CHAPTER 15

FORMERLY

HOUSE BILL NO. 84

AN ACT TO AMEND CHAPTER 13, TITLE 30 AND CHAPTER 23, TITLE 12, OF THE DELAWARE CODE RELATING TO THE INHERITANCE TAX.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (three-fifths of all members elected to each House thereof concurring therein):

Section 1. Amend §1341, Chapter 13, Title 30 of the Delaware Code by striking the figures 110,000" and 13,000" as they appear in paragraphs (2) and (3), respectively, of subsection (a) of said section and substitute respectively in lieu thereof the figures "$25,000" and "$5,000".

Section 2. Amend §1345(a), Chapter 13, Title 30 of the Delaware Code by inserting at the end of said section after word "lien" and before the period "." the following:

and except for any property passing to the spouse of a decedent, which shall not be subject to the lien provided by this subsection"

Section 3. Amend §1341, Chapter 13, Title 30 of the Delaware Code by striking in its entirety paragraph (a)(1) of said section and substituting in ,lieu thereof the following:

"(1) The value of the gross estate at the death of the decedent (excluding property owned as tenants by the entirety with a spouse) exceeds $250,000; or one of the beneficiaries is a person described in Class A of §1322 of this Title and there is imposed a tax under subsection (1) of §1322 of this Title".

Section 4, Amend §2304, Chapter 23, title 12 of the Delaware Code by striking said section in its entirety and substitute in lieu thereof a new §2304 to read as follows:

"§2304. Inheritance Tax Returns or Affidavits.

Whenever a return is required under §1341 of Title 30, a certificate of the Division of Revenue shall be filed with the Register of Wills of the county in which letters have been granted and, In addition, with the Register of Wills of the county or counties in which the decedent owned real property. In all cases when no return is required under §1341 of Title 30, an affidavit, in a form approved by the Division of Revenue, shall be completed and filed by the personal representative, surviving Joint tenant or person in possession of the estate with the Register of Wills. The Secretary of Finance may, in addition, require that a copy of said affidavit be filed with him."

Section 5. Amend §1341, Chapter 13, Title 30 of the Delaware Code by adding the following phrase after the word "property" and before the period "." as they appear at the end of paragraph (a)(5) of said Section:

"provided such property passes to a person described in Classes 8, C or D of §1322 of this Title"

Section 6. Amend §1341, Chapter 13, Title 30 of the Delaware Code by striking the word "title" as it appears in subsection (b) of said Section and substitute in lieu thereof the following: "Title, and would have had to file a return if the decedent was a Delaware resident".

Section 7. Amend §1345, Chapter 13, Title 30 of the Delaware Code by striking the phrase "lapse of time, It as it appears in subsection (a) of said section and substitute in lieu thereof the following:

"lapse of time, or unless a certificate or affidavit pertaining to such tax has been filed with the Register of Wills as set forth in §2304 of Title 12, the tax"

Section 8. Amend §1304(a), Chapter 13, Title 30 of the Delaware Code by adding at the end thereof the following:

For purposes of the preceding sentence, a general power of appointment shall be deemed to have been created (1) in the case of a general power of appointment created by will, on the date of the death of the testator and (II) in the case of a general power of appointment created by an inter vivos instrument, on the date that the instrument is no longer revocable pursuant to the uncontrolled volition of the person having such a power of revocation."

Section 9. Amend §1304, Title 30 of the Delaware Code by adding at the end thereof the following new subsection (h):

"(h) If there is a specific property included in the gross estate for Delaware inheritance tax purposes that is not includible in the gross estate for Federal estate tax purposes and there is a tax imposed under Chapter 15 of this Title on the estate, then for purposes of this chapter only, that specific property shall be disregarded in computing the inheritance tax due."

Section 10. Amend §1309, Chapter 13, Title 30 of the Delaware Code by striking subsection (c) of said section in its entirety and substitute in lieu thereof a new subsection (c) to read as follows:

"(c) Exemption of Annuities and Other Payments Under Certain Trusts and Plans -- Notwithstanding the provisions of this Section or any provision of law, there shall not be deemed to be a transfer from any decedent the value of an annuity or other payment received by the estate of the decedent or by a beneficiary under qualified pension, profit sharing, and stock bonus plans described in 26 U.S.C. §401(a) of the Federal Internal Revenue Code, a qualified annuity plan or contract described in 26 U.S.C. §403(a) or (b) of the Federal Internal Revenue Code; or an individual retirement account, annuity or bond described in 26 U.S.C. §408(a) or (b) of the Federal Internal Revenue Code."

Section 11. Amend §1314, Chapter 13, Title 30 of the Delaware Code by striking subsection (a) of said section in its entirety and substitute in lieu thereof a new subsection (a) to read as follows:

"(a) In General -- If the decedent was, at the time of his death, a resident of the State and the person filing the return of tax imposed by this Chapter elects the application of this Section, the value of qualified real property shall be its value under 26 U.S.C. §2032A of the Federal Internal Revenue Code, or such similar subsequent tax legislation, hereinafter referred to as 'I.R.C. §2032A, whether or not a federal estate tax return is required to be filed on behalf of such decedent and whether or not an election is made to value property under I.R.C. §2032A for federal estate purposes. The aggregate decrease in the value of qualified real property with respect to the gross estate of any decedent shall not exceed $500,000."

Section 12. Amend §1323, Chapter 13, Title 30 of the Delaware Code by striking subsection (c) of said section in its entirety and by redesignating existing subsection (d) of said §1323 as subsection (c) of said section.

Section 13. Amend Chapter 13, Title 30 of the Delaware Code by adding thereto a new §1326 to read as follows:

"§1326. Credit for Previously Taxed Property.

(a) Where any property, real, personal, or mixed, is included in the decedent's gross estate for purposes of this Chapter and such property can be identified as having been received by the decedent (or that the decedent was entitled to receive) as beneficiary of the estate of any person who died within 2 years prior to the death of the decedent, or which can be identified has having been acquired by the decedent in exchange for the property so received, if an inheritance tax under this Chapter was collected with respect to such property, a credit of an amount equal to the tax collected with respect to such property at the time of the prior decedent's death shall be allowed. 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 of this Title provides that the tax attributable to such property is to be paid from a source other than the property referred to in the preceding sentence, the credit shall be applied against the tax imposed by §1322 of this Title on the transfer to the beneficiary entitled to. property, or if more than one beneficiary is entitled to such property, then the credit shall be apportioned against the tax imposed by §1322 of this Title 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. For purposes of this Section, the tax collected with respect to such property shall be an amount equal to the excess of the inheritance tax collected with respect to such prior decedent's estate over the inheritance tax computed without including such property in such prior decedent's gross estate for inheritance tax purposes.

(b) Subsection (a) of this Section notwithstanding, the maximum credit allowable pursuant to this Section shall be an amount equal to the tax imposed by §1322 of this Title on the specific property to which this section applies only."

Section 14. Amend §1344(b), Title 30 of the Delaware Code by striking the phrase "subsection (c)" as it appears therein and substitute in lieu thereof the phrase "subsections (c) and (d)" and by adding to said section a new subsection (d) to read as follows:

"(d) If any part of the gross estate consists of the value of property which is includible in the gross estate by reason of §1304(d) (relating to certain property for which a marital deduction was previously allowed), the decedent's estate shall be entitled to recover from the person receiving the property the tax imposed under §1322 of this Title on the transfer to him of his net taxable share of the property so included in the gross estate."

Section 15. Amend Chapter 13, Title 30 of the Delaware Code by adding thereto a new §1346 to read as follows:

"§1346. Release of Lien as to Specific Property.

(a) Subject to such regulations as the Secretary of Finance may prescribe, the Secretary may, upon submission of a complete application by the executor, release the lien imposed by §1345 of this Title with respect to any property subject to tax under Chapters 13 and 15 of this Title provided such application sets forth a showing of just cause for the release of the specific property from the lien. The sale or proposed sale of the specific property shall be deemed to be just cause for the release of that property from the lien. Such application shall include:

(1) A description of the property to be released.

(2) The value of that property.

(3) An estimate of the total value of all property subject to the lien of §1345 of this Title.

(4) An estimate of the tax due under Chapters 13 and 15 of this Title with respect to the entire estate.

(5) The classification of the beneficiary of the specific property according to §1322 of this Title.

(6) An estimate of the amount of tax due with respect to the specific property and the basis for such estimate.

(7) The reason for the request of early release of the specific property and the prejudice suffered if such property is not released as requested.

(8) A statement, under penalty of perjury, that the facts contained in the application are true and correct to the best of the executor's knowledge.

(9) A proposed form of release of lien as to the specific property.

(10) Payment of the amount of tax estimated to be due with respect to the specific property to be released.

b. The Secretary shall respond to such application within 30 days of receipt or the application shall be deemed granted. The response need not be a final one to qualify as a response under this provision. A certification by the executor under penalty of perjury, that no response of any kind has been received shall constitute conclusive proof of such non-receipt as to anyone who relies in good faith thereon.

c. If the Secretary finds the application for the release of the specific is complete pursuant to subsection (a) herein, he shall release the specific upon receipt of payment of the estimated tax due with respect to the specific under §1322 of this Title.

d. In no event shall the release of any specific property from the lien of §1345 Title affect the personal liability of the transferors of such property or the for the tax due under Chapters 13 or 15 of this Title."

e. If there has been an underpayment of the tax due with respect to the specific property at the time of the release of lien by the Secretary of Finance, there shall be assessed interest at the amount of 1% per month as to the amount of the underpaid tax liability under Chapter 13 commencing nine months from the date of the decedent's death and continuing until the time of payment of the actual tax due as reflected on the final return as accepted by the Division of Revenue.

Section 16. This Act shall be effective for decedents dying on or after January 1, 1989.

Approved May 8, 1989.