persons interested in the
estate in proportion to their relative interests in other property of the
estate.
(7) Any extension in the payment of a part of
the tax under any provision of the Internal Revenue Code shall inure to the
benefit of, and the tax subject to the extension shall be equitably apportioned
among, the persons receiving the property relating to the extension. Any tax
benefit derived from the interest paid with respect to the tax shall be
equitably apportioned among the persons receiving the property.
NEW SECTION. Sec. 12.
RCW 11.110.240 and 1985 c 30 s 133 are each repealed.
