Bill Text: MI HB6189 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: Taxation; estates; technical amendments to provision relating to inheritance tax; provide for. Amends sec. 1 of 1899 PA 188 (MCL 205.201).

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2010-05-20 - Printed Bill Filed 05/20/2010 [HB6189 Detail]

Download: Michigan-2009-HB6189-Introduced.html

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HOUSE BILL No. 6189

 

May 19, 2010, Introduced by Rep. LeBlanc and referred to the Committee on Tax Policy.

 

     A bill to amend 1899 PA 188, entitled

 

"Michigan estate tax act,"

 

by amending section 1 (MCL 205.201), as amended by 1992 PA 65.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. (1) A tax is shall be imposed upon the transfer of any

 

property, real or personal, of the value of $100.00 or over, or of

 

any interest therein in that property or income therefrom from that

 

property, in trust or otherwise, to persons or corporations, not

 

exempt by law in this state from taxation on real or personal

 

property or not heretofore or hereafter existing within this state

 

as incorporated foundations or not heretofore existing within this

 

state as established nonprofit unincorporated foundations operated

 

exclusively for benevolent, charitable, or educational purposes, in

 

the following cases:

 

     (a) When the transfer is by will or by the intestate laws of

 

this state from any person dying seized or possessed of the

 

property while a resident of this state.

 

     (b) When the transfer is by will or intestate law of property

 

within the state, and the decedent was a nonresident of the state

 

at the time of his or her death.

 

     (c) When the transfer is of property made by a resident or by

 

nonresident, when the nonresident's property is within this state,

 

by deed, grant, bargain, sale, or gift made in contemplation of the

 

death of the grantor, vendor, or donor or intended to take effect,

 

in possession or enjoyment at or after such death. Any transfer of

 

a material part of this property in the nature of a final

 

disposition or distribution made by the decedent within 2 years

 

prior to his or her death, except in case of a bona fide sale for a

 

fair consideration in money or money's worth, shall, unless shown

 

to the contrary, be deemed considered to have been made in

 

contemplation of death within the meaning of this section. The tax

 

shall also be imposed when any such grantee, vendee, or donee

 

becomes beneficially entitled in possession or expectancy to any

 

property or the income of the property by any such transfer,

 

whether made before or after the passage of this act.

 

     (d) Whenever any person or persons, corporation or

 

association, whether voluntary or organized pursuant to law, shall

 

exercise a power of appointment derived from any disposition of

 

property made either before or after the passage of this act, the

 

appointment when made shall be deemed considered a transfer taxable

 

under this act in the same manner as though the property to which

 

the appointment relates belonged absolutely to the donee of the

 

power and had been bequeathed or devised to the donee by will; and

 

whenever any person or persons, corporation or association, whether

 

voluntary or organized pursuant to law, possessing such a power of

 

appointment so derived shall omit or fail to exercise the power of

 

appointment within the time provided, in whole or in part, a

 

transfer taxable under this act shall be deemed considered to take

 

place to the extent of the omission or failure, in the same manner

 

as though the person or persons, corporation or association thereby

 

becoming entitled to the possession or enjoyment of the property to

 

which the power related had succeeded thereto by a will of the

 

donee of the power failing to exercise the power, taking effect at

 

the time of the omission or failure. This subdivision is construed

 

so that the exercise of a power of appointment or the omission or

 

failure to exercise a power of appointment does not constitute a

 

taxable transfer under this act if the transfer, by the donor of

 

the power, of the property to which the appointment relates is not

 

described within subdivision (a), (b), or (c).

 

     (2) Notwithstanding subsection (1), a tax shall not be imposed

 

in respect of personal property, except tangible personal property

 

having an actual situs in this state, if 1 of the following apply:

 

     (a) The transferor at the time of the transfer was a resident

 

of a state or territory of the United States, or of any foreign

 

country, which at the time of the transfer did not impose a

 

transfer tax or death tax of any character in respect of personal

 

property of residents of this state, except tangible personal

 

property having an actual situs in that state or territory or

 

foreign country.

 

     (b) If the laws of the state, territory, or country of

 

residence of the transferor at the time of the transfer contained a

 

reciprocal exemption provision under which nonresidents were

 

exempted from transfer taxes or death taxes of every character in

 

respect of personal property, except tangible personal property

 

having an actual situs therein, provided the state, territory, or

 

country of residence of such nonresidents allowed a similar

 

exemption to residents of the state, territory, or country of

 

residence of the transferor. For the purposes of this section the

 

District of Columbia and possessions of the United States shall be

 

considered territories of the United States. As used in this

 

subsection, "foreign country" and "country" mean both any foreign

 

country and any political subdivision of that country, and either

 

of them of which the transferor was domiciled at the time of his or

 

her death. For the purposes of this section, "tangible personal

 

property" shall be construed to exclude all property commonly

 

classed as intangible personal property, such as deposits in banks,

 

mortgages, debts, receivables, shares of stock, bonds, notes,

 

credits, evidences of an interest in property, evidences of debt,

 

and like incorporeal personal property.

 

     (3) Notwithstanding subsection (1), a tax shall not be imposed

 

in respect of property passing to a trustee or trustees of any

 

trust agreement or trust deed heretofore or hereafter executed by a

 

resident or nonresident decedent by virtue of or under the terms

 

and provisions of any contract or contracts of insurance heretofore

 

or hereafter in force, insuring the life of such the decedent, and

 

paid or payable at or after the death of the decedent to the

 

trustee or trustees for the benefit of a beneficiary or

 

beneficiaries having any present or future, vested, contingent, or

 

defeasible interest under such a trust deed or trust agreement.

 

     (4) If an unincorporated foundation provided tax exempt status

 

by subsection (1) ceases to operate if its funds are diverted from

 

the lawful purposes of its organization, or if it becomes unable to

 

lawfully serve its purposes, the legislature may by law provide for

 

the winding up of its affairs and for the conservation and

 

disposition of its property, in such a way as may best promote and

 

perpetuate the purposes for which the unincorporated foundation was

 

originally organized.

 

     (5) Every transfer to any corporation, society, institution,

 

or person or persons, or association of persons for benevolent,

 

charitable, religious, or educational purposes, organized,

 

existing, or operating under the laws of or within a state or

 

territory of the United States, other than this state, or of the

 

District of Columbia, also shall be exempt from taxation under this

 

act, if at the date of the transfer which, excepting as to gifts by

 

living persons, shall be deemed considered to be the date of

 

decedent's death, the laws of the state or territory or of the

 

District of Columbia, under which such corporation, society,

 

institution, person or persons, or association of persons was

 

organized, existing, or operating did not impose a death tax of any

 

character in respect to property transferred to such a corporation,

 

society, institution, person or persons, or association of persons

 

organized, existing, or operating under the laws of or within this

 

state, or if at the date of the transfer the laws of the state or

 

territory or of the District of Columbia contained a reciprocal

 

provision under which such a transfer to such a corporation,

 

society, institution, person or persons, or association of persons

 

organized, existing, or operating under the laws of or within

 

another state or territory or of the District of Columbia were

 

exempted from death taxes of every character, if the other state or

 

territory or of the District of Columbia allowed a similar

 

exemption to such a corporation, society, institution, person or

 

persons, or association of persons organized, existing, or

 

operating under the laws of another state or territory or of the

 

District of Columbia.

 

     The exemption provided in this subsection shall be effective

 

with respect to transfers from decedents whose death occurred on or

 

after May 1, 1950. Any tax previously paid on transfers made exempt

 

by this subsection shall be refunded.

 

     (6) Notwithstanding subsection (1), but subject to subsection

 

(7), if the decedent dies after December 31, 1982 and if the

 

decedent makes or has made a transfer otherwise subject to tax

 

under this act to the surviving spouse of the decedent or to the

 

surviving spouse of the decedent and another person or persons, and

 

if this transfer qualifies for the marital deduction for purposes

 

of the federal estate tax in the estate of the decedent or if this

 

transfer would have qualified for the federal estate tax marital

 

deduction if the transfer had been included in the gross estate of

 

the decedent for purposes of the federal estate tax, the transfer,

 

using values as finally determined for purposes of this act, shall

 

be exempt from taxation under this act.

 

     (7) The exemption provided by subsection (6) shall be subject

 

to the following:

 

     (a) On the death of the first spouse to die, if the executor

 

properly elects to treat a transfer or specific portion of a

 

transfer as qualified terminable interest property, then on the

 

death of the surviving spouse, the transfer of qualified terminable

 

interest property, using values on the death of the surviving

 

spouse, shall be considered a transfer of the surviving spouse

 

subject to subsection (1). For purposes of determining tax rates

 

and exemptions applicable to such a transfer, the relationship of

 

each successor on the death of the surviving spouse shall be to the

 

spouse to which the successor bears the closer relationship, and

 

other transfers from the surviving spouse to such successors shall

 

be taken into account first. If the executor is not required by

 

federal law to file a federal estate tax return, the provisions in

 

this subsection will apply if the executor makes an irrevocable

 

election to have them apply on or before 9 months after the date of

 

decedent's death, and files such election on or before that date

 

with the revenue division of the department of treasury.

 

     (b) If a transfer to the surviving spouse, or to the surviving

 

spouse and other persons, is of an interest in a group of assets

 

not all of which are subject to tax under this act, for purposes of

 

the application of subsection (6), on the death of the first spouse

 

to die, the surviving spouse or the surviving spouse and others

 

persons, shall be considered to have received a pro rata portion of

 

the group of assets in the same proportion that the value of that

 

portion of the group of assets not subject to tax under this act

 

bears to the value of the entire group of assets.

 

     (8) For purposes of subsections (6) and (7):

 

     (a) "Executor" means that term as defined by section 2203 of

 

the internal revenue code.

 

     (b) "Qualified terminable interest property" means a transfer

 

or a specific portion of a transfer which the executor elects to

 

treat as qualified terminable interest property, as that term is

 

defined by section 2056(b)(7) of the internal revenue code, for

 

purposes of the federal estate tax or for purposes of subsection

 

(7), to the extent subsections (6) and (7) apply to the transfer or

 

specific portion of the transfer.

 

     (c) The inheritance tax imposed on the estate of the surviving

 

spouse with respect to qualified terminable interest property shall

 

be paid from qualified terminable interest property unless the

 

surviving spouse's will specifically provides otherwise.