AN
ACT Relating to estate tax apportionment; and amending RCW 83.110.010,
83.110.020, 83.110.030, 83.110.050, 83.110.060, and 83.110.090.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
83.110.010 and 1998 c 292 s 402 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) of the Internal Revenue Code, and interest and penalties imposed in
addition to the excise tax;
(3)))
"Fiduciary" means executor, administrator of any description, and
trustee;
(((4)))
(3) "Internal Revenue Code" means the United States Internal
Revenue Code of 1986, as defined in and as of the date specified in RCW
83.100.020;
(((5)))
(4) "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) 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))) (5)
"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)))
(6) "Qualified heir" means a person interested in the estate
who is entitled to receive, or who has received, an interest in qualified real
property or a qualified family-owned business interest;
(((9)))
(7) "Qualified real property" means real property for which
the election described in section 2032A of the Internal Revenue Code has been
((made)) allowed;
(((10)))
(8) "Qualified family-owned business interest" means a
family-owned business interest for which the election in section 2057 of the
Internal Revenue Code has been allowed;
(9)
"State" means any state, territory, or possession of the United
States, the District of Columbia, or the Commonwealth of Puerto Rico; and
(((11)))
(10) "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, but
not the additional estate tax under section 2032A(c) or 2057(f) of the Internal
Revenue Code. Unless the will, trust, or other dispositive instrument
otherwise provides, apportionment of estate, inheritance, legacy, or succession
tax payable to any other state, or to any foreign country, and interest and
penalties imposed in addition to the tax, shall be governed by the law of that
state or foreign country.
Sec.
2. RCW
83.110.020 and 1989 c 40 s 2 are each amended to read as follows:
(((1)
Tax other than excise tax.)) Except as provided in RCW 83.110.090 ((or
subsection (2) of this section)), and unless the will, trust, or other
dispositive instrument otherwise provides, the tax((, but not the excise
tax,)) shall be apportioned among all persons interested in the estate.
Except as provided in RCW 83.110.050, the apportionment shall be made in the
proportion that the value of the interest of each person interested in the
estate bears to the total value of the interests of all persons interested in
the estate. Except as provided in RCW 83.110.050, the values used in
determining the tax shall be used for that purpose.
(((2)
Excise tax. Except as provided in RCW 83.110.030(6) and unless the will,
beneficiary designation, trust, or other instrument governing the disposition
of property subject to the excise tax otherwise provides, the excise tax shall
be apportioned among and charged to the persons interested in retirement
distributions on which the excise tax is actually imposed. Each person shall
be severally liable for the timely payment of the portion of the excise tax so
apportioned to the person. The apportionment shall be made in the proportion
that the value of the interest of each person interested in the retirement
distributions bears to the total value of the interests of all persons
interested in the retirement distributions. The values used in determining the
excise tax shall be used for that purpose. In order to facilitate timely
payment of the excise tax, the fiduciary shall have the right, but not the
obligation, in addition to any other power and consistent with the power
granted by RCW 11.98.070(13), to make loans, either secured or unsecured at
such interest as the fiduciary may determine, not exceeding the amount of the
excise tax so apportioned to the persons liable for payment of the excise tax.
If the fiduciary or other person is required to pay the excise tax, the
fiduciary or other person shall have the rights of recovery provided in RCW
83.110.040 or otherwise.))
Sec.
3. RCW
83.110.030 and 1990 c 180 s 6 are each amended to read as follows:
(1)
The court having jurisdiction over the administration of the estate of a
decedent shall determine the apportionment of the tax. If there are no probate
proceedings, the court of the county wherein the decedent was domiciled at
death shall determine the apportionment of the tax upon the application of the
person required to pay the tax.
(2)
If the court finds that it is inequitable to apportion interest and penalties
in the manner provided in this chapter because of special circumstances, it may
direct apportionment thereon in the manner it finds equitable.
(3)
The expenses reasonably incurred by any fiduciary and by other persons
interested in the estate in connection with the determination of the amount and
apportionment of the tax shall be apportioned as provided in RCW 83.110.020 and
charged and collected as a part of the tax apportioned. If the court finds it
is inequitable to apportion the expenses as provided in RCW 83.110.020, it may
direct apportionment thereof equitably.
(4)
If the court finds that the assessment of penalties and interest is due to
delay caused by the negligence of the fiduciary, the court may charge the
fiduciary with the amount of the assessed penalties and interest.
(5)
In any suit or judicial proceeding to recover from any person interested in the
estate the amount of the tax apportioned to the person in accordance with this
chapter, the determination of the court in respect thereto is prima facie
correct.
(((6)
In the case where there are successive interests with respect to retirement
distributions, the excise tax shall be equitably apportioned by the court
having jurisdiction over the administration of the estate among the persons
interested in the retirement distributions as defined in RCW 83.110.010(6).))
Sec.
4. RCW
83.110.050 and 1993 c 73 s 11 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 (a) by section 2057 of the Internal
Revenue Code, (b) by reason of the relationship of any person to the
decedent, or (c) 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 relates to deduction for state death taxes on transfers
for public, charitable, or religious uses. To the extent the amount
otherwise allowed as a deduction under section 2057 of the Internal Revenue
Code 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 amount, the amount shall not be included in the computation provided
for in this chapter, and to that extent no apportionment shall be made against
the amount.
(6)
In the case of qualified real property or a qualified family-owned business
interest, 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 or
2057 of the Internal Revenue Code. The reduction in the tax attributable
to the application of section 2032A or 2057 shall inure as follows:
(a)
First to the benefit of the qualified heirs in proportion to their relative
interests in the qualified real property or qualified family-owned business
interest, until the tax attributable to the qualified real property or
qualified family-owned business interest 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.
Sec.
5. RCW
83.110.060 and 1989 c 40 s 5 are each amended to read as follows:
((Except
as otherwise provided in RCW 83.110.030(6),)) No interest in income
and no estate for years or for life or other temporary interest in any property
or fund is subject to apportionment as between the temporary interest and the
remainder. The tax on the temporary interest and the tax, if any, on the remainder
is chargeable against the corpus of the property or funds subject to the
temporary interest and remainder. No tax shall be paid from a charitable
remainder annuity trust or a charitable remainder unitrust described in section
664 of the Internal Revenue Code.
Sec.
6. RCW
83.110.090 and 1989 c 40 s 6 are each amended to read as follows:
If the liabilities of persons interested in the estate as
prescribed by this chapter differ from those which result under the federal estate
tax law, for example, section 2206, 2207, 2207A, or 2207B of the Internal
Revenue Code, the liabilities imposed by the federal law will control and
the balance of this chapter shall apply as if the resulting liabilities had
been prescribed in this chapter. Nothing in this chapter affects the right of
a personal representative to recover payments due an estate pursuant to the
provisions of ((section 2207A of)) the Internal Revenue Code.
