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H*2757
Session 105 (1983-1984) 

H*2757(Rat #0202, Act #0117 of 1983)  General Bill, By T.G. Mangum, 
B.L. Hendricks, Kirsh and D.E. McTeer

Similar(S 417) A Bill to amend Section 12-15-10, as amended, Code of Laws of South Carolina, 1976, relating to the tax rates on a resident decedent's estate, so as to increase these tax rates, to amend Section 12-15-40, as amended, relating to the method of determining the value of the gross estate of residents, to amend Section 12-15-60, as amended, relating to the method of determining the value of the taxable estate of residents, and to amend Section 12-15-250, as amended, relating to the method of determining the value of the taxable estates of nonresidents, so as to revise these methods, to amend Section 12-15-70, relating to the reduction of estate tax exemptions and deductions if certain property is excluded from a resident's gross estate, so as to further provide for this reduction, to amend Section 12-15-260, relating to the proportionate allowance of estate tax exemptions and deductions to the estate of nonresident decedents, so as to further provide for this proportionate allowance, to amend Section 12-15-1540, relating to the liability of beneficiaries receiving proceeds of life insurance policies and related items, so as to revise this liability, to amend Section 12-15-1560, as amended, relating to the transfer of assets from an estate and the required notice thereof to the Tax Commission, so as to revise these transfer and notice provisions, to amend Section 12-17-30, as amended, relating to the tax rates on taxable gifts, so as to increase these rates, to amend Section 12-17-40, as amended, relating to the definition of the term "taxable gifts", so as to revise this definition, to amend Article 1, Chapter 17 of Title 12, relating to gift taxes, by adding Section 12-17-44 so as to provide for the effect that certain disclaimers of property interest have upon the imposition of the gift tax thereon, and to amend Title 21, relating to estates, by adding Chapter 37 so as to provide the procedure for and requirements of disclaimers of property interests. 03/29/83 House Introduced and read first time HJ-1715 03/29/83 House Referred to Committee on Ways and Means HJ-1716 05/17/83 House Committee report: Favorable Ways and Means HJ-2877 05/19/83 House Debate adjourned HJ-2981 05/24/83 House Objection by Rep. J. Bradley, P. Bradley, Aydlette, & Koon HJ-3017 05/26/83 House Objection withdrawn by Rep. J. Bradley & P. Bradley HJ-3140 05/31/83 House Objection withdrawn by Rep. Aydlette & Koon HJ-3313 05/31/83 House Read second time HJ-3313 06/01/83 House Read third time and sent to Senate HJ-3327 06/01/83 Senate Introduced and read first time SJ-1675 06/01/83 Senate Referred to Committee on Finance SJ-1676 06/02/83 Senate Recalled from Committee on Finance SJ-1753 06/02/83 Senate Read second time SJ-1784 06/03/83 Senate Read third time and enrolled SJ-1853 06/09/83 Ratified R 202 06/15/83 Signed By Governor 06/15/83 Effective date 06/15/83 06/15/83 Act No. 117 06/24/83 Copies available


(A117, R202, H2757)

AN ACT TO AMEND SECTION 12-15-10, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE TAX RATES ON A RESIDENT DECEDENT'S ESTATE, SO AS TO INCREASE THESE TAX RATES, TO AMEND SECTION 12-15-40, AS AMENDED, RELATING TO THE METHOD OF DETERMINING THE VALUE OF THE GROSS ESTATE OF RESIDENTS, TO AMEND SECTION 12-15-60, AS AMENDED, RELATING TO THE METHOD OF DETERMINING THE VALUE OF THE TAXABLE ESTATE OF RESIDENTS, AND TO AMEND SECTION 12-15-250, AS AMENDED, RELATING TO THE METHOD OF DETERMINING THE VALUE OF THE TAXABLE ESTATES OF NONRESIDENTS, SO AS TO REVISE THESE METHODS, TO AMEND SECTION 12-15-70, RELATING TO THE REDUCTION OF ESTATE TAX EXEMPTIONS AND DEDUCTIONS IF CERTAIN PROPERTY IS EXCLUDED FROM A RESIDENT'S GROSS ESTATE, SO AS TO FURTHER PROVIDE FOR THIS REDUCTION, TO AMEND SECTION 12-15-260, RELATING TO THE PROPORTIONATE ALLOWANCE OF ESTATE TAX EXEMPTIONS AND DEDUCTIONS TO THE ESTATE OF NONRESIDENT DECEDENTS, SO AS TO FURTHER PROVIDE FOR THIS PROPORTIONATE ALLOWANCE, TO AMEND SECTION 12-15-1540, RELATING TO THE LIABILITY OF BENEFICIARIES RECEIVING PROCEEDS OF LIFE INSURANCE POLICIES AND RELATED ITEMS, SO AS TO REVISE THIS LIABILITY, TO AMEND SECTION 12-15-1560, AS AMENDED, RELATING TO THE TRANSFER OF ASSETS FROM AN ESTATE AND THE REQUIRED NOTICE THEREOF TO THE TAX COMMISSION, SO AS TO REVISE THESE TRANSFER AND NOTICE PROVISIONS, TO AMEND SECTION 12-17-30, AS AMENDED, RELATING TO THE TAX RATES ON TAXABLE GIFTS, SO AS TO INCREASE THESE RATES, TO AMEND SECTION 12-17-40, AS AMENDED, RELATING TO THE DEFINITION OF THE TERM "TAXABLE GIFTS", SO AS TO REVISE THIS DEFINITION, TO AMEND ARTICLE 1, CHAPTER 17 OF TITLE 12, RELATING TO GIFT TAXES, BY ADDING SECTION 12-17-44 SO AS TO PROVIDE FOR THE EFFECT THAT CERTAIN DISCLAIMERS OF PROPERTY INTERESTS HAVE UPON THE IMPOSITION OF THE GIFT TAX THEREON, AND TO AMEND TITLE 21, RELATING TO ESTATES, BY ADDING CHAPTER 37 SO AS TO PROVIDE THE PROCEDURE FOR AND REQUIREMENTS OF DISCLAIMERS OF PROPERTY INTERESTS.

Be it enacted by the General Assembly of the State of South Carolina:

Tax table

SECTION 1. Section 12-15-10 of the 1976 Code, as amended by Act 539 of 1978, is further amended to read:

"Section 12-15-10. A tax computed in accordance with the following table is imposed on the transfer of the taxable estate determined as provided in Section 12-15-60 of every decedent resident of South Carolina dying after December 31, 1982.

If the taxable estate is: The tax shall be:

Not over $40,000 6% of the taxable

estate

Over $40,000 but not over $2,400

$100,000 plus 7% of the excess

over $40,000

Over $100,000 $6,600

plus 8% of the excess

over $100,000."

Valuation of gross estate

SECTION 2. Section 12-15-40 of the 1976 Code, as amended by Act 539 of 1976, is further amended to read:

"Section 12-15-40. The value of the gross estate shall be determined by including therein the value of the same property as shall be included in the gross estate of the decedent for federal estate tax purposes under Sections 2031 through 2039, inclusive, and Sections 2041 through 2043, inclusive, of the Internal Revenue Code of 1954, as amended through December 31, 1975 and Section 2040 and Sections 2044 through 2046, inclusive, of the Internal Revenue Code of 1954, as amended through December 31, 1982, except the property excluded pursuant to Section 12-15-50."

Determination of value of taxable estate

SECTION 3. Section 12-15-60 of the 1976 Code, as last amended by Act 539 of 1978, is further amended to read:

"Section 12-15-60. For purposes of the tax imposed by Section 12-15-10, the value of the taxable estate shall be determined by deduction from the value of the gross estate the exemptions and deductions allowed for federal estate tax purposes pursuant to Section 2051 and Sections 2053 through 2055, inclusive, of the Internal Revenue Code of 1954, as amended through December 31, 1975, and Section 2056 of the Internal Revenue Code of 1954, as amended through December 31, 1982.

(1) Provided, that in the absence of a provision in a decedent's will to the contrary, in determining the net marital deduction allowable for estate tax purposes in either an intestate situation or a testate situation involving a residuary share, the intestate or testate share so passing to a surviving spouse shall be liable for and charged with a pro rata share of debts, funeral expenses, and expenses of administration in such proportion as the value of the intestate share or the

testate share of the residuary estate passing to a surviving spouse bears to the value of the total intestate estate or total residuary estate before reduction for debts and expenses.

(2) Provided, further, that in the absence of a provision in a decedent's will to the contrary, the intestate share or testate share of the residuary estate passing to a surviving spouse shall not be charged with any death taxes, state or federal, to the extent that the share qualifies for the statutory marital deduction.

(3) Provided, further, that the applicable provisions of subsections (1) and (2) shall also apply to bequests of the residue of an estate, or a share thereof, to a charity or charities which qualify for the estate tax charitable deduction."

Exemption and deduction reduced

SECTION 4. Section 12-15-70 of the 1976 Code is amended to read:

"Section 12-15-70. If property is excluded under Section 12-15-50, then each exemption and deduction granted under Sections 12-15-60 and 12-15-61 shall be reduced in the proportion that the value of real and tangible personal property which has an actual situs outside this State bears to the total value of the gross estate

including such property."

Valuation of taxable estate

SECTION 5. Section 12-15-250 of the 1976 Code, as last amended by Act 539 of 1978, is further amended to read:

"Section 12-15-250. For the purposes of the tax imposed by Section 12-15-210, the value of the taxable estate of a nonresident shall be determined by deducting from the value of the gross estate of the decedent for federal estate tax purposes under Section 2051 and Sections 2053 through 2055, inclusive, of the Internal Revenue Code of 1954, as amended through December 31, 1975, and Section 2056 of the Internal Revenue Code of 1954, as amended through December 31, 1982, as adjusted pursuant to Section 12-15-260."

Allowance of exemption of deduction

SECTION 6. Section 12-15-260 of the 1976 Code is amended to read:

"Section 12-15-260. Each exemption and deduction granted under Sections 12-15-250 and 12-15-251 shall be allowed in the proportion that the real and tangible personal property having an actual situs in this State bears to the total gross estate as computed under Section 12-15-40."

Value of property

SECTION 7. Section 12-15-1540 of the 1976 Code is amended to read:

"Section 12-15-1540. Unless the decedent directs otherwise in his will, if any part of the gross estate on which the tax has been paid consists of the value of property included in the gross estate under Sections 12-15-40 or 12-15-230 by reason of their reference to the provisions of Sections 2034 to 2045, inclusive, of the Internal Revenue Code of 1954, as amended through December 31, 1982, the executor shall be entitled to recover from the person receiving or in possession of the property the portion of the total tax paid as the value of the property bears to the sum of the taxable estate and the amount of the specific exemption allowed in computing the taxable estate determined under Section 12-15-61. If there is more than one such person, the executor shall be entitled to receive from these persons in the same ratio. In case of the property received by, or in possession of the surviving spouse of the decedent for which a reduction is allowed under Sections 12-15-60 or 12-15-250 by reason of their reference to Section 2056 of the Internal Revenue Code as amended through December 31, 1982, this section shall not apply to such property except as to the amount thereof in excess of the amount of the marital deduction allowed under these sections."

Notice

SECTION 8. Section 12-15-1560 of the 1976 Code, as amended by Act 115 of 1979, is further amended to read:

"Section 12-15-1560. Ten days notice must be served upon the Commission prior to the transfer or delivery by any financial institution, corporation, person, or other institution of securities, deposits, or other assets, including shares of capital stock or other interest in the above institutions or corporations, which belong to or stand in the name of any decedent or in the joint name of the decedent and one or more other persons to the executors, administrators, or legal representatives of the decedent or to his survivors when held in the joint name of the decedent and one or more other persons upon their order or request. However, the ten-day notice period may be waived upon written consent of the Commission. Prior to the expiration of the ten-day period, the Commission may require the institution, corporation, or persons to retain a sufficient portion of the property to be transferred for purposes of paying any taxes and interest subsequently due thereupon as imposed by this chapter.

Notwithstanding the provisions of this section:

(1) any portion of a checking or savings account up to ten thousand dollars may be transferred upon notification to the Commission of the intent to transfer without its written consent and without regard to the ten-day notice period . Any amount so withdrawn must be included in the gross estate of the decedent if otherwise includable therein as provided by law;

(2) this notice is also not required for the transfer of stocks, bonds, notes, mortgages, dividends, interest, wages, or salaries of a nonresident decedent unless the transferee has actual knowledge that a decedent was a resident of South Carolina or that the assets have an actual business situs in South Carolina. The exemption from notice for nonresidents does not apply to bank accounts, bank boxes, certificates of deposits, safety deposit boxes, insurance proceeds, or real estate."

Computation of tax

SECTION 9. Section 12-17-30 of the 1976 Code, as amended by Act 539 of 1978, is further amended to read:

"Section 12-17-30. (a) Computation of Tax. - The tax imposed by Section 12-17-10 for each calendar year shall be an amount equal to the excess of:

(1) a tax, computed in accordance with the rate schedule set forth in (2) below, on the aggregate sum of the taxable gifts for that calendar year and for each of the preceding calendar years, over

(2) a tax, computed in accordance with the rate schedule, on the aggregate sum of the taxable gifts for each of the preceding calendar years.

If the taxable gifts are: The tax shall be:

Not over $40,000 6% of the taxable

gifts

Over $40,000 but not over $2,400

$100,000 plus 7% of the excess

over $40,000

Over $100,000 $6,600

plus 8% of the excess

over $100,000.

(b) Calendar Year - The term 'calendar year' includes only the calendar year 1969 and succeeding calendar years.

(c) Preceding Calendar Years. - For gifts made on and after January 1, 1970, the term 'preceding calendar years' means the calendar year 1969 and all calendar years intervening between the calendar year 1969 and the calendar year for which the tax is being computed.

(d) Tax to be Paid by Donor. - The tax imposed by Section 12-17-10 shall be paid by the donor. If the gift tax is not paid when due the donee of any gift shall be personally liable for the tax to the extent of the value of the gift."

Definition

SECTION 10. Section 12-17-40 of the 1976 Code, as last amended by Act 539 of 1978, is further amended to read:

"Section 12-17-40. The term 'taxable gifts' shall mean the transfers by gift which are included in taxable gifts for federal gift tax purposes under Sections 2503, 2518, and 2519 of the Internal Revenue Code of 1954, as amended through December 31, 1982, and Sections 2511 through 2514, inclusive, and 2516 through 2517, inclusive, of the Internal Revenue Code of 1954, as amended through December 31, 1975, less the deductions allowed in Sections 2522 and 2524 of the Internal Revenue Code of 1954, as amended through December 31, 1975, and Section 2523 of the Internal Revenue Code of 1954, as amended through December 31, 1982. The words 'secretary or his delegate' as used in the aforementioned sections of the Internal Revenue Code shall mean the 'South Carolina Tax Commission'."

Disclaimer

SECTION 11. Article 1, Chapter 17, Title 12 of the 1976 Code is amended by adding:

"Section 12-17-44. For the purposes of this chapter, if a person as defined in Section 21-37-40 makes a disclaimer as provided in Section 2518 of the Internal Revenue Code of 1954, as amended through December 31, 1982, (therein referred to as a qualified disclaimer) with respect to any

interest in property, this chapter shall apply with respect to this interest as if the interest had never been transferred to the person."

Disclaimer of property interests

SECTION 12. Title 21 of the 1976 Code is amended by adding:

"Chapter 37

Disclaimer of Property Interests

Section 21-37-10. It is the intent of the General Assembly by enacting this chapter to clarify the laws of this State with respect to the subject matter hereof in order to ensure the ability of persons to disclaim interests in property without the imposition of federal and state estate, inheritance, gift, and transfer taxes. This chapter is to be interpreted and construed in accordance with, and in furtherance of, that intent.

Section 21-37-20. As used in this chapter unless the context clearly indicates otherwise:

(a) 'Devise' means a testamentary disposition of real or personal property or to dispose of real or personal property by will.

(b) 'Devisee' means any person designated in a will to receive a devise. In the case of a devise to an existing trust or trustee, or to a trust or trustee described by will, the trust or trustee is the devisee and the beneficiaries are not devisees.

(c) 'Heir' means any person, including the surviving spouse, who is entitled under the statutes of intestate descent and distribution to the property of a decedent.

(d) 'Personal representative' means executor, administrator, successor personal representative, special administrator, guardian, attorney-in-fact, trustee, committee, conservator, and persons who perform substantially the same function under the law governing their status.

(e) 'Retirement plan' means a defined benefit plan, defined contribution plan, self-employed retirement plan, individual retirement account, or simplified employee pension plan, as provided in Section 12-7-90 and any other type of employee benefit plan.

Section 21-37-30. If a person or his personal representative makes a disclaimer with respect to any interest in property, as defined in Section 12-17-44, this interest must be considered never to have been transferred to the person.

Section 21-37-40. (a) A person or his personal representative who may disclaim any interest in property shall include, but shall not be limited to:

(1) a devisee,

(2) an heir,

(3) a grantee,

(4) a donee,

(5) a person succeeding to a disclaimed interest,

(6) a beneficiary under a testamentary or nontestamentary instrument or contract,

(7) a beneficiary of a trust,

(8) a beneficiary of a life insurance policy,

(9) a beneficiary of a retirement plan,

(10) a joint owner with right of survivorship in real or personal property,

(11) a person designated to take pursuant to a power of appointment, exercised by a testamentary or nontestamentary instrument,

(12) a holder of any power over property or a trust, including a power to determine or receive distributions of income or principal, a power to remove or appoint trustees or other fiduciaries, and administrative powers, or

(13) a person named to take on the death of another person or to whom any property or interest therein devolves, by whatever means, including, but not limited to, a taker in default under a power of appointment or any other power.

(b) A disclaimer may be made with respect to an undivided portion, or fractional share, or life estate, or any other limited interest or estate in any interest in property not barred hereunder.

Section 21-37-50. (a) If a person becomes entitled to an interest in property because of the death of a decedent including, but not limited to, a testator, an intestate, an insured, the grantor of a trust, the holder of a power of appointment, a joint owner with right of survivorship, and a participant in a retirement plan and the person disclaims the interest, the interest devolves or passes as if the person predeceased the decedent, unless the instrument governing the devolution or passing of the interest contains another disposition thereof in the event of a disclaimer; provided, that in no event may Section 21-7-470 govern the devolution or passing of any interest in property disclaimed herein. Any future interest that takes effect in possession or enjoyment after the termination of the estate or interest disclaimed takes effect as if the person disclaiming had died before the event determining that the taker of the property or interest had become finally ascertained and his interest indefeasibly vested. A disclaimer relates back for all purposes to the date of death of the decedent, or donee of the power, or insured, or qualified plan participant, or the determinative event, as the case may be.

(b) If a person becomes entitled to an interest in property other than because of the death of a decedent including, but not limited to, a donee and a grantee and the person disclaims the interest, the interest devolves or passes as if the person had died before the effective date of the instrument under which he is entitled, unless the instrument contains another disposition thereof in the event of a disclaimer. A future interest that takes effect in possession or enjoyment at or after the termination of the disclaimed interest takes effect as if the person disclaiming had died before the event determining that the taker of the property or interest had become finally ascertained and his interest indefeasibly vested. A disclaimer relates back for all purposes to the effective date of the instrument or contract, or the date of the determinative event, as the case may be.

(c) A disclaimer of an interest in property to which a person is entitled under a provision of an instrument is effective only with respect to the interest under the provision and has no effect on any interest including an interest in the same property disclaimed governed by any other provision of the instrument, or any other instrument, or by intestacy, unless the interest under the other provision, or other instrument, or under intestacy, is also disclaimed.

(d) The disclaimer or the written waiver of the right to disclaim is binding upon the person disclaiming, or person waiving, and all persons claiming through or under him.

Section 21-37-60. The right to disclaim an interest in property is barred by (1) an assignment, conveyance, encumbrance, pledge, or transfer of the interest, or a contract therefor, (2) a written waiver of the right to disclaim, (3) an acceptance of the interest or a benefit thereunder, or (4) a sale of the interest under judicial sale made before the disclaimer is effected. Acceptance of an interest in:

(a) a joint bank account or other joint depository account as a joint signatory,

(b) a life insurance policy as a beneficiary thereof, or

(c) a trust (revocable by the grantor) as beneficiary thereof,

by a person disclaiming this interest may not be considered to have occurred through mere inaction of the person.

Section 21-37-70. This chapter does not abridge the right of a person to waive, release, assign, convey, disclaim, or renounce property or an interest therein under other existing provisions of law.

Section 21-37-80. The right to disclaim granted by this chapter exists notwithstanding any limitation on the interest of the person disclaiming in the nature of a spendthrift provision or similar restriction."

Time for delivering or filing disclaimer

SECTION 13. An interest in property that exists on the effective date of Chapter 37 of Title 21 of the 1976 Code as to which, if a present interest, the time for delivering or filing a disclaimer under the chapter has not expired or, if a future interest, the interest has not become indefeasibly vested or the taker finally ascertained, may be disclaimed within nine months after the effective date of this act.

Applicability of provisions

SECTION 14. The provisions of Sections 1 through 8 of this act apply to all decedents dying after December 31, 1983, and the provisions of Sections 9 through 11 of this act apply to all gifts made after December 31, 1982.

Time effective

SECTION 15. This act shall take effect upon approval by the Governor.




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