Law:Division 10. Proration Of Taxes (California)

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Contents

Chapter 1. Proration Of Estate Taxes

Article 1. General Provisions

Ca Codes (prob:20100-20101) Probate Code Section 20100-20101



20100. Except where the context otherwise requires, the following definitions shall govern the construction of this chapter: (a) "Estate tax" means a tax imposed by any federal or California estate tax law, now existing or hereafter enacted, and includes interest and penalties on any deficiency. (b) "Person interested in the estate" means any person, including a personal representative, entitled to receive, or who has received, from a decedent while alive or by reason of the death of the decedent any property or interest therein. (c) "Personal representative" includes a guardian, conservator, trustee, or other person charged with the responsibility of paying the estate tax. (d) "Property" means property included in the gross estate for federal estate tax purposes. (e) "Value" means fair market value as determined for federal estate tax purposes.

20101. (a) This chapter does not apply to persons interested in the estate of a decedent who died before January 1, 1987. (b) Notwithstanding the repeal of former Article 4a (commencing with Section 970) of Chapter 15 of Division 3 of the Probate Code by Chapter 783 of the Statutes of 1986, the provisions of that former article remain applicable where the decedent died before January 1, 1987. No inference as to the applicable law in effect before January 1, 1987, shall be drawn from the enactment of this chapter.


Article 2. Proration

Ca Codes (prob:20110-20117) Probate Code Section 20110-20117



20110. (a) Except as provided in subdivision (b), any estate tax shall be equitably prorated among the persons interested in the estate in the manner prescribed in this article. (b) This section does not apply: (1) To the extent the decedent in a written inter vivos or testamentary instrument disposing of property specifically directs that the property be applied to the satisfaction of an estate tax or that an estate tax be prorated to the property in the manner provided in the instrument. As used in this paragraph, an "instrument disposing of property" includes an instrument that creates an interest in property or an amendment to an instrument that disposes of property or creates an interest in property. (2) Where federal law directs otherwise. If federal law directs the manner of proration of the federal estate tax, the California estate tax shall be prorated in the same manner.


20111. The proration required by this article shall be made in the proportion that the value of the property received by each person interested in the estate bears to the total value of all property received by all persons interested in the estate, subject to the provisions of this article.


20112. (a) In making a proration of the federal estate tax, allowances shall be made for credits allowed for state or foreign death taxes in determining the federal tax payable and for exemptions and deductions allowed for the purpose of determining the taxable estate. (b) In making a proration of the California estate tax, allowances shall be made for (1) credits (other than the credit for state death taxes paid) allowed by the federal estate tax law and attributable to property located in this state, and (2) exemptions and deductions allowed by the federal estate tax law for the purpose of determining the taxable estate attributable to property located in this state. (c) In making a proration of an estate tax, interest on extension of taxes and interest and penalties on any deficiency shall be charged to equitably reflect the benefits and burdens of the extension or deficiency and of any tax deductions associated with the interest and penalties.


20113. If a trust is created, or other provision made whereby a person is given an interest in the income of, an estate for years or for life in, or other temporary interest in, any property, the estate tax on both the temporary interest and on the remainder thereafter shall be charged against and paid out of the corpus of the property without apportionment between remainders and temporary estates.


20114. (a) As used in this section, "qualified real property" means qualified real property as defined in Section 2032A of the Internal Revenue Code (26 U.S.C. Sec. 2032A). (b) If an election is made pursuant to Section 2032A of the Internal Revenue Code (26 U.S.C. Sec. 2032A), the proration shall be based upon the amount of federal estate tax that would be payable but for the election. The amount of the reduction in federal estate tax resulting from an election pursuant to Section 2032A of the Internal Revenue Code (26 U.S.C. Sec. 2032A) shall reduce the tax that is otherwise attributable to the qualified real property that is the subject of the election. If the tax that is otherwise attributable to the qualified real property is reduced to zero pursuant to this subdivision, any excess amount of reduction shall reduce the tax otherwise payable with respect to the other property, this amount to be equitably prorated in accordance with Section 20111. (c) If additional federal estate tax is imposed under subsection (c) of Section 2032A of the Internal Revenue Code (26 U.S.C. Sec. 2032A) by reason of early disposition or cessation of qualified use, the additional tax shall be a charge against the portion of the qualified real property to which the additional tax is attributable, and shall be equitably prorated among the persons interested in that portion of the qualified real property in proportion to their interests.


20114.5. (a) As used in this section: (1) A reference to Section 4980A of the Internal Revenue Code means Section 4980A of the federal Internal Revenue Code of 1986 as amended (26 U.S.C. Sec. 4980A) and also means former Section 4981A of the federal Internal Revenue Code of 1986. (2) "Excess retirement accumulation" has the meaning given it in paragraph (3) of subsection (d) of Section 4980A. (b) If the federal estate tax is increased under subsection (d) of Section 4980A of the Internal Revenue Code, the amount of the increase shall be a charge against the persons who receive the excess retirement accumulation that gives rise to the increase, and shall be equitably prorated among all persons who receive interests in qualified employer plans and individual retirement plans to which the excess retirement accumulation is attributable.


20115. Where the payment of any portion of the federal estate tax is extended under the provisions of the federal estate tax law, the amount of extended tax shall be a charge against the persons who receive the specific property that gives rise to the extension.


20116. (a) If all property does not come into the possession of the personal representative, the personal representative is entitled, and has the duty, to recover from the persons interested in the estate the proportionate amount of the estate tax with which the persons are chargeable under this chapter. (b) If the personal representative cannot collect from any person interested in the estate the amount of an estate tax apportioned to the person, the amount not recoverable shall be equitably prorated among the other persons interested in the estate who are subject to proration.


20117. (a) If a person is charged with or required to pay an estate tax greater than the amount prorated to that person because another person does not pay the amount of estate tax prorated to the other person, the person charged with or required to pay the greater amount has a right of reimbursement against the other person. (b) The right of reimbursement may be enforced through the personal representative in the discretion of the personal representative, or may be enforced directly by the person charged with or required to pay the greater amount, and for the purpose of direct enforcement the person is subrogated to the position of the personal representative. (c) The personal representative or person who has a right of reimbursement may commence a proceeding to have a court determine the right of reimbursement. The provisions of Article 3 (commencing with Section 20120) shall govern the proceeding, with changes necessary to make the provisions appropriate for application to the proceeding, and the court order determining the right of reimbursement is an enforceable judgment.


Article 3. Judicial Proceedings

Ca Codes (prob:20120-20125) Probate Code Section 20120-20125



20120. (a) The personal representative or any person interested in the estate may commence a proceeding to have a court determine the proration pursuant to this chapter. (b) A proceeding under this article shall be commenced in the court in which the estate of the decedent was administered or, if no administration proceedings have been commmenced, in the superior court of any county in which the estate of the decedent may be administered. (c) If proceedings for the administration of the decedent's estate are pending, a proceeding under this article shall be combined with the administration proceedings. If a proceeding is commenced at any time before final distribution, there shall be no additional filing fee.


20121. A proceeding under this article shall be commenced by filing a petition that sets forth all of the following information: (a) The jurisdictional facts. (b) Other facts necessary for the court to determine the proration of estate taxes.


20122. Not less than 30 days before the hearing, the petitioner shall do both of the following: (a) Cause notice of the hearing and a copy of the petition to be mailed to the personal representative and to each person interested in the estate against whom prorated amounts may be charged pursuant to paragraph (1) of subdivision (a) of Section 20123. (b) Cause a summons and a copy of the petition to be served on each person interested in the estate who may be directed to make payment of prorated amounts pursuant to paragraph (2) of subdivision (a) of Section 20123. The summons shall be in the form and shall be served in the manner prescribed in Title 5 (commencing with Section 410.10) of Part 2 of the Code of Civil Procedure.


20123. (a) The court, upon making a determination as provided in this article, shall make an order: (1) Directing the personal representative to charge the prorated amounts against the persons against whom an estate tax has been prorated insofar as the personal representative is in possession of any property or interests of the persons against whom the charge may be made. (2) Summarily directing all other persons against whom an estate tax has been prorated to make payment of the prorated amounts to the personal representative. (b) A court order made under this section is a judgment that may be enforced against the persons against whom an estate tax has been prorated.

20124. Upon petition by the personal representative or any person interested in the estate, the court shall modify an order made pursuant to this article whenever it appears that the amount of estate tax as actually determined is different from the amount of estate tax on which the court based the order.


20125. (a) A personal representative acting or resident in another state may commence an action in this state to recover from a person interested in the estate, who either is resident in this state or owns property in this state, the amount of the federal estate tax, or an estate tax or death duty payable to another state, apportioned to the person. (b) The action shall be commenced in the superior court of any county in which administration of the estate of the decedent would be proper or, if none, in which any defendant resides. (c) For purposes of the action the apportionment by the court having jurisdiction of the administration of the decedent's estate in the other state is prima facie correct.


Chapter 2. Proration Of Taxes On Generation-skipping Transfer

Article 1. General Provisions

Ca Codes (prob:20200-20201) Probate Code Section 20200-20201



20200. Except where the context otherwise requires, the following definitions shall govern the construction of this chapter: (a) "Generation-skipping transfer tax" means a tax imposed by any federal or California generation-skipping transfer tax law, now existing or hereafter enacted, and includes interest and penalties on any deficiency. (b) "Property" means property on which a generation-skipping transfer tax is imposed. (c) "Transferee" means any person who receives, who is deemed to receive, or who is the beneficiary of, any property. (d) "Trustee" means any person who is a trustee within the meaning of the federal generation-skipping transfer tax law, or who is otherwise required to pay a generation-skipping transfer tax. (e) "Value" means fair market value as determined for generation-skippi ng transfer tax purposes.


20201. (a) This chapter does not apply to transferees of property of a decedent who died before January 1, 1987. (b) No inference as to the applicable law in effect before January 1, 1987, shall be drawn from the enactment of this chapter.



Article 2. Proration

Ca Codes (prob:20210-20215) Probate Code Section 20210-20215



20210. (a) Except as provided in subdivision (b), any generation-skipping transfer tax shall be equitably prorated among the transferees in the manner prescribed in this article. (b) This section does not apply: (1) To the extent the transferor in a written instrument transferring property specifically directs that the property be applied to the satisfaction of a generation-skipping transfer tax or that a generation-skipping transfer tax be prorated to the property in the manner provided in the instrument. (2) Where federal law directs otherwise. If federal law directs the manner of proration of the federal generation-skipping transfer tax, the California generation-skipping transfer tax shall be prorated in the same manner.


20211. The proration required by this article shall be made in the proportion that the value of the property received by each transferee bears to the total value of all property received by all transferees, subject to the provisions of this article.


20212. In making a proration required by this article: (a) Allowances shall be made for credits, exemptions, and deductions allowed for the purpose of determining the tax payable. (b) Interest and penalties on any deficiency shall be charged to equitably reflect the benefits and burdens of the deficiency and of any tax deductions associated with the interest and penalties.


20213. If a trust is created or other provision made whereby a transferee is given an interest in income, or an estate for years or for life, or another temporary interest in property, the tax on both the temporary interest and other interests in the property shall be charged against, and paid out of, the corpus of the property without apportionment between the temporary and other interests.


20214. (a) If all property does not come into the possession of the trustee, the trustee is entitled, and has the duty, to recover from the transferees, the proportionate amount of the tax with which the transferees are chargeable under this chapter. (b) If the trustee cannot collect from any transferee the amount of tax apportioned to the transferee, the amount not recoverable shall be equitably prorated among the other transferees who are subject to proration.

20215. (a) If a person is charged with, or required to pay, a generation-skipping transfer tax greater than the amount prorated to that person because another person does not pay the amount of generation-skipping transfer tax prorated to the other person, the person charged with or required to pay the greater amount has a right of reimbursement against the other person. (b) The right of reimbursement may be enforced through the trustee in the discretion of the trustee, or may be enforced directly by the person charged with, or required to pay, the greater amount and, for the purpose of direct enforcement, the person is subrogated to the position of the trustee. (c) The trustee or person who has a right of reimbursement may commence a proceeding to have a court determine the right of reimbursement. The provisions of Article 3 (commencing with Section 20220) shall govern the proceeding, with changes necessary to make the provisions appropriate for application to the proceeding, and the court order determining the right of reimbursement is an enforceable judgment.


Article 3. Judicial Proceedings

Ca Codes (prob:20220-20225) Probate Code Section 20220-20225



20220. (a) The trustee or any transferee may commence a proceeding to have a court determine the proration pursuant to this chapter. (b) A proceeding under this article shall be commenced in the court in which the estate of the decedent was administered or, if no administration proceedings have been commenced, in the superior court of any county in which the estate of the decedent may be administered. (c) If proceedings for the administration of the decedent's estate are pending, a proceeding under this article shall be combined with the administration proceedings. If a proceeding is commenced at any time before final distribution, there shall be no additional filing fee.

20221. A proceeding under this article shall be commenced by filing a petition that sets forth all of the following information: (a) The jurisdictional facts. (b) Other facts necessary for the court to determine the proration of the generation-skipping transfer tax.


20222. Not less than 30 days before the hearing the petitioner shall do both of the following: (a) Cause notice of the hearing and a copy of the petition to be mailed to the trustee and each transferee against whom prorated amounts may be charged pursuant to paragraph (1) of subdivision (a) of Section 20223. (b) Cause a summons and a copy of the petition to be served on each transferee who may be directed to make payment of prorated amounts pursuant to paragraph (2) of subdivision (a) of Section 20223. The summons shall be in the form and shall be served in the manner prescribed in Title 5 (commencing with Section 410.10) of Part 2 of the Code of Civil Procedure.


20223. (a) The court, upon making a determination as provided in this article, shall make an order: (1) Directing the trustee to charge the prorated amounts against the transferees against whom the generation-skipping transfer tax has been prorated insofar as the trustee is in possession of any property or interests of the transferees against whom the charge may be made. (2) Summarily directing all other transferees against whom the generation-skipping transfer tax has been prorated to make payment of the prorated amounts to the trustee. (b) A court order made under this section is a judgment that may be enforced against the persons against whom a generation-skipping transfer tax has been prorated.

20224. Upon petition by the trustee or any transferee, the court shall modify an order made pursuant to this article whenever it appears that the amount of generation-skipping transfer tax as actually determined is different from the amount of tax on which the court based the order.


20225. (a) A trustee acting or resident in another state may commence an action in this state to recover from a transferee, who either is resident in this state or owns property in this state, the amount of the federal generation-skipping transfer tax, or a generation-skipping transfer tax payable to another state, apportioned to the person. (b) The action shall be commenced in the superior court of any county in which administration of the estate of the decedent would be proper or, if none, in which any defendant resides. (c) For purposes of the action an apportionment by the court having jurisdiction of the administration of the decedent's estate in the other state is prima facie correct.


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