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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
]]]] 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 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