CHAPTER 697
HOUSE BILL NO. 849
AS AMENDED BY HOUSE AMENDMENT
NOS. 2 and 7
AN ACT AMENDING TITLE 30, CHAPTER 13, OF THE DELAWARE CODE BY REPEALING AND REVISING CERTAIN LAWS RELATING TO INHERITANCE TAX.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Amend Chapter 13, Title 30 of the Delaware Code by striking said chapter in its entirety and inserting in lieu thereof a new Chapter 13 to read as follows:
CHAPTER 13. INHERITANCE TAX.
SUBCHAPTER I. PROPERTY SUBJECT TO TAX.
"Executor" means the executor or administrator of the decedent, or, if there is no executor or administrator appointed, qualified, and acting in the State of Delaware, then any person in actual or constructive possession of any property of the decedent.
"Gross Estate" of a decedent means the fair market value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, to the extent so provided in this chapter.
"Beneficiary" means any heir, legatee, devisee, grantee or other person who receives or is entitled to property which is included in the gross estate of the decedent under the provisions of this chapter.
sonal property having a situs without this State, unless otherwise specified.
"Real property" means real property situated within this State, but not real property situated without this State unless otherwise specified.
§1302. Property Included in Gross Estate; Resident Decedent.
The gross estate of a decedent who at the time of his death was a resident of this State shall include, to the extent provided for in this Chapter, the value of all real and personal property to the extent of the interest therein of the decedent at the time of his death.
§1303. Property Included in Gross Estate; Non-Resident Decedents.
The gross estate of a decedent who at the time of death was not a resident of this State shall include, to the extent provided for in this Chapter, the value of all real and tangible personal property having an actual situs in this State to the extent of the interest therein of the decedent at the time of his death.
§ 1304. Powers of Appointment.
(a) The value of the gross estate shall include the value of all property with respect to which the decedent exercised or released effective upon his death a general power of appointment, or with respect to which the decedent at any time exercised or released a general power of appointment, either in whole or in part and irrespective of the means by which such exercise or release was accomplished if such property would have been included in the gross estate had it been owned by the decedent.
(b) The value of the gross estate shall include the value of property with respect to which the decedent exercised a general power of appointment within six months of
his death if the property affected by such exercise would have been subject to the provisions of §1306 of this title had such property been owned by the decedent at the time of such exercise and had been transferred by him at that time.
(c) The value of the gross estate shall include the value of property with respect to which the decedent at any time exercised a general power of appointment if the property affected by such exercise would have been subject to the provisions of § 1307 of this title had such property been owned by the decedent at the time of his death or if possession or enjoyment of the property can, through ownership of such interest, be obtained by anyone only by surviving the decedent.
(d) A disclaimer or renunciation, or lapse of a general power of appointment shall not be deemed to be an exercise or release of such power.
(e) For purposes of this chapter the term "general power of appointment" means a power which is exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate; except that a power of appointment which is exercisable by the decedent only in conjunction with another person who is either the creator of the power or who has a substantial interest in the property, subject to the power, which is adverse to exercise of the power in favor of the decedent shall not be deemed a general power of appointment.
(1) The value of property with respect to which the decedent possessed a power of appointment other than a general power of appointment as herein defined and the value of property with respect to which decedent possessed but did not exercise or release a general power of appointment shall not be included in the value of the gross estate of the decedent.
§ 1305. Jointly Owned Property.
The gross estate shall include the value of all property to the extent of the interest therein held as joint tenants by the decedent and any other person, or as tenants by the entirety, or deposited with any banking institution or depository in the joint names of the decedent and any other person and payable to either or the survivor, except such part thereof as may be proved to have originally belonged to such other person or never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money's worth; provided, nevertheless, for up to $200,000 of the value of real property held by the decedent and his or her surviving spouse as tenants by the entirety and other personal property jointly owned by the decedent and his or her surviving spouse, one-half the value of such property shall be conclusively presumed to have been acquired from the decedent by the surviving spouse for an adequate and full consideration in money or money's worth.
§1306. Transfers in Contemplation of Death.
(a) General Rule -- The value of the gross estate shall include the value of all property to the extent of any interest therein, of which the decedent has made any transfer in the nature of a final disposition or distribution thereof (except in the case of a bona fide sale for an adequate and full consideration in money or moneys' worth) in contemplation of death.
(b) Application of general rule -- If the decedent, within a period of six months ending with the date of his death (except in the case of a bona fide sale for an adequate and full consideration in money or money's worth), transferred an interest in property or exercised or released a general power of' appointment, such exercise or transfer or release shall, unless shown to the contrary, be deemed to have been in contemplation of death within the meaning of this section and §§1304 and 1308 (relating to powers of appointment and revocable transfers); but no such exercise or transfer or release made before such six month period shall be treated as having been made in contemplation of death.
§1307. Transfers taking Effect at or after Death.
The gross estate shall include the value of all real and personal property to the extent of the interest therein of which the decedent at any time made a transfer by deed, grant, gift or settlement (except in cases of a bona fide purchase for adequate and full consideration in money or money's worth" intended to take effect in possession or enjoyment at or after the death of the grantor, donoF, or settlor to any person, body politic or corporate, whether resident or non-resident of this State, in trust or otherwise.
§1308. Revocable Transfers.
(a) General Rule -- The value of the gross estate shall include all property to the extent of any interest therein of which decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money's worth), by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power by the decedent alone or by the decedent acting with any other person (unless such other person is a person having a substantial interest in the property, subject to the power, which is adverse to the exercise of the power in favor of the decedent), to alter, amend, revoke, or terminate, or where any such power is relinquished in contemplation of decedent's death.
(b) Date of Existence of Power -- For purposes of subsection (a), the power to alter, amend, revoke, or terminate shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject to a precedent giving of notice of even though the alteration, amendment, revocation or termination takes effect only on the expiration of a stated period after the exercise of the power, whether or not on or before the date of the decedent's death notice has been given or the power has been exercised. In such cases proper adjustment shall be made representing the interests which would have been excluded from the power if the decedent had lived, and for such purpose, if the notice has not been given or the power has not been exercised on or before the date of his death, such notice shall be considered to have been given, or the power exercised, on the date of his death.
(c) For the purposes of Subsection (a) hereof, no relinquishment of a power shall be deemed to be in contemplation of death unless such relinquishment was perfected by the decedent within six months prior to his death.
(a) General Rule -- The value of the gross estate shall include the value of an annuity or other payment receivable by any beneficiary by reason of surviving the decedent under any form of contract or agreement (other than as insurance under policies on the life of the decedent), if, under such contract or agreement, an annuity or other payment was payable to the decedent during lifetime, or the decedent possessed the right to receive such annuity or payment, either alone or in conjunction with another for his life or for a period not ascertainable without reference to his death or for any period which does not, in fact, end before his death.
(b) Amount Includible -- Subsection (a) shall apply to only such part of the value of the annuity or other payment receivable under such contract or agreement as is proportionate to that part of the purchase price therefore contributed by the decedent. For the purposes of this section, any contribution by the decedent's employer or former employer to the purchase price of such contract or agreement (whether or not to an employee's trust or fund forming a part of a pension, annuity, retirement, bonus or profit sharing plan) shall be considered to be contributed by the decedent if made by reason of his employment.
(c) Exemption of Annuities under Certain Trusts and Plan--Notwithstanding the provisions of this section or of any provisions of law, there shall not be deemed to be a transfer from any decedent the value of an annuity or other payment received by any beneficiary (other than the executor or administrator of the decedent's estate) under any arrangement referred to in §2039 of the Federal Internal Revenue Code as presently enacted or hereafter amended, or any successor to such section relating to similar subject matter except to the extent that such annuities are includible under the applicable provisions of the Federal Internal Revenue Code in effect at the time of decedent's death as a part of the gross estate of such decedent.
§1310. Proceeds of Life Insurance.
(a) The gross estate shall include the value of all property to the extent of the amount receivable by the estate as insurance under policies on the life of the decedent.
(b) The proceeds of policies of life insurance otherwise than to the estate of the insured and whether paid directly by the insurer to beneficiaries designated in the policies or to a trustee, testamentary or inter vivos, designated therein and held, managed and distributed by such trustee to or for the benefits of such persons or classes of persons under such plan and in such estates as may have been prescribed by the insured under agreement with such trustee shall be exempt from and not subject to the provisions of this chapter.
§1311. Transfers for Insufficient Consideration.
(a) In General -- If any one of the transfers, trusts, interests, rights or powers enumerated and described in §§1304 and 1306 to 1308 inclusive is made, created, exercised, or relinquished for a consideration in money or money's worth, but is not a bona fide sale for an adequate and full consideration in money or money's worth, there shall be included in the gross estate only the excess of the fair market value at the time of death of the owner of the property otherwise to be included on account of such transaction, over the value of the consideration received therefor by the decedent.
(b) Marital Rights Not Treated as Consideration -For purposes of this chapter, a relinquishment or promised relinquishment of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent's property, or estate, shall not be considered to any extent a consideration "in money or money's worth."
Except as otherwise specifically provided therein, §§1304 to 1311 inclusive, shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whenever made, created, arising, existing, exercised, or relinquished.
§1313. Exemption -- Charitable, Educational, Religious, Etc. Bequests.
The value of any property, estate or interest devised or bequeathed for charitable, educational, library, hospital, historical or religious purposes or for purposes of public benefit or improvement, shall not be included in the gross estate of the decedent and shall not be subject to the taxes imposed in this chapter.
SUBCHAPTER II. RATES AND DETERMINATION OF TAX.
§1321. Basis of Computation of Tax -- Definition of Beneficiary's Net Taxable Share of the Gross Estate.
estate shall be determined by deducting from the value of the property included in the gross estate to which the beneficiary is entitled, that portion of the deductions provided in §1323, which are properly allocable or attributable to or charged against such property.
(b) The rates of tax imposed by §1322 of this chapter shall be the rates in effect as of the date of decedent's death.
A tax computed at the following rates is hereby imposed on the transfer to each beneficiary of his net taxable share of the gross estate as determined in accordance with §1321:
Class A. Where the property or any interest or estate therein passes to or for the use of the husband or wife of the decedent, the tax on such property, interest or estate shall be at the following rates:
On that part of its value exceeding $70,000 and not exceeding $100,000, two per cent;
On that part of its value exceeding $100,000 and not exceeding $200,000, three per cent;
On that part of its value exceeding $200,000, four per cent;
Class B. Where the property or any interest or estate therein passes to or for the use of a parent, grandparent, child by birth, wife or widow of a son or the husband or widower of a daughter, a child by legal adoption, or the lineal descendant of the decedent, the tax on such property, interest or estate shall be at the following rates:
On that part of its value exceeding $3,000 and not exceeding $25,000, one per cent;
On that part of its value exceeding $25,000 and not exceeding $50,000, two per cent;
On that part of its value exceeding $50,000 and not exceeding $75,000, three per cent;
On that part of its value exceeding $75,000 and not exceeding $100,000, four per cent;
On that part of its value exceeding $100,000 and not exceeding $200,000, live per cent;
On that part of its value exceeding $200,000, six percent.
Class C. Where the property or any interest or estate therein passes to or for the use of (1) a brother, or sister, either of the whole or half blood of the decedent, or a lineal descendant of any such brother or sister of the whole or half blood of the decedent, (2) a brother or sister of decedent's parent or the child or children of any brother or sister of the decedent's parent, the tax shall be at the following rates:
On that part of its value exceeding $1,000 and not exceeding $25,000, live percent;
On that part of its value exceeding $25,000 and not exceeding $50,000, six percent;
On that part of its value exceeding $50,000 and not exceeding $100,000, seven percent;
On that part of its value exceeding $100,000 and not exceeding $150,000, eight percent;
On that part of its value exceeding $150,000 and not exceeding $200,000, nine percent;
On that part of its value exceeding $200,000, ten percent.
Class D. In case of property or any interest or estate therein passing to or for the use of any person, not described in Class A, Class B or Class C of this section, the tax shall be at the following rates:
On that part of its value not exceeding $25,000, ten percent;
On that part of its value exceeding $25,000 but not exceeding $50,000, twelve percent;
On that part of its value exceeding $50,000 but not exceeding $100,000, fourteen percent;
On that part of its value exceeding $100,000, sixteen percent.
§1323. Deductions Allowable in Determining Value of Each Beneficiary's Taxable Share of the Net Estate.
(a) In determining the value of each beneficiary's net taxable share of the gross estate, the deductions allowable from the value of property included in the gross estate to which the beneficiary is entitled, shall be:
(2) Administration expenses;
(3) Claims against the estate;
(4) Unpaid mortgages on, or any indebtedness in respect of, property included in the value of the gross estate, the amount of such mortgage or indebtedness to be limited to that proportion of such mortgage or indebtedness as the decedent's interest in such property included in the gross estate bears to the total value of such property.
(b) Where any property, real, personal or mixed, which can be identified as having been received by the decedent, or to which he is entitled, as beneficiary of the estate of any person who died within two years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for property so received, if an inheritance tax under this chapter was collected from such estate, and if such property is included in decedent's gross estate, a deduction of an amount equal to the value of such property at the time of the prior decedent's death shall be allowed.
(c) In determining the value of each beneficiary's net taxable share of the gross estate no deduction shall be allowed by reason or on account of the payment, or liability for payment, of any Delaware inheritance tax, or of any Delaware estate tax, or of any estate, inheritance, legacy or succession tax of the United States or of any state or jurisdiction outside of this State.
§ 1324. Credit for Gift Tax.
(a) In General -- If a tax on a transfer of property by gift has been paid under Chapter 14 of this Title, and thereafter on the death of the donor any amount in respect of such gift is required to be included in the value of the gross estate of the decedent under this chapter, then there shall be credited against the tax imposed by §1322 the amount of the tax paid on the gift under Chapter 14 of this Title with respect to so much of the property which constituted the gift as is included in the gross estate. Unless the will of the decedent, a trust or other legally effective written instrument governing the source of payment of the tax imposed by §1322 provides that such tax is to be paid from a source other than the property referred to in the Foregoing sentence, the credit shall be applied against the tax imposed by § 1322 on the transfer to the beneficiary entitled to such property, or if more than one beneficiary is entitled to such property, then the credit shall be apportioned against the tax imposed by §1322 on the transfer to each beneficiary of his net taxable share of the gross estate in proportion to the share of the property which is so included in the gross estate as that beneficiary is entitled to receive.
§1325. Regulations Governing Valuation of Estates.
The Secretary or his delegate may promulgate such rules and regulations as are deemed necessary or appropriate with respect to determining the value of property includible in the gross estate under this Chapter, including the valuation of annuities, contigent or remainder interests, and the use of tables of mortality.
SUBCHAPTER III. RETURNS AND PAYMENT OF TAX.
§ 1341. Inheritance Tax Returns.
A. Resident Returns
The executor of every resident decedent of this State shall make a return with respect to the inheritance tax imposed by Subchapter II according to the forms and regulations prescribed by the Secretary or his delegate if any one of the following conditions applies:
(a) The value of the gross estate at the death of the decedent exceeds $20,000;
(b) The value of the gross estate at the death of the decedent exceeds $3,000 and one or more of the beneficiaries are persons described in Class B of §1322;
(c) The value of the gross estate at the date of death of the decedent exceeds $1,000 and one or more of the beneficiaries are persons described in Class C of § 1322;
(d) One or more of the beneficiaries are persons described in Class D of §1322;
(e) In all other cases where the decedent owned an inheritable or joint title to real property.
The executor of every non-resident decedent of this State who, at the time of his death, owned any tangible personal property, real property, or any interest therein, which is made subject to the provisions of this Chapter by the provisions of §1303, shall make a return with respect to the inheritance tax imposed by Subchapter II according to the forms and regulations prescribed by the Secretary or his delegate.
§1342. Time and Place for Filing Returns and Payments.
(a) Returns made under this chapter shall be filed within nine months of the date of the decedent's death.
(b) Any executor required to make and file a return under this chapter shall, without assessment, notice or demand, pay the tax due to the Department of Finance on or before the date fixed for filing such return, determined without regard to any extension of time for filing the return.
() The Secretary of Finance shall prescribe the place of filing any returns required under this chapter and for the payment of any tax due under this chapter.
§1343. Extension of Time for Filing and Payment.
(a) The Secretary of Finance upon written request may extend the time for filing any return required under this chapter and may extend the time for payment of the tax shown or required to be shown on such return for a reasonable period from the date fixed for the filing of the return or for the payment of the tax.
(b) If the time for filing the federal estate tax return of the decedent is extended under the federal internal revenue laws, the time for filing any return required under this chapter shall be automatically extended for a like period, provided that the Secretary or his delegate shall be furnished with an executed copy of such extension grant before or with the filing of the return required under this chapter.
() Any extension of the time for payment granted under subsection (a) of this section shall extend the time within which any assessment may be made for an equal period of time.
(a) Every executor shall make payments of the tax out of the property of the decedent in accordance with the instructions of the decedent expressed in the provisions of a valid will, trust or other legally effective written instrument governing the source of payment of the tax. Unless such instructions provide otherwise, each beneficiary shall be personally liable for the tax imposed under §1323 on the transfer to him of his net taxable share of the gross estate; and the executor shall determine the value of each beneficiary's net taxable share of the gross estate and the tax which is imposed with respect to the transfer thereof, and prior to distribution the executor shall deduct the tax from each beneficiary's net taxable share of the gross estate or collect the tax from the beneficiary entitled to such property. No executor shall deliver or be compelled to deliver any specific legacy or property subject to the tax to any beneficiary until he has collected or otherwise provided for the tax due thereon.
Any executor who delivers any specific legacy or property subject to the tax to any beneficiary without collecting or otherwise providing for payment of the tax due shall be personally liable for such tax.
() In all cases other than those referred to in subsection (c) of this section in which any property required to be included in the gross estate does not come into possession of the executor, and unless instructions of the decedent within the meaning of subsection (a) direct payments of the tax out of other property of the decedent, the executor shall recover from the beneficiaries in possession of such property an amount equal to the tax imposed under §1322 with respect to the transfer of such property. The Court of Chancery of the county in which the decedent's estate is being administered may by order direct the payment of such amount to the executor by such beneficiary or beneficiaries in possession.
(a) Where a tax is imposed on an estate for life or for a term of years, or to terminate on the expiration of a certain period, or on any remainder or reversionary interest,
the tax on such estate or interest as between the executor, trustee, tenant for life or for years, remainderman or reversioner and other beneficiaries shall be charged to the corpus of the property in which such estate exists, unless otherwise provided for by the testator or transferor, and shall be payable at once in the same manner and within the same time as if the estate or interest had vested in possession.
§1345. Special Lien for Inheritance Taxes.
(a) Unless the tax imposed by this chapter is sooner paid in full or becomes unenforceable by reason of lapse of time, it shall be a lien upon the gross estate of the decedent for ten years from the date of death, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien.
(b) If the tax imposed under this chapter is not paid when due, then the spouse, transferee, trustee, surviving tenant, person in possession of the property by reason of the exercise, non-exercise, or release of a power of appointment, or beneficiary who receives or has on the date of the decedent's death, property included in the gross estate to the extent of the value at the time of the decedent's death of such property, shall be personally liable for such tax. Any part of such property transferred by (or transferred by a transferee of) such spouse, transferee, trustee, surviving tenant, person in possession, or beneficiary, to a purchaser, or holder of a security interest, who purchases or takes a security interest iri such property for value and without notice of the lien, shall be divested of the lien provided in subsection (a) hereof and a like lien shall then attach to all property of such spouse, transferee, trustee, surviving tenant, person in possession, or beneficiary, or transferee of any such person, except any part transferred to such a purchaser or holder of a security interest.
() If the tax imposed by this Chapter is not paid when due, the Secretary of Finance or his delegate may file in the Office of the Prothonotary, as clerk of the Superior Court of the county in which the real or personal property of the decedent is located, a certificate specifying the amount of tax, addition to tax, penalty and interest due, the name and last known address of the person described in Section 1345 (d) or Section 1346 (b) liable for the amount and the fact that the Secretary of Finance or his delegate has complied with all the provisions of this Chapter in the assessment of the tax. From the time of the filing, the amount set forth in the certificate shall thereupon be and constitute a judgment of record in such court with like force and effect as any other judgment of the court. The Prothonotary shall enter the certificates in the regular judgment docket and index them as soon as they are filed. No property, legal or equitable, wages, salaries, deposits or moneys in banks, savings institutions or loan associations, or other property or income of any person described in Section 1345 (d) or Section 1346 (b) shall be exempt from execution or attachment process issued upon, or for collection, of any judgment except as otherwise provided by law.
SUBCHAPTER IV. PROCEDURE AND ADMINISTRATION AND ENFORCEMENT.
§1351. Incorporation of Certain Personal Income Tax Procedure and Administration Provisions.
The provisions of §118l through 1203 inclusive, of this Title, other than §1194(b), §1195(c), (g), and (1), §I196(b) and (c), shall apply to the returns and determination of tax due under this chapter, and the words "income tax" whenever they appear in those sections shall be deemed to refer to the inheritance tax, and references to the "taxpayer" whenever they appear in those sections shall be deemed to refer to the executor.
§1352. Incorporation of Certain Personal Income Tax Enforcement Provisions.
The provisions of §1211 through 1244 inclusive, of this Title other than §I214 and §I218 shall apply to the enforcement of this chapter as if the chapter referred to therein were this chapter and the tax referred to therein were the inheritance tax.
§ 1353. Rules and Regulations.
The Secretary of Finance or his delegate shall have the authority to administer and enforce the provisions of this Chapter, and pursuant thereto may issue such rules and regulations, and require such facts and information as may be deemed necessary or appropriate."
Section 2. If any clause, sentence, paragraph or part of this Act or the application thereof to any person or circumstances, shall, for any reason, be adjudged by a court of competent jurisdiction, to be invalid, such judgment shall not affect, impair or invalidate the remainder of this Act.
Section 3. The provisions of this Act shall become effective on the next first day of January after enactment and shall apply to decedents dying on or after the effective day of this Act.
Approved August 5, 1976