CHAPTER 150

FORMERLY

HOUSE BILL NO. 185

AN ACT TO AMEND TITLE 12 OF THE DELAWARE CODE RELATING TO DECEDENTS' ESTATES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :

Section 1. Amend §902(a)(2), Title 12 of the Delaware Code by striking paragraph (2) and by substituting in its place the following:

"(2) The extent of the inclusion in the decedent’s gross estate for federal estate tax purposes of certain joint interests of the decedent and the surviving spouse under §2040(b) of the Code shall be modified as follows: the decedent’s gross estate for federal estate tax purposes shall include one-half of any interest in property created at any time, including interests created before January 1, 1977, held by the decedent and the surviving spouse as

(a) tenants by the entirety, or

(b) joint tenants with right of survivorship, but only if the decedent and the surviving spouse are the only joint tenants.".

Section 2. Amend §902(b), Title 12 of the Delaware Code by striking subsection (b) and by substituting in its place the following:

"(b) For purposes of this chapter, if the federal estate tax is not applicable, because of its permanent or temporary repeal, to the estates of persons dying on the date of the decedent’s death, any reference in this chapter to 'the Code' as defined in subsection (a)(1) of this section, 'federal estate tax purposes', and to other terms dependent upon the federal estate tax provisions of the Code shall be deemed to refer to the provisions of the Code in effect on the last date on which the federal estate tax was applicable to the estates of persons dying before the date of the decedent’s death.".

Section 3. Amend §902, Title 12 of the Delaware Code by adding a new subsection (c) as follows:

"(c) In every case where an elective share petition has been filed, the personal representative of the estate shall prepare a Form 706 (United States Estate Tax Return) for the estate, regardless of whether such form is required to be filed. If such form is not required to be filed because of the permanent or temporary repeal of the federal estate tax, the personal representative shall use in such preparation the Form 706, or its equivalent form, last authorized by the Internal Revenue Service before the repeal became effective. A copy of the form must be provided to the surviving spouse by the latest of the following dates:

(1) the due date for the Form 706, as extended;

(2) if a Form 706 or an equivalent form is not required to be filed, whether or not because of the permanent or temporary repeal of the federal estate tax, 15 months from the date of the decedent’s death; or

(3) three months after the elective share petition has been timely filed.".

Section 4. Amend §903(1)a., Title 12 of the Delaware Code by deleting §903(1)a. and by substituting in its place the following:

"a. Property which is a part of the decedent’s estate which passes to the surviving spouse by testate or intestate succession;".

Section 5. Amend §903(1)c., Title 12 of the Delaware Code by deleting §903(1)c. and by substituting in its place the following:

"c. One-half of any interest in property created at any time, including interests created before January 1, 1977, held by the decedent and the surviving spouse as

(i) tenants by the entirety, or

(ii) joint tenants with right of survivorship, but only if the decedent and the surviving spouse are the only joint tenants;".

Section 6. Amend §903(1)f., Title 12 of the Delaware Code by striking §903(1)f. and by substituting in its place the following:

"f. Any lump sum immediately payable to the surviving spouse and the present value of amounts payable to the surviving spouse in the future, under any trust, contract or other arrangement, which are attributable to proceeds of insurance, including accidental death benefits, on the life of the decedent and includible in the decedent’s gross estate for federal estate tax purposes;".

Section 7. Amend §903(1)g., Title 12 of the Delaware Code by striking §903(1)g. and by substituting in its place the following:

"g. Any lump sum immediately payable to the surviving spouse and the present value of amounts payable to the surviving spouse in the future under annuity contracts under which the decedent was the primary annuitant; under any public or private plan or arrangement for the payment of pension or other retirement benefits, disability compensation, death benefits, salary continuation, or deferred compensation; and under any individual retirement account, but not including payments to the surviving spouse under the federal Social Security system or any other similar state or federal retirement system providing an individual right to a surviving spouse to receive payments as a result of the decedent’s death;".

Section 8. Amend §903(1)h., Title 12 of the Delaware Code by striking §903(1)h. and by substituting in its place the following:

"h. Any lump sum immediately payable to the surviving spouse and the present value of amounts payable to the surviving spouse in the future, under any trust, contract or other arrangement, which are attributable to property transferred by the decedent during the decedent’s lifetime; and".

Section 9. Amend §903(1)i., Title 12 of the Delaware Code by striking §903(1)i. and by substituting in its place the following:

"i. The value of the share of the surviving spouse resulting from rights in community property owned by the decedent in this or any other state.".

Section 10. Amend §903(1), Title 12 of the Delaware Code by striking in its entirety the unnumbered paragraph at the end of §903(1).

Section 11. Amend §903, Title 12 of the Delaware Code by adding a new §903(3) as follows:

"(3) For purposes of this section, property or an interest in property considered derived from the decedent by virtue of death which has been disclaimed or renounced by the surviving spouse shall be deemed not to have been disclaimed or renounced for the purpose of computing the value of the property transferred to the surviving spouse under this chapter, subject to the following:

a. If the surviving spouse is the primary beneficiary of an interest in a trust that:

i. does not qualify for the marital deduction for federal estate tax purposes, whether or not an election is made to qualify the trust for a marital deduction for federal estate tax purposes under the Code, and

ii. does not provide the surviving spouse with amounts payable in the future for which a present value can be determined as of the date of the decedent’s death,

any interest in the trust that the surviving spouse disclaims or renounces shall not be considered derived by the surviving spouse from the decedent under subsection (1) of this section.

b. The surviving spouse shall be considered the primary beneficiary of a trust if:

i. the surviving spouse is designated as the primary beneficiary in the trust’s governing instrument;

ii. there are no other beneficiaries of the trust entitled to distributions from the trust during the surviving spouse’s lifetime; or

iii. there are other beneficiaries of the trust entitled to discretionary distributions from the trust during the surviving spouse’s lifetime, but the discretionary distributions can be made only after taking into consideration the interest of the surviving spouse, and if the discretionary distributions are based on an ascertainable standard.".

Section 12. This Act shall be effective with respect to the estates of decedents dying on or after January 1, 2008.

Approved July 17, 2007