Davis v. Clarke

Opinion

DABNEY, Acting P. J. Facts and Procedural History

Robert Daniels died on March 25, 1982. The second amendment to the Robert and Isabelle Daniels Living Trust of 1982 established a qualified terminable interest property (QTIP) trust which gave Isabelle, as surviving spouse, the income for life and a limited power of appointment over the remainder.

Isabelle died on April 6, 1984. She had received $242,245.63 income from the trust.

On May 9, 1989, the inheritance tax referee filed a report which valued the QTIP trust as follows: Income—$242,246; limited power qualified terminable trust—$603,553; general power to appoint charity—$603,553; “Five by Five”1 power—$142,368. The remainder interest was valued on the basis of Isabelle’s actual life pursuant to Revenue and Taxation Code section 139552 rather than her life expectancy as set forth in the tables pursuant to section 13953.3

[489]Respondent objected to the referee’s valuation of the trust pursuant to section 13955. The court sustained the objections and ordered the referee’s report to be amended to value the trust pursuant to section 13953. Petitioner appeals from that order pursuant to Probate Code section 7242, subdivision (b).

Discussion

At issue in this appeal is the applicability of section 13955 when the surviving spouse, who received a life estate and a limited power of appointment over the remainder of the trust, dies before determination of the inheritance tax on the transfer of such interests.

Although both sections 13953 and 13955 as part of the inheritance tax law were repealed after Robert’s death, we apply the law in effect at the date of his death. (Estate of Gibson (1983) 139 Cal.App.3d 733, 736 [189 Cal.Rptr. 201].)

Section 13953 states: “The value of a future, contingent, or limited estate, income, or interest is determined in accordance with the standards of mortality and value set forth in the United States life tables: 1959-1961, published by the United States Department of Health, Education and Welfare, Public Health Service, and the rate of interest used in computing the present value of the estate, income, or interest is 6 percent per annum compounded annually.”