Estate of Yush

8 Cal.App.3d 251 (1970) 87 Cal. Rptr. 222 Estate of PHILLIP YUSH, Deceased.

BALDO M. KRISTOVICH, as Public Administrator, etc., Petitioner and Respondent,

v.

HOUSTON I. FLOURNOY, as State Controller, Objector and Appellant.

Docket No. 35555. Court of Appeals of California, Second District, Division Three.

May 28, 1970. [252] COUNSEL

Myron Siedorf, Walter H. Miller and Mary L. Harris for Objector and Appellant.

John D. Maharg, County Counsel, and Henry W. Gardett, Deputy County Counsel, for Petitioner and Respondent.

[253] OPINION

ALLPORT, J.

Phillip Yush died intestate on August 15, 1962, a resident of Los Angeles County. He was survived by a brother (Irwin Yush), two nephews, and a niece. Thereafter the Public Administrator came into possession of certain United States Series E bonds having a death date value of $45,200. These bonds were payable on the death of the owner Phillip Yush to the beneficiary and co-owner Irwin Yush. The bonds were delivered by the Public Administrator to the beneficiary prior to the former's appointment as administrator of the estate on October 17, 1962. On September 12, 1967, the administrator filed an inheritance tax affidavit (form 22) listing these bonds. On October 11, 1967, an inheritance tax report was filed determining the fair market value of the estate to be $2,412.19 and listing the bonds as joint tenancy property, the survivor being Irwin Yush. Pursuant to this report an order was made fixing the total inheritance tax due in the sum of $3,474.60 and charging the full amount to Irwin Yush. No tax was due upon the interests of the nephews and the niece, their exemptions exceeding the value of their distributive shares. Thereafter the administrator filed a "First and Final Account and Report" and an amendment thereto, alleging that "[a]ll taxes chargeable to the estate so far as known to petitioner, including federal and state income, inheritance and personal property taxes, have been paid as shown on Schedule B ..." and that inheritance taxes in the sum of $3,474.60 plus penalties and interest were owed by Irwin Yush for transfers outside of probate. The account requested that Irwin's distributive share of the estate be applied in toto to this unpaid tax liability and paid directly to the Controller of the State of California. The Controller filed objections to the account upon the ground that the inheritance tax due under the order fixing same had not been paid and sought disapproval of the account and denial of final distribution of the assets. On hearing the trial court found that no inheritance tax had been paid and that there was no receipt for such in the estate file. The court held that under Revenue and Taxation Code section 14101 the administrator was liable for the inheritance tax fixed in the probate proceeding, which tax in this case was zero, and that the transferee Irwin Yush was liable for the $3,474.60 tax on the transfer of the bonds outside of probate. It was also found that the provision of the Revenue and Taxation Code (§ 14143) requiring a receipt from the Controller showing payment of taxes prior to distribution of the estate was inapplicable since the estate owed no taxes. The objections of the Controller were overruled and the account settled and distribution ordered as prayed. The Controller has appealed from this order.