WSR 97-13-018

INSURANCE COMMISSIONER'S OFFICE

[Filed June 9, 1997, 1:53 p.m.]

notice of publication of tables for use of courts and appraisers throughout this state showing the average expectancy of life and values of annuities and of life and term estates

Pursuant to RCW 48.02.160(1), the Insurance Commissioner hereby publishes the following tables for use of courts and appraisers throughout this state showing the average expectancy of life and values of annuities and of life and term estates.

If you have questions or need additional information, please call Greg Scully, Chief Deputy Insurance Commissioner, at (360) 664-3785.

Deborah Senn

Insurance Commissioner

[Open Style:Columns Off]

[Open Style:Columns On]

The first column shows the age of the person under consideration at his or her nearest birthday.

The second column shows the present worth of one dollar payable upon death.

The third column shows the present value of an annuity of $1.00 per year payable at the end of each year, during the lifetime of a person of the specified age, with a final payment upon death of an amount proportionate to the time elapsed between the date of the preceding payment and the date of death.

The fourth column shows the complete expectation of life, which is the average number of years of future life for persons of the specified age.

If a life interest in an estate or income from property is payable in semiannual, quarterly, monthly or weekly installments, Tables should be used without adjustment.

In the case of a life annuity or an annuity-certain, if payable at the end of semiannual, quarterly, monthly or weekly periods, the annuity value should be multiplied by the appropriate adjustment factor:

Semiannual 1.01113

Quarterly 1.01672

Monthly 1.02046

Weekly 1.02190

Example 1. A decedent's will provides that his nephew, age 40 years, is to receive the sum of $1,000 per year for life, payable in monthly installments. What is the present value of the bequest?

Reference to column (3) of Table I provides the factor for valuation of a life annuity at age 40, 16.6374. The monthly adjustment factor is 1.02046. The value required is 16.6374 x 1.02046 x $1,000 = $16,978.

Example 2. A decedent leaves to his sister, age 50, a life interest in property the value of which is $50,000, and provides that upon the sister's death, absolute title to the property will pass to other parties. What is the value of the sister's interest, and what is the value of the remainder interest of the other parties in the estate?

A net return of 4 1/2% per annum is to be assumed, and on that basis the sister's income from the estate will be .045 x $50,000 or $2,250 per year. The value of her income (whether paid annually or otherwise) will be $2,250 x 15.8165 [see column (6) Table I, age 50] or $35,587, which is the amount upon which the sister's tax accrues.

The remainder interest of the other parties is determined from column (5) of Table I, taking into account the age of the person receiving the life interest. The value of $1.00 due upon the death of the sister is $.28833. Hence, the reversion is valued at .28833 x $50,000, or $14,417, on which amount accrues the tax of those who receive the remainder interest.

note. It is to be noted that the value of a life estate plus the value of the reversionary or remainder interest equals the value of the whole property. Thus, as a practical matter, only one of the values needs to be computed, and the second can then be arrived at by simply subtracting the value computed from the value of the whole property.

Example 3. Income from property valued at $100,000 is payable to the decedent's niece for 20 years. The income is payable whether or not the niece survives. At the end of 20 years (whether or not the niece is then living) the property is to pass to the decedent's younger brother (or to the younger brother's estate if he is not then living).

Income at 4 1/2% on $100,000 will be $4,500 per year. Present worth of $1.00 per year for 20 years, according to column (3) of Table II, is $13.0079. The niece's interest, therefore, is $13.0079 x $4,500 or $58,536.

Present worth of $1.00 due at the end of 20 years, from column (2) is $.414643. The brother's interest is valued at $.414643 x 100,000 or $41,464.

note. It is to be noted that the value of a term estate plus the value of the reversionary or remainder interest equals the value of the whole property. Thus, as a practical matter, only one of the values needs to be computed, and the second can then be arrived at by simply subtracting the value computed from the value of the whole property.

Example 4. The decedent provides that a beneficiary is to receive $100 per month for a fixed period of 10 years, and at the end of that period a final payment in the amount of $10,000. What is the value of the bequest?

$1.00 per year payable annually for 10 years is worth $7.9127 [column (3), Table II]. For adjustment to a monthly basis, the correcting factor is 1.02046. The payments amount to $1,200 per year and the value of the income is, thus, $7.9127 x 1.02046 x 1,200 = $9,690.

The value of $10,000 due at the end of 10 years is $.643928 x 10,000 = $6,439; the total value of the bequest is $9,690 + $6,439 = $16,129.

Reviser's note: The brackets and enclosed material in the text of the above material occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.