The transfers enumerated in section 12-340 shall be taxable if made: (a) By will; (b) by statutes relating to descent and distribution of property upon the death of the owner; (c) in contemplation of the death of the transferor, and any transfer of property, either by a direct conveyance or by conveyances through a third party, made and completed within one year next prior to the date of death of the transferor, shall, unless shown to the contrary, be construed prima facie to have been made in contemplation of death; (d) by gift or grant intended to take effect in possession or enjoyment at or after the death of the transferor. Such a transfer as last mentioned shall include, among other things, a transfer under which the decedent retained for his life, or for any period not ascertainable without reference to his death, or for a period of such duration as to evidence an intention that he should retain for his life (1) the possession or enjoyment of, or the right to the income from, the property, or (2) the right, either alone or in conjunction with any person or persons, to designate the person or persons who shall possess or enjoy the property or the income therefrom, but shall not include property transferred by the decedent in which he retained, whether by operation of law or otherwise, the possibility, hereinafter referred to as a “reversionary interest”, that the property would return to the decedent or his estate or would be subject to a power of disposition by him, unless the value of such reversionary interest immediately before the death of the decedent exceeded five per cent of the value of the property transferred. The value of a taxable reversionary interest immediately before the death of the decedent shall be determined, without regard to the fact of the decedent's death, by usual methods of valuation, including the use of tables of mortality and actuarial principles, allowing credit for the value of all intervening estates, under regulations prescribed by the Commissioner of Revenue Services; (e) in payment of a claim against the estate of a deceased person arising from a contract made by him and payable by its terms at or after his death, but a claim created by an antenuptial agreement made payable by will shall be considered as creating a debt against the estate and shall not constitute a taxable transfer. If any transfer specified in subdivisions (c), (d) and (e) of this section is made for a valuable consideration, so much thereof as is the equivalent in money value of the money value of the consideration received by the transferor shall not be taxable, but the remaining portion shall be taxable. If it becomes necessary or appropriate in ascertaining such value to use mortality tables, the American Men's Ultimate Mortality tables at four per cent compound interest shall be used, so far as applicable.
(1949 Rev., S. 2021; 1959, P.A. 250, S. 1; P.A. 77-614, S. 139, 610.)
History: 1959 act excluded certain reversionary interests; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979.
Annotations to former statute:
Gift which did not create joint tenancy, nevertheless taxable as gift to take effect in possession and enjoyment at death of donor. 111 C. 165. Cited. Id., 176. Irrevocable transfer to trustee to pay income to transferor during life, with directions that on his death corpus be paid to designated beneficiaries, taxable within Subdiv. (d); tax to be computed on value at death. 114 C. 207, 213, 225; 287 U.S. 509. See 122 C. 115. Gift by warranty deed to children, reserving life use in grantor, taxable within Subdiv. (d). 114 C. 207. Cited. 115 C. 147. Revocable transfer in trust to pay income to settlor's spouse for life and upon spouse's death to settlor, and upon death of survivor to transfer principal to settlor's executors, held within Subdiv. (d); same where remainder is to spouse's appointees by will or in default of appointment to designated persons; life estates not taxable. 118 C. 233, 245, 247. See 122 C. 116. Tax applies to transfers wherein death of transferor is a factor in devolution of use and enjoyment of property. 122 C. 107, 117. Taxability of transfer providing for possibility of reverter. Id., 117–122. Transfer in trust to pay income to settlor's wife for life, with remainders to named beneficiaries, wherein settlor retained power of revocation exercisable to revest corpus in him if wife died or became incompetent during his lifetime, held taxable under Subdiv. (d). 125 C. 456. Whether a transfer is in contemplation of death is question of fact in individual case; thought of death must be impelling cause of transfer. Id., 680, 683, 685. Only consideration having monetary value and actually received by transferor may be deducted; mere promise not sufficient. 127 C. 48. Cited. 128 C. 558. Cases relating to transfers to take effect in possession or enjoyment at death reviewed; inter vivos trust taxable where settlor reserved power to amend otherwise than to revest in him. 129 C. 176. Joint bank accounts taxable under Subdiv. (d) when decedent contributed all funds, retained books and withdrew interest. 131 C. 345. If donees came into possession and enjoyment at creation of accounts, section applies; if they were to succeed to possession and enjoyment at donor's death, accounts taxable under Subdiv. (d). Id., 347. Life insurance purchased in combination with annuity held taxable. 132 C. 5. Cited. 282 U.S. 607. Transfer held subject to succession tax as one intended to take effect in possession or enjoyment at or after the death of the settlor. 134 C. 456. U.S. defense savings bonds held taxable even though survivor had no knowledge of treasury regulations. 136 C. 33. Some act of decedent as transferor, with intent to retain property, is essential to render transfer taxable. Id., 503. Cited. 140 C. 491; 141 C. 257. Intent is to reach the shifting of the economic benefits that may occur by reason of the death of the settlor even though the shifting follows necessarily from a prior transfer of title. 142 C. 144. Benefits coming to decedent's spouse from noncontributory, unfunded retirement plan subject to change by employer, held transfer to take effect at or after death. 145 C. 497.
Element of “interest to take effect in possession or enjoyment after death”. 9 CS 196. Cited. 10 CS 541. “Grant” includes transfer for valuable consideration. 15 CS 24. Trust to take effect at death of survivor or transferor is an “interest to take effect in possession...on death”. Id., 135. Joint and survivor savings account created five years before death of B, when about to undergo surgery, and who did not thereafter retain possession and control of passbooks, held to have been created in contemplation of death. 16 CS 241. Cited. 17 CS 70.
Annotations to present section:
Cited. 32 CS 227; 38 CS 54.
Subdiv. (c):
Cited. 175 C. 8.
The question whether a transfer is made in contemplation of death is one of fact and each such transfer must be individually examined; hence tax commissioner's appeal from decree of the probate court holding two transfers nontaxable did not involve all the transfers. 28 CS 210.
Subdiv. (d):
Nine years before his death, settlor assigned to charity all interests he might have in properties of trusts, held that on death of settlor such interests not within Subdiv.; taxability determined by state of affairs at time of death of decedent. 146 C. 184. Cited. 149 C. 334. Statute is intended to reach the shifting of economic benefits which may occur by reason of death of transferor, though the shifting follows necessarily from a prior transfer of title inter vivos. 151 C. 39. Consideration for contractual restriction of competition payable annually to decedent held a testamentary transfer and taxable as such. 152 C. 282. Succession tax on transfers made according to Subdiv. is imposed on privilege of succeeding to right of possession or enjoyment of property from a former owner at his death, even though the shifting of enjoyment follows from a prior transfer of title inter vivos, or as a result of a contractual obligation. Id., 336. Where a trust is involved, intangibles are treated as being owned by a settlor at death and as having their situs, for purposes of the succession tax, in the state of the settlor's domicile. Id., 336, 337. In order for a transfer to be subject to the succession tax under Subdiv., there must be a causal relationship between the settlor's intent and the taking effect in possession or enjoyment; the taking effect must be caused by an intentional act of the transferor, not by an independent act of someone else. Id., 667.