Session Law

Identifying Information:L. 2001 ch. 077
Other Identifying Information:2001 Senate Bill 137
Tax Type:Estate Tax
Brief Description:An Act enacting the Kansas estate tax apportionment act; repealing K.S.A. 2000 Supp.79-15,120, 79-15,121, 79-15,122, 79-15,123 and 79-15,124.
Keywords:


Body:

CHAPTER 77

SENATE BILL No. 137


An Act enacting the Kansas estate tax apportionment act; repealing K.S.A. 2000 Supp.

79-15,120, 79-15,121, 79-15,122, 79-15,123 and 79-15,124.

Be it enacted by the Legislature of the State of Kansas:

Section 1. (a) As used in this act:

(1) ``Court'' means a court in which proceedings for administration of

an estate are pending or have been completed or, if no proceedings are

pending or have been completed, a court in which venue lies for the

administration of the estate of the decedent;

(2) ``estate'' means the gross estate of a decedent as determined for

the purpose of estate taxes;

(3) ``estate tax'' means any estate, inheritance or death tax levied or

assessed on the property of a decedent's estate, because of the death of

a person, imposed by federal, state, local or foreign law, including the

federal estate tax and including interest and penalties imposed in addition

to those taxes. Estate tax does not include a tax imposed under section

2701 (d)(1)(A) of the federal internal revenue code of 1986;

(4) ``person'' includes a trust, natural person, partnership, association,

joint stock company, corporation, limited liability company, government,

political subdivision or governmental agency;

(5) ``person interested in the estate'' means a person, or a fiduciary

on behalf of that person, who is entitled to receive, or who has received,

from a decedent or because of the death of the decedent, property in-

cluded in the decedent's estate for purposes of the estate tax, but does

not include a creditor of the decedent or of the decedent's estate; and

(6) ``representative'' means the representative, executor or adminis-

trator of an estate or any other person who is required to pay estate taxes

assessed against the estate.

(b) (1) The representative shall charge each person interested in the

estate the fraction of the total estate tax assessed against the estate, that

the taxable value of that person's interest in the estate included in deter-

mining the amount of the tax bears to the total taxable value of all the

interests of all persons interested in the estate included in determining

the amount of the tax. The representative shall not apportion estate taxes

under this subsection that are otherwise apportioned by federal law.

(2) Subsection (b)(1) shall apply unless the decedent in a written inter

vivos or testamentary instrument disposing of or creating an interest in

property specifically directs the manner of apportionment of estate tax or

grants a discretionary power of apportionment to another person. A di-

rection for the apportionment or nonapportionment of estate tax is lim-

ited to the estate tax on the property passing under the instrument unless

the instrument specifically provides that such direction is to apply to prop-

erty passing outside the provisions of the instrument.

(3) If under subsection (b)(2) directions for the apportionment of an

estate tax in two or more instruments executed by the same person con-

flict, the instrument disposing of or creating an interest in the property

to be taxed controls. If directions for the apportionment of estate tax in

two or more instruments executed by the same person conflicts with

respect to an interest in property disposed of or created by neither in-

strument, the instrument executed or amended most recently controls. If

the most recent instruments were executed or amended contemporane-

ously, and one of the instruments is a last will and testament or codicil,

the last will and testament or codicil controls. If directions for the ap-

portionment of estate tax in two or more instruments executed by differ-

ent persons conflict, the direction of the person in whose estate the prop-

erty is included controls.

(4) Subsections (b)(2) and (b)(3) do not grant or enlarge the power

of a person to apportion estate tax to property passing under an instru-

ment created by another person in excess of the estate tax attributable to

the property. Subsections (b)(2) and (b)(3) do not apply to the extent

federal law directs a different manner of apportionment.

(c) Any deduction, exemption or credit allowed by law in connection

with the estate tax inures to a person interested in the estate as provided

by subsections (d), (e) and (f).

(d) If the deduction, exemption or credit is allowed because of the

relationship of the person interested in the estate to the decedent, or

because of the purpose of the gift, the deduction, exemption or credit

inures to the person having the relationship or receiving the gift, unless

that person's interest in the estate is subject to a prior present interest

that is not allowable as a deduction. The estate tax apportionable to the

person having the present interest shall be paid from the corpus of the

gift or the interest of the person having the relationship.

(e) A deduction for property of the estate that was previously taxed

and a credit for gift taxes or death taxes of a foreign country that were

paid by the decedent or the decedent's estate inures proportionally to all

persons interested in the estate who are liable for a share of the estate

tax.

(f) A credit for inheritance, succession or estate taxes, or taxes of a

similar nature applicable to property or interests includable in the estate,

inures to the persons interested in the estate who are chargeable with

payment of a portion of those taxes to the extent that the credit reduces

proportionately those taxes.

(g) To the extent that property passing to or in trust for a surviving

spouse or a charitable, public or similar gift or devise is not an allowable

deduction for purposes of the estate tax solely because of an inheritance

tax or other death tax imposed on and deductible from the property, the

property is not included in the computation provided for by subsection

(b), and to that extent no apportionment is made against the property.

The exclusion provided by this subsection does not apply if the result

would be to deprive the estate of a deduction otherwise allowable under

section 2053(d) of the federal internal revenue code of 1986, relating to

deductions for state death taxes on transfers for public, charitable or re-

ligious uses.

(h) The estate tax attributable to an interest in income, an estate for

years or for life or another temporary interest in any property or fund,

and the remainder interest and any other split interest, is chargeable

against the corpus of the property or the funds that are subject to the

temporary interest and remainder.

(i) (1) In this subsection, ``qualified real property'' has the meaning

assigned by section 2032A of the federal internal revenue code of 1986.

(2) If an election is made under section 2032A of the federal internal

revenue code of 1986, the representative shall apportion estate taxes ac-

cording to the amount of federal estate tax that would be payable if the

election were not made. The amount of the reduction of the estate tax

resulting from the election shall be applied to reduce the amount of estate

tax allocated to those persons who receive real estate subject to the special

use value election is allocated based on the value of the qualified real

property that each receives. If the amount applied to reduce the taxes

allocated based on the value of the qualified real property is greater than

the amount of those taxes, the excess shall be applied to the portion of

the taxes allocated for all other property. This amount is to be apportioned

under subsection (b)(1).

(3) If additional federal estate tax is imposed under section 2032A(c)

of the federal internal revenue code of 1986 because of an early dispo-

sition or cessation of a qualified use, the additional tax shall be equitable

apportioned among the persons who have an interest in the portion of

the qualified real property to which the additional tax is attributable in

proportion to their interests. If the qualified real property is split between

one or more life or term interests and remainder interests, the additional

tax shall be apportioned to each person whose action or cessation of use

caused the imposition of additional tax, unless all persons with an interest

in the qualified real property agree in writing to dispose of the property,

in which case the additional tax shall be apportioned among the remainder

interests.

(j) (1) In this subsection, ``qualified family-owned business interest''

has the meaning assigned by Section 2057 of the federal internal revenue

code of 1986.

(2) If an election is made under section 2057 of the federal internal

revenue code of 1986, the representative shall apportion estate taxes ac-

cording to the amount of federal estate tax that would be payable if the

election were not made. The amount of the reduction of the estate tax

resulting from the election shall be applied to reduce the amount of the

estate tax allocated to those persons who receive property on which the

election is allocated based on the value of the qualified family-owned

business interest that each receives. If the amount applied to reduce the

taxes allocated based on the value of the qualified family-owned business

interest is greater than the amount of those taxes, the excess shall be

applied to the portion of the taxes allocated for all other property. This

amount is to be apportioned under subsection (b)(1).

(3) If additional federal estate tax is imposed under section 2057(f)

of the federal internal revenue code of 1986 because of an early dispo-

sition or cessation of a qualified use, the additional tax shall be equitably

apportioned among the persons who have an interest in the portion of

the qualified family-owned business interest to which the additional tax

is attributable in proportion to their interest.

(k) If the date for the payment of any portion of an estate tax is

extended, the amount of the extended tax and interest and penalties on

such extended tax shall be apportioned to the persons who receive the

specific property that gives rise to the extension, except to the extent

caused by breach of fiduciary duty of a representative.

(l) If federal law directs the apportionment of the federal estate tax,

a similar state tax shall be apportioned in the same manner.

(m) If property includable in an estate does not come into possession

of the representative, the representative shall recover from each person

interested in the estate the amount of the estate tax apportioned to the

person under this act. A representative required to recover unpaid

amounts of estate tax apportioned to persons interested in the estate

under this act may initiate an action at any time to recover unpaid

amounts, or reasonable estimates of such amounts, but is not required to

initiate the action until the expiration of 90 days after the date of the final

determination of the amount of the estate tax. A representative who ini-

tiates an action under this act within a reasonable time after the 90 day

period is not subject to any liability or surcharge because any portion of

the estate tax apportioned to any person interested in the estate was

collectible at a time following the death of the decedent but thereafter

became uncollectible. The obligation to recover a tax under this subsec-

tion does not apply if:

(1) The duty is waived by the parties who would benefit from such

recovery or by the instrument under which the representative derives

powers; or

(2) in the reasonable judgment of the representative, proceeding to

recover the tax is not cost effective.

(n) If, after complying with the provisions of subsection (m), a rep-

resentative does not collect from a person interested in the estate an

unpaid amount of estate tax apportioned to the person, the amount not

collected shall be apportioned among the other persons interested in the

estate who are subject to apportionment in the same manner as provided

by subsection (b)(1). A person who is charged with or who pays an ap-

portioned amount under this subsection because another person failed to

pay an amount of estate tax apportioned to the person charged with the

tax has a right of reimbursement for that amount from the person who

failed to pay the tax. The representative may enforce the right of reim-

bursement. The person charged with the tax may also enforce such right

of reimbursement provided the representative has either assigned the

representative's right to seek reimbursement to the person charged with

the tax or six months have expired since the person charged with the tax

has paid such tax and there are no pending judicial proceedings in which

the representative is pursuing such right of reimbursement.

(o) This section shall be applied after giving effect to any valid dis-

claimers.

(p) Except as otherwise provided in this act, interest and penalties

assessed against the estate by a taxing authority shall be apportioned

among and charged to the persons interested in the estate in the manner

provided by subsection (b), unless, on application by any person inter-

ested in the estate, the court determines that the proposed apportionment

is not equitable or that the assessment of interest or penalties was caused

by a breach of fiduciary duty of a representative. If the apportionment is

not equitable, the court may apportion interest and penalties in an eq-

uitable manner. If the assessment of interest or penalties was caused by

a breach of fiduciary duty of a representative, the court may charge the

representative with the amount of the interest and penalties assessed

attributable to such representative's conduct.

(q) Expenses, including attorney and representative fees, reasonably

incurred by a representative in determination of the amount, apportion-

ment or collection of the estate tax shall be apporitioned among and

charged to persons interested in the estate in the manner provided by

subsection (b) unless, on application by any person interested in the es-

tate, the court determines that the proposed apportionment is not equi-

table. If the court determines that the assessment is not equitable, the

court may apportion the expenses in a equitable manner.

(r) A representative who has possession of any property of an estate

that is distributable to a person interested in the estate may withhold

from that property an amount equal to the person's apportioned share of

the estate tax.

(s) A representative shall recover from any person interested in the

estate the unpaid amount of the estate tax apportioned and charged to

the person under this section, unless the representative determines in

good faith that an attempt to recover this amount would be economically

impractical.

(t) A representative acting in another state may initiate an action in

a court of this state to recover a proportionate amount of the federal estate

tax, of an estate tax payable to another state, or of a death duty due by a

decedent's estate to another state, from a person interested in the estate

who is domiciled in this state or owns property in this state subject to

attachment or execution. In the action, a determination of apportionment

by the court having jurisdiction of the administration of the decedent's

estate in the other state is prima facie correct. This act applies only if the

state in which the determination of apportionment was made affords a

substantially similar remedy.

(u) The prevailing party in an action initiated by a person for the

collection of estate taxes from a person interested in the estate to whom

estate taxes were apportioned and charged under subsection (b) may be

awarded necessary expenses, including reasonable attorney fees.

(v) Nothing in this act shall be construed as creating a lien on real

estate.

(w) This act is named and may be cited as the Kansas estate tax ap-

portionment act.

[SGMLhdnf]77[cm

Sec. 2. K.S.A. 2000 Supp. 79-15,120, 79-15,121, 79-15,122, 79-

15,123 and 79-15,124 are hereby repealed.

Sec. 3. This act shall take effect and be in force from and after its

publication in the statute book.

Approved April 3, 2000.


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Date Composed: 09/25/2001 Date Modified: 09/25/2001