Proration of Estate Taxes

]Probate Code Division 10, Chapter 1 deals with the proration of estate taxes. Article 1 deals with general provisions. Section 20100 defines the following terms: “estate tax,” “person interested in the estate,” “personal representative,” “property,” and “value.”

Article 2 deals with proration. Section 20110 requires the estate tax to be equitably prorated among the persons interested in the estate in the manner prescribed in this article. This section does not apply in two specifies instances.

Section 20111 states that the proration required by this article is 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.

Section 20112 requires, in making a proration of the federal estate tax, that allowances are to 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. Allowances are to be made for credits allowed by the federal estate tax law and attributable to property located in this state, as well as 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.

Section 20113 provides that, 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 is charged against and paid out of the corpus of the property without apportionment between remainders and temporary estates.

Section 20114 defines the term “qualified real property.” If an election is made pursuant to the Internal Revenue Code, the proration is based upon the amount of federal estate tax that would be payable but for the election.

Section 20114.5 deals with references to the federal Internal Revenue Code and defines the term “excess retirement accumulation.”

Section 20115 states that, 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 i a charge against the persons who receive the specific property that gives rise to the extension.

Section 20116 provides that, 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.

Section 20117 states that, 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.

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.

Article 3 deals with judicial proceedings. Section 20120 authorizes the personal representative or any person interested in the estate to commence a proceeding to have a court determine the proration pursuant to this chapter.

Section 20121 requires a proceeding to be commenced by filing a petition that sets forth two specified items of information.

Section 20122 requires the petitioner, not less than 30 days before the hearing, to do the two required actions.

Section 20123 requires the court to make an order, upon making a determination as provided in this article, that directs two courses of action. 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.

Section 20124 states that, upon petition by the personal representative or any person interested in the estate, the court is required to 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.

Section 20125 allows a personal representative acting or resident in another state to 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.