CHAPTER 119

STATE REVENUE APPORTIONMENT OF FEDERAL AND STATE ESTATE TAXES

AN ACT PROVIDING FOR APPORTIONMENT OF FEDERAL AND STATE ESTATE TAXES.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. (a). Whenever it appears upon any accounting, or in any appropriate action or proceeding, that an executor, administrator, temporary administrator, trustee, or other person acting in a fiduciary capacity, has after the effective date of this Act paid an estate tax levied or assessed under the provisions of Article 11 of Chapter 6 of the Revised Code of Delaware, 1935, as amended (subdivision 143 of said Code), providing for a tax known as "Delaware Estate Tax", or under any law amendatory thereof or supplemental thereto, or under any other law hereafter enacted providing for the same or a different estate tax, or under the provisions of any estate tax law of the United States heretofore or hereafter enacted, upon or with respect to any property required to be included in the gross estate of a decedent under the provisions of any such law, the amount of the tax so paid, except in a case where a testator otherwise directs in his will, and except in a case where by written instrument executed inter vivos direction is given for apportionment within the fund of taxes assessed upon the specific fund dealt with in such inter vivos instrument, shall be equitably prorated among the persons interested in the estate to whom such property is or may be transferred or to whom any benefit accrues. Such proration shall be made by the Orphans' Court of the County in which any such accounting has been made, or in which any such appropriate action or proceeding is pending, in the proportion, as near as may be, that the value of the property, interest, or benefit of each such person bears to the total value of the property, interests, and benefits received by all such persons interested in the estate, except that in making such proration allowances shall be made for any exemptions granted by the Act imposing the tax and for any deductions allowed by such Act for the purpose of arriving at the value of the net estate; and except that in cases where a trust is created, or other provision made whereby any person is given an interest in income, or an estate for years, or for life, or other temporary interest in any property or fund, the tax on both such temporary interest and on the remainder thereafter shall be charged against and be paid out of the corpus of such property or fund without apportionment between remainders and temporary estates. For the purposes of this Section the term "persons interested in the estate" shall with respect to both State and Federal taxes include all persons who may be entitled to receive or who have received any property or interest which is required to be included in the gross estate of a decedent, or any benefit whatsoever with respect to any such property or interest, whether under a will or intestacy, or by reason of any transfer, trust, estate, interest, right, power, or relinquishment of power taxable under any of the aforementioned laws providing for the levy or assessment of estate taxes.

The tax shall be paid by the executor, administrator, or other fiduciary as such out of the estate before its distribution. In all cases in which any property required to be included in the gross estate does not come into the possession of the executor, administrator or other fiduciary as such, he shall recover from whoever is in possession, or from the persons interested in the estate, the proportionate amount of such tax payable.by the persons interested in the estate with which such persons are chargeable under the provisions of this Section, and the said Orphans' Court may by order direct the payment of such amount of tax by such persons to the executor, administrator, or other fiduciary.

No executor, administrator, or other person acting in a fiduciary capacity shall be required to transfer, pay over, or distribute any fund or property, which may have either a Federal or a State tax imposed upon it, or which may be liable for the payment of any Federal or State tax, until the amount of such tax or taxes due from the devisee, legatee, distributee, or other person to whom such property is transferred, is paid or, if the apportionment of tax has not been determined, adequate security is furnished by the transferee for such payment.

(b) The said Orphans' Court is hereby granted jurisdiction and all power necessary to make the prorations and the orders directing the payment of amounts of tax contemplated by subdivision (a) of this Section. Such jurisdiction may be invoked by petition filed in said Court by any such executor, administrator, temporary administrator, trustee, or other person acting in a fiduciary capacity, or any other person having such an interest as may in the judgment of said Court entitle him to file such a petition. The said Orphans' Court, upon making a determination as provided in subdivision (a) of this Section, shall make a decree or order directing the executor, administrator, or other fiduciary to charge the prorated amounts against the persons against whom the tax has been so prorated, in so far as he is in possession of property or interests of such persons against whom such charge has been made, and summarily directing all other persons against whom the tax has been so prorated or who are in possession of property or interests of such persons to make payment of such prorated amounts to such executor, administrator or other fiduciary. Every such petition shall make all interested persons parties defendant to the proceeding and they shall be summoned, or otherwise notified, as provided by the Rules of the Orphans' Court relating to partition causes. The said Court may hear the cause upon oral testimony of witnesses or otherwise.

Section 2. All acts or parts of acts inconsistent with this Act are hereby repealed to the extent of such inconsistency only.

Approved April 2, 1947.