SENATE BILL NO. 1246

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S1246................................................by JUDICIARY AND RULES
UNIFORM ESTATE TAX APPORTIONMENT ACT - Adds to existing law to adopt the
Uniform Estate Tax Apportionment Act; to define terms; to specify the rules
applicable to the apportionment by will or other dispositive instrument; to
specify statutory rules applicable when there is no controlling instrument;
to specify the rules applicable to credits and deferrals of estate taxes;
to specify conditions for advancement of tax for uninsulated property; to
provide an initial apportionment and recapture of special elective
benefits; to authorize securing payment of estate tax from property in
possession of a fiduciary; to authorize collection of estate tax by a
fiduciary; to govern the right of reimbursement; to authorize an action to
determine or enforce the provisions of this chapter; to provide uniformity
of application and construction; to provide severability; and to provide
delayed application.
                                                                        
01/29    Senate intro - 1st rdg - to printing
01/30    Rpt prt - to Jud
02/12    Rpt out - rec d/p - to 2nd rdg
02/13    2nd rdg - to 3rd rdg
02/19    3rd rdg - PASSED - 33-0-2
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett, Burtenshaw,
      Calabretta, Cameron, Compton, Davis, Gannon, Geddes, Goedde, Hill,
      Ingram, Keough, Little, Lodge, Malepeai, Marley, McKenzie,
      McWilliams, Noble, Noh, Pearce, Richardson, Schroeder, Sorensen,
      Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Darrington, Kennedy
    Floor Sponsor - Marley
    Title apvd - to House
02/20    House intro - 1st rdg - to Rev/Tax
02/23    Rpt out - Ref'd to Jud
03/02    Rpt out - rec d/p - to 2nd rdg
03/03    2nd rdg - to 3rd rdg
03/08    3rd rdg - PASSED - 65-3-2
      AYES -- Andersen, Barraclough, Bauer, Bayer, Bedke, Bell, Black,
      Block, Boe, Bolz, Bradford, Campbell, Cannon, Collins, Crow, Cuddy,
      Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
      Field(18), Field(23), Gagner, Garrett, Harwood, Henbest, Jaquet,
      Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin,
      McKague, Meyer, Miller, Mitchell, Moyle, Naccarato, Nielsen,
      Pasley-Stuart, Raybould, Ridinger, Ring, Ringo, Roberts, Robison,
      Rydalch, Sali, Sayler, Schaefer, Shirley, Skippen, Smith(30),
      Smith(24), Smylie, Snodgrass, Stevenson, Trail, Wills, Mr. Speaker
      NAYS -- Barrett, Clark, Wood
      Absent and excused -- Jones, Shepherd
    Floor Sponsor - Ellsworth
    Title apvd - to Senate
03/09    To enrol
03/10    Rpt enrol - Pres signed
03/11    Sp signed
03/12    To Governor
03/16    Governor signed
         Session Law Chapter 54
         Effective: 07/01/04

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-seventh Legislature                 Second Regular Session - 2004
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1246
                                                                        
                              BY JUDICIARY AND RULES COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO APPORTIONMENT OF ESTATE TAX;  REPEALING  SECTION  15-3-916,  IDAHO
  3        CODE;  AMENDING  CHAPTER 3, TITLE 15, IDAHO CODE, BY THE ADDITION OF A NEW
  4        PART 13, CHAPTER 3, TITLE 15, IDAHO CODE, TO PROVIDE ADOPTION OF THE  UNI-
  5        FORM  ESTATE  TAX  APPORTIONMENT  ACT, TO PROVIDE A SHORT TITLE, TO DEFINE
  6        TERMS, TO SPECIFY THE RULES APPLICABLE TO THE  APPORTIONMENT  BY  WILL  OR
  7        OTHER  DISPOSITIVE  INSTRUMENT, TO SPECIFY STATUTORY RULES APPLICABLE WHEN
  8        THERE IS NO CONTROLLING INSTRUMENT, TO SPECIFY  THE  RULES  APPLICABLE  TO
  9        CREDITS  AND DEFERRALS OF ESTATE TAXES, TO SPECIFY CONDITIONS FOR ADVANCE-
 10        MENT OF TAX FOR UNINSULATED PROPERTY, TO PROVIDE AN INITIAL  APPORTIONMENT
 11        AND  RECAPTURE OF SPECIAL ELECTIVE BENEFITS, TO AUTHORIZE SECURING PAYMENT
 12        OF ESTATE TAX FROM PROPERTY IN POSSESSION OF  A  FIDUCIARY,  TO  AUTHORIZE
 13        COLLECTION OF ESTATE TAX BY A FIDUCIARY, TO GOVERN THE RIGHT OF REIMBURSE-
 14        MENT,  TO  AUTHORIZE  AN  ACTION TO DETERMINE OR ENFORCE THE PROVISIONS OF
 15        THIS ACT, TO PROVIDE UNIFORMITY OF APPLICATION AND CONSTRUCTION,  TO  PRO-
 16        VIDE SEVERABILITY, AND TO PROVIDE DELAYED APPLICATION.
                                                                        
 17    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 18        SECTION  1.  That Section 15-3-916, Idaho Code, be, and the same is hereby
 19    repealed.
                                                                        
 20        SECTION 2.  That Title 15, Chapter 3, Idaho Code,  be,  and  the  same  is
 21    hereby  amended  by the addition thereto of a NEW PART, to be known and desig-
 22    nated as Part 13, Chapter 3, Title 15, Idaho Code, and to read as follows:
                                                                        
 23                                       PART 13
 24                           UNIFORM ESTATE TAX APPORTIONMENT
                                                                        
 25        15-3-1301.  SHORT TITLE. This part may be cited as the "Uniform Estate Tax
 26    Apportionment Act."
                                                                        
 27        15-3-1302.  DEFINITIONS. As use in this part:
 28        (a) "Apportionable estate" means the value of the gross estate as  finally
 29    determined for purposes of the estate tax to be apportioned reduced by:
 30        (1)  Any  claim  or  expense  allowable as a deduction for purposes of the
 31        tax;
 32        (2)  The value of any interest in property that, for purposes of the  tax,
 33        qualifies for a marital or charitable deduction or otherwise is deductible
 34        or is exempt; and
 35        (3)  Any amount added to the decedent's gross estate because of a gift tax
 36        on transfers made before death.
 37        (b)  "Estate  tax"  means  a  federal,  state,  or  foreign  tax,  however
 38    denominated,  imposed  because  of the death of an individual and interest and
 39    penalties associated with the tax. The term does not  include  an  inheritance
 40    tax,  income tax, or generation-skipping transfer tax other than a generation-
                                                                        
                                           2
                                                                        
  1    skipping transfer tax incurred on a direct skip taking effect at death.
  2        (c)  "Gross estate" means, with respect to an estate tax, all interests in
  3    property subject to the tax.
  4        (d)  "Person" has the same meaning  set  forth  in  section  15-1-201(33),
  5    Idaho Code.
  6        (e)  "Ratable"  means  apportioned  or allocated pro rata according to the
  7    relative values of interests to which the term is to be applied. "Ratably" has
  8    a corresponding meaning.
  9        (f)  "Time-limited interest" means an interest in  property  which  termi-
 10    nates  on a lapse of time or on the occurrence or nonoccurrence of an event or
 11    which is subject to the exercise of discretion that could transfer  a  benefi-
 12    cial  interest to another person. The term does not include a cotenancy unless
 13    the cotenancy itself is a time-limited interest.
 14        (g)  "Value" means, with respect to an interest in property,  fair  market
 15    value  as  finally  determined  for  purposes  of the estate tax that is to be
 16    apportioned, reduced by any outstanding debt secured by the  interest  without
 17    reduction:
 18        (1)  For taxes paid or required to be paid; or
 19        (2)  For any special valuation adjustment.
                                                                        
 20        15-3-1303.  APPORTIONMENT  BY  WILL  OR  OTHER DISPOSITIVE INSTRUMENT. (a)
 21    Except as otherwise provided in subsection (c), the following rules apply:
 22        (1)  To the extent that a provision of a  decedent's  will  expressly  and
 23        unambiguously  directs the apportionment of an estate tax, the tax must be
 24        apportioned accordingly regardless of whether such will is probated.
 25        (2)  Any portion of an estate tax not apportioned  pursuant  to  paragraph
 26        (a)(1)  of  this section must be apportioned in accordance with any provi-
 27        sion of a revocable trust of which the  decedent  was  the  settlor  which
 28        expressly and unambiguously directs the apportionment of an estate tax. If
 29        conflicting  apportionment  provisions appear in two (2) or more revocable
 30        trust instruments, the provision in the  most  recently  dated  instrument
 31        prevails. For purposes of this paragraph:
 32             (A)  A  trust  is revocable if it was revocable immediately after the
 33             trust instrument was executed, even if the trust subsequently becomes
 34             irrevocable; and
 35             (B)  The date of an amendment to a revocable trust instrument is  the
 36             date  of  the  amended  instrument  only if the amendment contains an
 37             apportionment provision.
 38        (3)  If any portion of an estate tax is not apportioned pursuant to  para-
 39        graph  (a)(1)  of  this section or paragraph (a)(2) of this section, and a
 40        provision in any other dispositive instrument expressly and  unambiguously
 41        directs that any interest in the property disposed of by the instrument is
 42        or  is  not to be applied to the payment of the estate tax attributable to
 43        the interest disposed of by the instrument,  the  provision  controls  the
 44        apportionment of the tax to that interest.
 45        (b)  Subject  to  subsection  (c) of this section, and unless the decedent
 46    expressly and unambiguously directs the contrary, the following rules apply:
 47        (1)  If an apportionment provision directs  that  a  person  receiving  an
 48        interest  in  property  under  an  instrument is to be exonerated from the
 49        responsibility to pay an estate tax that would otherwise be apportioned to
 50        the interest,
 51             (A)  The tax attributable to the exonerated interest must  be  appor-
 52             tioned  among the other persons receiving interests passing under the
 53             instrument, or
 54             (B)  If the values of the other  interests  are  less  than  the  tax
                                                                        
                                           3
                                                                        
  1             attributable  to  the  exonerated  interest,  the  deficiency must be
  2             apportioned ratably among the other persons  receiving  interests  in
  3             the  apportionable  estate that are not exonerated from apportionment
  4             of the tax.
  5        (2)  If an apportionment provision directs that an estate  tax  is  to  be
  6        apportioned  to an interest in property a portion of which qualifies for a
  7        marital or charitable deduction, the estate tax must first be  apportioned
  8        ratably among the holders of the portion that does not qualify for a mari-
  9        tal or charitable deduction and then apportioned ratably among the holders
 10        of  the  deductible portion to the extent that the value of the nondeduct-
 11        ible portion is insufficient.
 12        (3)  Except as otherwise provided in paragraph (4) of this subsection,  if
 13        an  apportionment  provision  directs that an estate tax be apportioned to
 14        property in which one (1) or more time-limited interests exist, other than
 15        interests in specified property under section 15-3-1307, Idaho  Code,  the
 16        tax  must  be apportioned to the principal of that property, regardless of
 17        the deductibility of some of the interests in that property.
 18        (4)  If an apportionment provision directs that an estate  tax  is  to  be
 19        apportioned  to  the  holders of interests in property in which one (1) or
 20        more time-limited interests exist and  a  charity  has  an  interest  that
 21        otherwise  qualifies  for an estate tax charitable deduction, the tax must
 22        first be apportioned, to the extent feasible,  to  interests  in  property
 23        that  have  not  been  distributed  to the persons entitled to receive the
 24        interests.
 25        (c)  A provision that apportions an  estate  tax  is  ineffective  to  the
 26    extent that it increases the tax apportioned to a person having an interest in
 27    the  gross estate over which the decedent had no power to transfer immediately
 28    before the decedent executed the instrument in which the apportionment  direc-
 29    tion  was  made.  For  purposes  of  this  subsection, a testamentary power of
 30    appointment is a power to transfer the property that is subject to the power.
 31        (d)  For purposes of this section, a decedent's will, revocable trust,  or
 32    other  dispositive instrument that contains the applicable phrase(s) set forth
 33    in paragraphs (1), (2) or (3) of this subsection (or other substantially simi-
 34    lar language in other dispositive instruments not listed in said  paragraphs),
 35    shall  satisfy the part's requirement for an express and unambiguous direction
 36    as to what properties are to bear or not bear  the  payment  of  those  taxes.
 37    Other  language may be used to direct the apportionment of the estate tax, but
 38    if it is determined by a court that the direction in the will, trust, or other
 39    dispositive instrument does not expressly and unambiguously direct the  appor-
 40    tionment  of  all  of the estate tax with respect to all property that consti-
 41    tutes the gross estate, the estate tax that is not clearly  and  unambiguously
 42    apportioned  shall  be  apportioned  in accordance with the provisions of this
 43    part.  The portions of said phrase(s) set forth in parentheses  indicate  sug-
 44    gestions  or descriptions of alternate language for the word or phrase immedi-
 45    ately preceding the language in parentheses which may be  added,  deleted,  or
 46    varied in the instrument.  Said phrases are:
 47        (1)  In  the  case  of a will, "all taxes arising as a result of my death,
 48        whether attributable to assets passing under this will or otherwise, shall
 49        be paid out of the residue of my probate estate (or apportioned  to  other
 50        specifically identified assets, probate or otherwise)"; or
 51        (2)  In  the case of a revocable trust,  "all taxes arising as a result of
 52        the Grantor's (Settlor's or  Trustor's)  death,  whether  attributable  to
 53        assets passing under this trust instrument or otherwise, shall be paid out
 54        of  the  residue of the trust estate (or apportioned to other specifically
 55        identified assets in trust or otherwise)"; or
                                                                        
                                           4
                                                                        
  1        (3)  In the case of a charitable remainder  trust  as  to  assets  already
  2        transferred  to  or  in the trust,  "no estate taxes and state death taxes
  3        shall be charged or apportioned to and paid from the assets of this chari-
  4        table remainder trust" or  "The  (lifetime  or  term)  annuity  (unitrust)
  5        interest  of  the  Successor Recipient (Beneficiary) will take effect upon
  6        the death of the Initial Recipient (Beneficiary)  only  if  the  Successor
  7        Recipient  (Beneficiary)  furnishes  the  funds for payment of any federal
  8        estate taxes and state death taxes for which the  Trustee  may  be  liable
  9        upon  the  death  of the Initial Recipient (Beneficiary). If the funds are
 10        not furnished  by  the  Successor  Recipient  (Beneficiary),  the  annuity
 11        (unitrust)  period  shall  terminate on the death of the Initial Recipient
 12        (Beneficiary), notwithstanding any other provision in this  instrument  to
 13        the contrary."
                                                                        
 14        15-3-1304.  STATUTORY  APPORTIONMENT  OF  ESTATE TAXES. To the extent that
 15    apportionment of an estate tax is not controlled by an instrument described in
 16    section 15-3-1303, Idaho Code, and except as otherwise  provided  in  sections
 17    15-3-1306 and 15-3-1307, Idaho Code, the following rules apply:
 18        (1)  Subject  to  subsections (2), (3) and (4) of this section, the estate
 19    tax is apportioned ratably to each person that has an interest in  the  appor-
 20    tionable estate.
 21        (2)  A  generation-skipping  transfer tax incurred on a direct skip taking
 22    effect at death is charged to the person to whom the interest in  property  is
 23    transferred.
 24        (3)  If  property  is  included  in the decedent's gross estate because of
 25    section 2044 of the Internal Revenue Code of 1986 or any  similar  estate  tax
 26    provision,  the  difference  between  the  total  estate  tax  for  which  the
 27    decedent's  estate  is  liable  and  the  amount  of  estate tax for which the
 28    decedent's estate would have been liable if the property had not been included
 29    in the decedent's gross estate is apportioned ratably  among  the  holders  of
 30    interests in the property. The balance of the tax, if any, is apportioned rat-
 31    ably to each other person having an interest in the apportionable estate.
 32        (4)  Except  as otherwise provided in section 15-3-1303(b)(4), Idaho Code,
 33    and except as to property to which section 15-3-1307, Idaho Code  applies,  an
 34    estate  tax  apportioned to persons holding interests in property subject to a
 35    time-limited interest must be apportioned, without further  apportionment,  to
 36    the principal of that property.
                                                                        
 37        15-3-1305.  CREDITS  AND  DEFERRALS.  Except as otherwise provided in sec-
 38    tions 15-3-1306 and 15-3-1307, Idaho Code, the following rules apply  to  cre-
 39    dits and deferrals of estate taxes:
 40        (1)  A  credit  resulting  from  the  payment of gift taxes or from estate
 41    taxes paid on property previously taxed inures ratably to the benefit  of  all
 42    persons to which the estate tax is apportioned.
 43        (2)  A credit for state or foreign estate taxes inures ratably to the ben-
 44    efit  of  all  persons to which the estate tax is apportioned, except that the
 45    amount of a credit for a state or foreign tax paid by  a  beneficiary  of  the
 46    property  on  which  the  state  or  foreign tax was imposed, directly or by a
 47    charge against the property, inures to the benefit of the beneficiary.
 48        (3)  If payment of a portion of an estate tax is deferred because  of  the
 49    inclusion  in the gross estate of a particular interest in property, the bene-
 50    fit of the deferral inures ratably to the persons  to  which  the  estate  tax
 51    attributable  to  the  interest  is  apportioned.  The  burden of any interest
 52    charges incurred on a deferral of taxes and the benefit of any  tax  deduction
 53    associated  with  the  accrual  or payment of the interest charge is allocated
                                                                        
                                           5
                                                                        
  1    ratably among the persons receiving an interest in the property.
                                                                        
  2        15-3-1306.  INSULATED PROPERTY, ADVANCEMENT OF TAX. (a) In this section:
  3        (1)  "Advanced fraction" means a fraction that has as  its  numerator  the
  4        amount  of the advanced tax and as its denominator the value of the inter-
  5        ests in insulated property to which that tax is attributable.
  6        (2)  "Advanced tax" means the aggregate amount of estate tax  attributable
  7        to  interests  in  insulated  property which is required to be advanced by
  8        uninsulated holders under subsection (c) of this section.
  9        (3)  "Insulated property" means property subject to a time-limited  inter-
 10        est  which  is included in the apportionable estate but is unavailable for
 11        payment of an estate tax because of impossibility or impracticability.
 12        (4)  "Uninsulated  holder"  means  a  person  who  has  an   interest   in
 13        uninsulated property.
 14        (5)  "Uninsulated  property"  means property included in the apportionable
 15        estate other than insulated property.
 16        (b)  If an estate tax is to be advanced pursuant to subsection (c) of this
 17    section by persons holding interests in  uninsulated  property  subject  to  a
 18    time-limited  interest  other  than property to which section 15-3-1307, Idaho
 19    Code applies, the tax must be advanced, without  further  apportionment,  from
 20    the principal of the uninsulated property.
 21        (c)  Subject  to  section  15-3-1309(b) and (d), Idaho Code, an estate tax
 22    attributable to interests in insulated property must be  advanced  ratably  by
 23    uninsulated  holders.  If  the value of an interest in uninsulated property is
 24    less than the amount of estate taxes otherwise required to be advanced by  the
 25    holder  of  that interest, the deficiency must be advanced ratably by the per-
 26    sons holding interests in properties that are excluded from the  apportionable
 27    estate  under  section 15-3-1302(a)(2), Idaho Code, as if those interests were
 28    in uninsulated property.
 29        (d)  A court having jurisdiction to  determine  the  apportionment  of  an
 30    estate  tax  may require a beneficiary of an interest in insulated property to
 31    pay all or part of the estate tax otherwise apportioned to the interest if the
 32    court finds that it would be substantially more equitable for that beneficiary
 33    to bear the tax liability personally than for that  part  of  the  tax  to  be
 34    advanced by uninsulated holders.
 35        (e)  When  a  distribution of insulated property is made, each uninsulated
 36    holder may recover from the distributee a  ratable  portion  of  the  advanced
 37    fraction  of  the property distributed. To the extent that undistributed insu-
 38    lated property ceases to be insulated, each  uninsulated  holder  may  recover
 39    from  the  property  a  ratable  portion of the advanced fraction of the total
 40    undistributed property.
 41        (f)  Upon a distribution of insulated property for which, pursuant to sub-
 42    section (d) of this section, the distributee becomes obligated to make a  pay-
 43    ment to uninsulated holders, a court may award an uninsulated holder a record-
 44    able lien on the distributee's property to secure the distributee's obligation
 45    to that uninsulated holder.
                                                                        
 46        15-3-1307.  APPORTIONMENT  AND RECAPTURE OF SPECIAL ELECTIVE BENEFITS. (a)
 47    In this section:
 48        (1)  "Special elective  benefit"  means  a  reduction  in  an  estate  tax
 49        obtained by an election for:
 50             (A)  A  reduced  valuation  of specified property that is included in
 51             the gross estate;
 52             (B)  A deduction from the gross estate, other than a marital or char-
 53             itable deduction, allowed for specified property; or
                                                                        
                                           6
                                                                        
  1             (C)  An exclusion from the gross estate of specified property.
  2        (2)  "Specified property" means property for which an  election  has  been
  3        made for a special elective benefit.
  4        (b)  If an election is made for one (1) or more special elective benefits,
  5    an  initial  apportionment of a hypothetical estate tax must be computed as if
  6    no election for any of those benefits had been made. The  aggregate  reduction
  7    in  estate tax resulting from all elections made must be allocated among hold-
  8    ers of interests in the specified property in the proportion that  the  amount
  9    of  deduction,  reduced  valuation, or exclusion attributable to each holder's
 10    interest bears to the aggregate amount of deductions, reduced valuations,  and
 11    exclusions obtained by the decedent's estate from the elections. If the estate
 12    tax  initially  apportioned to the holder of an interest in specified property
 13    is reduced to zero, any excess amount of reduction reduces ratably the  estate
 14    tax  apportioned  to other persons that receive interests in the apportionable
 15    estate.
 16        (c)  An additional estate tax imposed to recapture all or part of  a  spe-
 17    cial  elective  benefit must be charged to the persons that are liable for the
 18    additional tax under the law providing for the recapture.
                                                                        
 19        15-3-1308.  SECURING PAYMENT OF ESTATE TAX FROM PROPERTY IN POSSESSION  OF
 20    FIDUCIARY.  (a)  A  fiduciary  may  defer a distribution of property until the
 21    fiduciary is satisfied that adequate provision for payment of the  estate  tax
 22    has been made.
 23        (b)  A  fiduciary  may  withhold from a distributee an amount equal to the
 24    amount of estate tax apportioned to an interest of the distributee.
 25        (c)  As a condition to a distribution, a fiduciary may  require  the  dis-
 26    tributee to provide a bond or other security for the portion of the estate tax
 27    apportioned to the distributee.
                                                                        
 28        15-3-1309.  COLLECTION OF ESTATE TAX BY FIDUCIARY. (a) A fiduciary respon-
 29    sible  for payment of an estate tax may collect from any person the tax appor-
 30    tioned to and the tax required to be advanced by the person.
 31        (b)  Except as otherwise provided in section 15-3-1306,  Idaho  Code,  any
 32    estate  tax  due from a person that cannot be collected from the person may be
 33    collected by the fiduciary from other persons in the following order of prior-
 34    ity:
 35        (1)  Any person having an interest in the apportionable  estate  which  is
 36        not exonerated from the tax;
 37        (2)  Any other person having an interest in the apportionable estate;
 38        (3)  Any person having an interest in the gross estate.
 39        (c)  A domiciliary fiduciary may recover from an ancillary personal repre-
 40    sentative  the estate tax apportioned to the property controlled by the ancil-
 41    lary personal representative.
 42        (d)  The total tax collected from a person pursuant to this part  may  not
 43    exceed the value of the person's interest.
                                                                        
 44        15-3-1310.  RIGHT  OF  REIMBURSEMENT.  (a) A person required under section
 45    15-3-1309, Idaho Code, to pay an estate tax greater than the amount  due  from
 46    the  person  under  section 15-3-1303 or 15-3-1304, Idaho Code, has a right to
 47    reimbursement from another person  to the extent that the other person has not
 48    paid the tax required by section 15-3-1303 or 15-3-1304,  Idaho  Code,  and  a
 49    right  to reimbursement ratably from other persons to the extent that each has
 50    not contributed a portion of the amount collected under section  15-3-1309(b),
 51    Idaho Code.
 52        (b)  A  fiduciary  may enforce the right of reimbursement under subsection
                                                                        
                                           7
                                                                        
  1    (a) of this section on behalf of the person that is entitled to the reimburse-
  2    ment and shall take reasonable steps to do so if requested by the person.
                                                                        
  3        15-3-1311.  ACTION TO DETERMINE OR ENFORCE PART. A fiduciary,  transferee,
  4    or  beneficiary  of the gross estate may maintain an action including, but not
  5    limited to, petitioning for declaratory judgment, to have  a  court  determine
  6    and  enforce this part or may petition a court pursuant to section 15-3-704 or
  7    15-7-201, Idaho Code, whichever is applicable.
                                                                        
  8        15-3-1312.  UNIFORMITY OF APPLICATION AND CONSTRUCTION.  In  applying  and
  9    construing  this  uniform act, consideration must be given to the need to pro-
 10    mote uniformity of the law with respect to its  subject  matter  among  states
 11    that enact it.
                                                                        
 12        15-3-1313.  SEVERABILITY. If any provision of this part or the application
 13    thereof to any person or circumstance is held invalid, the invalidity does not
 14    affect other provisions or applications of this part which can be given effect
 15    without  the  invalid provision or application, and to this end the provisions
 16    of this part are severable.
                                                                        
 17        15-3-1314.  DELAYED APPLICATION. (a) Sections 15-3-1303 through 15-3-1307,
 18    Idaho Code, do not apply to the estate of a decedent who dies prior to January
 19    1, 2005.
 20        (b)  For the estate of a decedent who dies on or after the effective  date
 21    of  this act, but prior to January 1, 2005, and as to which sections 15-3-1303
 22    through 15-3-1307, Idaho Code do not apply, estate taxes must  be  apportioned
 23    pursuant  to  the  law in effect immediately before the effective date of this
 24    act.

Statement of Purpose / Fiscal Impact


                      STATEMENT OF PURPOSE
                                
                             RS 13740
                                 
Idaho Code section 15-3-916 provides for the apportionment of estate
taxes among probate and non-probate assets.  It was adopted as part of
the Uniform Probate Act in Idaho in 1971.  It has been amended in
relatively minor ways in 1999 and 2001 by the authors of this bill.  The
language in the current bill is that of the Uniform Laws Commissioners'
amendments to the Uniform Probate Act, entitled the "Uniform Estate Tax
Apportionment Act", adopted by the National Conference of Commissioners
on Uniform State Laws ("NCCUSL") at its meeting August 1-7, 2003.  For
ease of reference, existing 15-3-916 is repealed in its entirety by the
bill and a new Part 13 of this portion of the Probate Code is added.

A good description of the general purpose of the revised act is contained
in the NCCUSL Prefatory Note to the 2003 Revision of the Uniform Estate
Tax Apportionment Act, which states:

     The Internal Revenue Code places the primary responsibility for
     paying federal estate taxes on the decedent's executor and empowers,
     but does not direct, the executor to collect from recipients of
     certain non-probate transfers included in the taxable estate a
     prorated portion of the estate tax attributable to those types of
     property. In the absence of specific contrary directions of the
     decedent, the Code generally provides as to other transfers that
     taxes are to be borne by the persons who would bear that cost if the
     taxes were paid by the executor prior to distributing the estate.
     The determination of who should bear the ultimate burden of the
     estate taxes is left to state law.

     If a state does not have a statutory apportionment law, the burden
     of the estate taxes generally will fall on residuary beneficiaries
     of the probate estate. This means that recipients of many types of
     nonprobate assets (such as beneficiaries of revocable trusts and
     surviving joint tenants) may be exonerated from paying a portion of
     the tax. Also, it generates a risk that residual gifts to the spouse
     or a charity may result in a smaller deduction and a larger tax. A
     number of states have adopted legislation apportioning the burden
     of estates taxes among the beneficiaries.

     The National Conference of Commissioners on Uniform State Laws'
     original Uniform Estate Tax Apportionment Act, completed in 1958,
     was superseded in 1964 by a revision later incorporated into the
     Uniform Probate Code as UPC  3-916, a section that was slightly
     changed in 1982. The project to replace the 1964 Act and the Uniform
     Probate Code section with an updated version was announced at the
     Conference's 1999 annual meeting, but did not get underway until the
     first meeting of the drafting committee in November of 2000. The
     current Act was approved and recommended for enactment in all states
     at the annual meeting of the National Conference of Commissioners
     on Uniform State Laws in August 2003.

     The Act continues to advance the principle of the 1964 Act that the
     decedent's expressed intentions govern apportionment of an estate
     tax. Statutory apportionment applies only to the extent there is no
     clear and effective decedent's tax burden direction to the contrary.
     Under the statutory scheme, marital and charitable beneficiaries
     generally are insulated from bearing any of the estate tax, and a
     decedent's direction that estate tax be paid from a gift to be
     shared by a spouse or charity with another is construed to locate
     the tax burden only on the taxable portion of the gift. The Act
     provides relief for persons forced to pay estate tax on values
     passing to others whose interests, though contributing to the tax,
     are unreachable by the fiduciary. The Act also addresses the
     allocation of the burden incurred because of several federal
     transfer tax provisions that did not exist when the 1964 Act was
     adopted.

The Act contains substantial Official Comments by NCCUSL, which will be
distributed along with this Bill, and which will be placed in the Idaho
Code if this bill is enacted, which explain the operation of the Act in
great detail and provide numerous examples of the application of the Act,
using specific mathematical figures.  The Act has been modified from the
original NCCUSL act only to the extent necessary to properly integrate
with other Idaho law, or where additional or alternate language would
clarify the Act.  In section 15-3-1303, a new paragraph d was added to
the original NCCUSL act, using language in part from the NCCUSL Official
Comments to section 15-3-1303, to provide "safe harbor" apportionment
language for various documents.

The existing language of section 15-3-916 is now inadequate to provide
for many situations in which estate tax needs to be apportioned and is
causing either manifest unfairness in the apportionment of estate taxes,
or expensive and lengthy litigation to determine the proper
apportionment.

                          FISCAL NOTE

This bill will have no fiscal impact.  As of January 1, 2005, the
essential effective date of this Act, Idaho's pick up estate tax will
have completely expired and only federal estate tax will be apportioned
by this statute.


CONTACT:
Name:  Robert L. Aldridge
Phone: (208) 336-9880 

STATEMENT OF PURPOSE/FISCAL NOTE                       S 1246