HOUSE BILL NO. 7
INTRODUCED BY C. YOUNKIN
AN ACT REPEALING STATE INHERITANCE TAXES; PROVIDING THAT STATE ESTATE AND GENERATION-SKIPPING TAXES APPLY TO THE EXTENT OF THE APPLICABLE FEDERAL CREDIT FOR EACH TAX; PROVIDING THAT THE PROPOSED ACT BE SUBMITTED TO THE QUALIFIED ELECTORS OF MONTANA; AMENDING SECTIONS 7-4-2613, 7-7-4607, 7-14-4654, 15-1-211, 15-1-406, 15-1-501, 15-1-503, 15-30-136, 17-5-718, 17-5-930, 17-5-1518, 17-5-1629, 35-21-827, 60-11-1110, 60-11-1210, 72-1-103, 72-3-607, 72-3-618, 72-3-631, 72-3-807, 72-3-1004, 72-3-1006, 72-3-1104, 72-16-215, 72-16-502, 72-16-503, 72-16-903, 72-16-904, 72-16-905, 72-16-907, 72-16-909, 72-16-1007, 80-12-305, AND 90-6-125, MCA; REPEALING SECTIONS 72-4-304, 72-14-303, 72-16-101, 72-16-102, 72-16-201, 72-16-203, 72-16-204, 72-16-205, 72-16-206, 72-16-207, 72-16-208, 72-16-209, 72-16-210, 72-16-211, 72-16-212, 72-16-213, 72-16-214, 72-16-216, 72-16-218, 72-16-301, 72-16-302, 72-16-303, 72-16-304, 72-16-305, 72-16-306, 72-16-307, 72-16-308, 72-16-311, 72-16-312, 72-16-313, 72-16-314, 72-16-315, 72-16-316, 72-16-317, 72-16-318, 72-16-319, 72-16-321, 72-16-322, 72-16-323, 72-16-331, 72-16-332, 72-16-333, 72-16-334, 72-16-335, 72-16-336, 72-16-337, 72-16-338, 72-16-339, 72-16-340, 72-16-341, 72-16-342, 72-16-343, 72-16-344, 72-16-345, 72-16-346, 72-16-347, 72-16-348, 72-16-349, 72-16-401, 72-16-402, 72-16-403, 72-16-411, 72-16-412, 72-16-413, 72-16-414, 72-16-415, 72-16-416, 72-16-417, 72-16-418, 72-16-419, 72-16-420, 72-16-421, 72-16-422, 72-16-423, 72-16-424, 72-16-425, 72-16-431, 72-16-432, 72-16-433, 72-16-434, 72-16-435, 72-16-436, 72-16-437, 72-16-438, 72-16-439, 72-16-440, 72-16-441, 72-16-442, 72-16-443, 72-16-445, 72-16-446, 72-16-447, 72-16-448, 72-16-449, 72-16-450, 72-16-451, 72-16-452, 72-16-453, 72-16-454, 72-16-455, 72-16-456, 72-16-457, 72-16-458, 72-16-459, 72-16-460, 72-16-461, 72-16-462, 72-16-463, 72-16-464, 72-16-465, 72-16-471, 72-16-472, 72-16-473, 72-16-474, 72-16-475, 72-16-476, 72-16-477, 72-16-478, 72-16-479, 72-16-480, 72-16-481, 72-16-482, 72-16-491, 72-16-492, 72-16-493, 72-16-504, 72-16-505, 72-16-701, 72-16-702, 72-16-703, 72-16-704, 72-16-705, 72-16-706, 72-16-801, 72-16-802, 72-16-803, 72-16-804, 72-16-805, AND 72-16-902, MCA; AND PROVIDING AN EFFECTIVE DATE AND AN APPLICABILITY DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 7-4-2613, MCA, is amended to read:
"7-4-2613. Documents subject to recording. The county clerk shall, upon the payment of the appropriate fees, record by printing, typewriting, or photographic, micrographic, or electronic process or by the use of prepared blank forms:
(1) (a) subject to subsection (1)(b), deeds, grants, transfers, certified copies of final judgments or decrees partitioning or affecting the title or possession of real property any part of which is situated in the county, contracts to sell or convey real estate and mortgages of real estate, releases of mortgages, powers of attorney to convey real estate, leases that have been acknowledged or proved, and abstracts of the instruments that have been acknowledged or proved;
(b) an instrument or deed evidencing either a division of real property or a merger of real property only if the instrument or deed is accompanied by a certification from the county treasurer that taxes and special assessments that have been assessed and levied have been paid;
(2) notices of buyer's interest in real property, notwithstanding any other requirement of law or rule relating to eligibility for recording of the deed, contract for deed, or other document relating to the notice of buyer's interest. However, if the instrument of conveyance underlying a notice of buyer's interest would be unrecordable, the clerk and recorder shall notify the buyer by certified mail that the underlying instrument is unrecordable and may be void;
(3) except as provided in 72-16-503, a document on a form provided by the department of revenue certifying that the
holder of a nonprobate interest in real property is deceased and that the deceased's interest is terminated. A nonprobate
interest in real property is a joint tenancy interest, a life estate interest, or any other interest not requiring probate. The
document may be on the form used by the department of revenue for responding to the application for determination of
inheritance or estate tax. It must contain:
(a) a statement that the holder of the nonprobate interest has died and that the holder's interest in the property is terminated;
(b) a certification by the county treasurer that the inheritance or estate tax, if any tax was due, has been paid or that
inheritance or estate tax was not due;
(c) a description of the property;
(4) certificates of births and deaths;
(5) wills devising real estate admitted to probate;
(6) official bonds;
(7) transcripts of judgments that by law are made liens upon real estate;
(8) instruments describing or relating to the individual property of married persons;
(9) all orders and decrees made by the district court in probate matters affecting real estate and that are required to be recorded;
(10) notice of preemption claims;
(11) notice and declaration of water rights;
(12) assignments for the benefit of creditors;
(13) affidavits of annual work done on mining claims;
(14) notices of mining locations and declaratory statements;
(15) estrays and lost property;
(16) a book containing appraisement of state lands; and
(17) other writings that are required or permitted by law to be recorded."
Section 2. Section 7-7-4607, MCA, is amended to read:
"7-7-4607. Exemption from certain taxes for refunding revenue bonds. The refunding Refunding bonds issued
pursuant to this part and the income therefrom shall be from those bonds are exempt from taxation, except inheritance,
estate, and transfer taxes."
Section 3. Section 7-14-4654, MCA, is amended to read:
"7-14-4654. Exemption from certain state taxes. All such revenue Revenue bonds issued pursuant to this part and the
interest or income therefrom from those bonds are exempt from all taxation in this state, other than gift, inheritance, and
estate taxes."
Section 4. Section 15-1-211, MCA, is amended to read:
"15-1-211. Uniform dispute review procedure -- notice -- appeal. (1) The department of revenue shall provide a
uniform review procedure for all persons or other entities, except as provided in subsection (1)(a).
(a) The department's dispute review procedure must be adopted by administrative rule and applies to all matters
administered by the department and to all issues arising from the administration of the department, except inheritance taxes,
estate taxes, property taxes, and the issue of whether an employer-employee relationship existed between the person or
other entity and individuals subjecting the person or other entity to the requirements of chapter 30, part 2, or whether the
employment relationship was that of an independent contractor. The procedure applies to assessments of centrally assessed
property taxed pursuant to chapter 23.
(b) (i) The term "other entity", as used in this section, includes all businesses, corporations, and similar enterprises.
(ii) The term "person" as used in this section includes all individuals.
(2) (a) Persons or other entities having a dispute with the department have the right to have the dispute resolved by appropriate means, including consideration of alternative dispute resolution procedures such as mediation.
(b) The department shall establish a dispute resolution office to resolve disputes between the department and persons or other entities.
(c) Disputes must be resolved by a final department decision within 180 days of the referral to the dispute resolution office, unless extended by mutual consent of the parties. If a final department decision is not issued within the required time period, the remedy is an appeal to the appropriate forum as provided by law.
(3) (a) The department shall provide written notice to a person or other entity advising them of a dispute over matters administered by the department.
(b) The person or other entity shall have the opportunity to resolve the dispute with the department employee who is responsible for the notice, as indicated on the notice.
(c) If the dispute cannot be resolved, either the department or the other party may refer the dispute to the dispute resolution office.
(d) The notice must advise the person or other entity of their opportunity to resolve the dispute with the person responsible for the notice and their right to refer the dispute to the dispute resolution office.
(4) Written notice must be sent to the persons or other entities involved in a dispute with the department indicating that the matter has been referred to the dispute resolution office. The written notice must include:
(a) a summary of the department's position regarding the dispute;
(b) an explanation of the right to the resolution of the dispute with a clear description of all procedures and options available;
(c) the right to obtain a final department decision within 180 days of the date that the dispute was referred to the dispute resolution office;
(d) the right to appeal should the department fail to meet the required deadline for issuing a final department decision; and
(e) the right to have the department consider alternative dispute resolution methods, including mediation.
(5) The department shall:
(a) develop guidelines that must be followed by employees of the department in dispute resolution matters;
(b) develop policies concerning the authority of an employee to resolve disputes; and
(c) establish procedures for reviewing and approving disputes resolved by an employee or the dispute resolution office.
(6) (a) (i) The director of revenue or the director's designee is authorized to enter into an agreement with a person or other entity relating to a matter administered by the department.
(ii) The director or the director's designee has no authority to bind a future legislature through the terms of an agreement.
(b) Subject to subsection (6)(a)(ii), an agreement under the provisions of subsection (6)(a)(i) is final and conclusive, and, except upon a showing of fraud, malfeasance, or misrepresentation of a material fact:
(i) the agreement may not be reopened as to matters agreed upon or be modified by any officer, employee, or agent of this state; and
(ii) in any suit, action, or proceeding under the agreement or any determination, assessment, collection, payment, abatement, refund, or credit made in accordance with the agreement, the agreement may not be annulled, modified, set aside, or disregarded."
Section 5. Section 15-1-406, MCA, is amended to read:
"15-1-406. Declaratory judgment. (1) An aggrieved taxpayer may bring a declaratory judgment action in the district court seeking a declaration that:
(a) an administrative rule or method or procedure of assessment or imposition of tax adopted or used by the department
of revenue is illegal or improper; or
(b) a tax authorized by the state or one of its subdivisions was illegally or unlawfully imposed or exceeded the taxing authority of the entity imposing the tax.
(2) The action must be brought within 90 days of the date the notice of the tax due was sent to the taxpayer or, in the case of an assessment covered by the uniform dispute review procedure set forth in 15-1-211, within 90 days of the date of the department director's final decision. The court shall consolidate all actions brought under subsection (1) that challenge the same tax. The decision of the court applies to all similarly situated taxpayers, except those taxpayers who are excluded under 15-1-407.
(3) The taxes that are being challenged under this section must be paid under protest when due as a condition of
continuing the action. Property taxes are paid under protest as provided in 15-1-402. All other taxes administered by the
department, except inheritance and estate taxes, are paid under protest by filing timely claims for refund and by following
the uniform dispute review procedures of 15-1-211. Inheritance and estate taxes are paid under protest by following the
procedures set forth in Title 72. Estate taxes are paid under protest by following the procedures set forth in Title 72.
(4) The remedy authorized by this section may not be used to challenge the:
(a) market value of property under a property tax unless the challenge is to the legality of a particular methodology that is being applied to similarly situated taxpayers; or
(b) legality of a tax other than a property tax, inheritance tax, or estate tax unless the review pursuant to 15-1-211 has
been completed.
(5) The remedy authorized by this section is the exclusive method of obtaining a declaratory judgment concerning a tax authorized by the state or one of its subdivisions. The remedy authorized by this section supersedes the Uniform Declaratory Judgments Act established in Title 27, chapter 8. This section does not affect actions for declaratory judgments under 2-4-506."
Section 6. Section 15-1-501, MCA, is amended to read:
"15-1-501. Disposition of money from certain designated license and other taxes. (1) The state treasurer shall deposit to the credit of the state general fund in accordance with the provisions of subsection (3) all money received from the collection of:
(a) income taxes, interest, and penalties collected under chapter 30;
(b) except as provided in 15-31-702, all taxes, interest, and penalties collected under chapter 31;
(c) oil and natural gas production taxes allocated under 15-36-324(8)(a) and (10)(a);
(d) electrical energy producer's license taxes under chapter 51;
(e) [an amount equal to 25% of] the retail telecommunications excise tax collected under Title 15, chapter 53, part 1;
(f) liquor license taxes under Title 16;
(g) fees from driver's licenses, motorcycle endorsements, and duplicate driver's licenses as provided in 61-5-121;
(h) inheritance and estate taxes under Title 72, chapter 16; and
(i) fees based on the value of currency on deposit and tangible personal property held for safekeeping by a foreign capital depository as provided in 15-31-803.
(2) The department of revenue shall also deposit to the credit of the state general fund all money received from the
collection of license taxes and fees and all net revenue and receipts from all other sources under the operation of the
Montana Alcoholic Beverage Code.
(3) Notwithstanding any other provision of law, the distribution of tax revenue must be made according to the provisions of the law governing allocation of the tax that were in effect for the period in which the tax revenue was recorded for accounting purposes. Tax revenue must be recorded as prescribed by the department of administration, pursuant to 17-1-102(2) and (4), in accordance with generally accepted accounting principles.
(4) All refunds of taxes must be attributed to the funds in which the taxes are currently being recorded. All refunds of interest and penalties must be attributed to the funds in which the interest and penalties are currently being recorded."
Section 7. Section 15-1-503, MCA, is amended to read:
"15-1-503. Refund of overpayment -- procedure. (1) When there has been an overpayment of the inheritance estate
tax collected by county treasurers or any other tax collected by the department of revenue and there is no law providing for
a refund, the department shall refund the amount of the overpayment to the taxpayer, plus any interest and penalty due the
taxpayer, as provided in subsection (2) of this section.
(2) No A refund or payment shall be is not allowed unless a claim is filed by the taxpayer before the expiration of 5
years from the time that the tax was paid. Within 6 months after the claim is filed, the department shall examine the claim
and either approve or disapprove it. If the claim is approved, the credit or refund shall must be made to the taxpayer within
60 days after the claim is approved;. if If the claim is disallowed, the department shall so notify the taxpayer and shall grant
a hearing on the claim. If the department disapproves a claim after holding a hearing, the determination of the department
may be reviewed as provided by 15-30-148."
Section 8. Section 15-30-136, MCA, is amended to read:
"15-30-136. Computation of income of estates or trusts -- exemption. (1) Except as otherwise provided in this
chapter, "gross income" of estates or trusts means all income from whatever source derived in the taxable tax year,
including but not limited to the following items:
(a) dividends;
(b) interest received or accrued, including interest received on obligations of another state or territory or a county, municipality, district, or other political subdivision of the state, but excluding interest income from obligations of:
(i) the United States government or the state of Montana;
(ii) a school district; or
(iii) a county, municipality, district, or other political subdivision of the state;
(c) income from partnerships and other fiduciaries;
(d) gross rents and royalties;
(e) gain from sale or exchange of property, including those gains that are excluded from gross income for federal fiduciary income tax purposes by section 641(c) of the Internal Revenue Code of 1954, as amended;
(f) gross profit from trade or business; and
(g) refunds recovered on federal income tax, to the extent that the deduction of the tax resulted in a reduction of Montana income tax liability.
(2) In computing net income, there are allowed as deductions:
(a) interest expenses deductible for federal tax purposes according to section 163 of the Internal Revenue Code of 1954, as amended;
(b) taxes paid or accrued within the taxable tax year, including but not limited to federal income tax, but excluding
Montana income tax;
(c) that fiduciary's portion of depreciation or depletion which that is deductible for federal tax purposes according to
sections 167, 611, and 642 of the Internal Revenue Code of 1954, as amended;
(d) charitable contributions that are deductible for federal tax purposes according to section 642(c) of the Internal Revenue Code of 1954, as amended;
(e) administrative expenses claimed for federal income tax purposes, according to sections 212 and 642(g) of the
Internal Revenue Code of 1954, as amended, if the expenses were not claimed as a deduction in the determination of
Montana inheritance tax;
(f) losses from fire, storm, shipwreck, or other casualty or from theft, to the extent not compensated for by insurance or otherwise, that are deductible for federal tax purposes according to section 165 of the Internal Revenue Code of 1954, as amended;
(g) net operating loss deductions allowed for federal income tax under section 642(d) of the Internal Revenue Code of 1954, as amended, except estates may not claim losses that are deductible on the decedent's final return;
(h) Montana income tax refunds or tax refund credits.
(3) The following additional deductions are allowed in deriving taxable income of estates and trusts:
(a) any amount of income for the taxable tax year currently required to be distributed to beneficiaries for the year;
(b) any other amounts properly paid or credited or required to be distributed for the taxable tax year.
(4) The exemption allowed for estates and trusts is that exemption provided in 15-30-112(2)(a) and (6)."
Section 9. Section 17-5-718, MCA, is amended to read:
"17-5-718. Tax exemption of bonds -- legal investments. (1) All bonds or notes issued under this part, their transfer,
and their income, including any profits made on their sale, are exempt from taxation by the state or any political
subdivisions subdivision or other instrumentality of the state, excepting inheritance, except for estate, and gift taxes.
(2) Bonds or notes issued under this part are legal investments for any person or board charged with investment of public funds and are acceptable as security for any deposit of public money."
Section 10. Section 17-5-930, MCA, is amended to read:
"17-5-930. Tax exemption of bonds -- legal investments. (1) All bonds issued under this part, their transfer, and their
income, including any profits made on their sale, are exempt from taxation by the state or any political subdivision or other
instrumentality of the state, excepting inheritance, except for estate, and gift taxes.
(2) Bonds issued under this part are legal investments for any person or board charged with investment of public funds and are acceptable as security for any deposit of public money."
Section 11. Section 17-5-1518, MCA, is amended to read:
"17-5-1518. Tax exemption of bonds. Bonds, notes, or other obligations issued by the board under this part and their
transfer and income (including any profits made on their sale) are free from taxation by the state or any political
subdivision or other instrumentality of the state, except for inheritance, estate, and gift taxes. The board is not required to
pay recording or transfer fees or taxes on instruments recorded by it."
Section 12. Section 17-5-1629, MCA, is amended to read:
"17-5-1629. Tax exemption of bonds. Bonds, notes, or other obligations issued by the board under this part, their
transfer, and their income (including any profits made on their sale) are free from taxation by the state or any political
subdivision or other instrumentality of the state, excepting inheritance, except for estate, and gift taxes. The board is not
required to pay recording or transfer fees or taxes on instruments recorded by it."
Section 13. Section 35-21-827, MCA, is amended to read:
"35-21-827. Property interests in plot -- inheritance estate tax. (1) All plots conveyed to individuals are presumed to
be the sole and separate property of the owner named in the instrument of conveyance.
(2) The spouse of an owner of a plot containing more than one interment space has a vested right to be interred in the plot, and a person becoming the spouse of the plot owner has a vested right to be interred in the plot if an interment space not subject to the vested right of interment for previous spouses is unoccupied at the time that the person becomes the spouse of the owner.
(3) A conveyance or other action of the owner without the written consent or joinder of the spouse of the owner may not divest the spouse of a vested right of interment, except that a final decree of dissolution of marriage between the owner and the spouse terminates the vested right of interment unless otherwise provided in the decree.
(4) If an interment is not made in a plot that has been transferred by deed or certificate of ownership to an individual owner or if all remains previously interred in the plot are lawfully removed, the plot descends upon the death of the owner to the owner's heirs-at-law, subject to the rights of interment of the decedent and the owner's surviving spouse unless the owner has disposed of the plot either in a will by a specific devise or by a written declaration filed and recorded in the office of the mausoleum-columbarium authority.
(5) Mausoleum or columbarium property passing to an individual by reason of the death of the owner is exempt from
all inheritance estate taxes."
Section 14. Section 60-11-1110, MCA, is amended to read:
"60-11-1110. Tax exemption. Bonds and refunding bonds, their transfer, and their income (including any profits made
on their sale) are free from taxation by the state or any political subdivision or instrumentality of the state, except for
inheritance and estate taxes."
Section 15. Section 60-11-1210, MCA, is amended to read:
"60-11-1210. Tax exemption. Bonds and refunding bonds, their transfer, and their income (including any profits made
on their sale) are free from taxation by the state or any political subdivision or instrumentality of the state, except for
inheritance and estate taxes."
Section 16. Section 72-1-103, MCA, is amended to read:
"72-1-103. General definitions. Subject to additional definitions contained in the subsequent chapters that are applicable to specific chapters, parts, or sections and unless the context otherwise requires, in chapters 1 through 5, the following definitions apply:
(1) "Agent" includes an attorney-in-fact under a durable or nondurable power of attorney, an individual authorized to make decisions concerning another's health care, and an individual authorized to make decisions for another under a natural death act.
(2) "Application" means a written request to the clerk for an order of informal probate or appointment under chapter 3, part 2.
(3) "Beneficiary", as it relates to:
(a) a trust beneficiary, includes a person who has any present or future interest, vested or contingent, and also includes the owner of an interest by assignment or other transfer;
(b) a charitable trust, includes any person entitled to enforce the trust;
(c) a beneficiary of a beneficiary designation, refers to a beneficiary of:
(i) an account with POD designation or a security registered in beneficiary form (TOD); or
(ii) any other nonprobate transfer at death; and
(d) a beneficiary designated in a governing instrument, includes a grantee of a deed; a devisee; a trust beneficiary; a beneficiary of a beneficiary designation; a donee; and a person in whose favor a power of attorney or a power held in any individual, fiduciary, or representative capacity is exercised.
(4) "Beneficiary designation" refers to a governing instrument naming a beneficiary of:
(a) an account with POD designation or a security registered in beneficiary form (TOD); or
(b) any other nonprobate transfer at death.
(5) "Child" includes an individual entitled to take as a child under chapters 1 through 5 by intestate succession from the parent whose relationship is involved and excludes a person who is only a stepchild, a foster child, a grandchild, or any more remote descendant.
(6) (a) "Claims", in respect to estates of decedents and protected persons, includes liabilities of the decedent or protected person, whether arising in contract, in tort, or otherwise, and liabilities of the estate that arise at or after the death of the decedent or after the appointment of a conservator, including funeral expenses and expenses of administration.
(b) The term does not include estate or inheritance taxes or demands or disputes regarding title of a decedent or
protected person to specific assets alleged to be included in the estate.
(7) "Clerk" or "clerk of court" means the clerk of the district court.
(8) "Conservator" means a person who is appointed by a court to manage the estate of a protected person.
(9) "Court" means the district court in this state having jurisdiction in matters relating to the affairs of decedents.
(10) "Descendant" of an individual means all of the individual's descendants of all generations, with the relationship of parent and child at each generation being determined by the definition of child and parent contained in this section.
(11) "Devise" when used as a noun means a testamentary disposition of real or personal property and when used as a verb means to dispose of real or personal property by will.
(12) "Devisee" means a person designated in a will to receive a devise. For purposes of chapter 3, in the case of a devise to an existing trust or trustee or to a trustee on trust described by will, the trust or trustee is the devisee and the beneficiaries are not devisees.
(13) "Disability" means cause for a protective order as described by 72-5-409.
(14) "Distributee" means any person who has received property of a decedent from the decedent's personal
representative other than as a creditor or purchaser. A testamentary trustee is a distributee only to the extent of distributed
assets or increment thereto to distributed assets remaining in the trustee's hands. A beneficiary of a testamentary trust to
whom the trustee has distributed property received from a personal representative is a distributee of the personal
representative. For purposes of this provision, "testamentary trustee" includes a trustee to whom assets are transferred by
will, to the extent of the devised assets.
(15) "Estate" includes the property of the decedent, trust, or other person whose affairs are subject to chapters 1 through 5 as originally constituted and as it exists from time to time during administration.
(16) "Exempt property" means that property of a decedent's estate that is described in 72-2-413.
(17) "Fiduciary" includes a personal representative, guardian, conservator, and trustee.
(18) "Foreign personal representative" means a personal representative appointed by another jurisdiction.
(19) "Formal proceedings" means proceedings conducted before a judge with notice to interested persons.
(20) "Governing instrument" means a deed; will; trust; insurance or annuity policy; account with POD designation; security registered in beneficiary form (TOD); pension, profit-sharing, retirement, or similar benefit plan; instrument creating or exercising a power of appointment or a power of attorney; or dispositive, appointive, or nominative instrument of any similar type.
(21) "Guardian" means a person who has qualified as a guardian of a minor or incapacitated person pursuant to testamentary or court appointment but excludes one who is merely a guardian ad litem.
(22) "Heirs", except as controlled by 72-2-721, means persons, including the surviving spouse and the state, who are entitled under the statutes of intestate succession to the property of a decedent.
(23) "Incapacitated person" has the meaning provided in 72-5-101.
(24) "Informal proceedings" means proceedings conducted without notice to interested persons by the clerk of court for probate of a will or appointment of a personal representative.
(25) "Interested person" includes heirs, devisees, children, spouses, creditors, beneficiaries, and any others having a property right in or claim against a trust estate or the estate of a decedent, ward, or protected person. The term also includes persons having priority for appointment as personal representative and other fiduciaries representing interested persons. The meaning as it relates to particular persons may vary from time to time and must be determined according to the particular purposes of and matter involved in any proceeding.
(26) "Issue" of a person means a descendant as defined in subsection (10).
(27) "Joint tenants with the right of survivorship" includes co-owners of property held under circumstances that entitle one or more to the whole of the property on the death of the other or others but excludes forms of co-ownership registration in which the underlying ownership of each party is in proportion to that party's contribution.
(28) "Lease" includes an oil, gas, coal, or other mineral lease.
(29) "Letters" includes letters testamentary, letters of guardianship, letters of administration, and letters of conservatorship.
(30) "Minor" means a person who is under 18 years of age.
(31) "Mortgage" means any conveyance, agreement, or arrangement in which property is used as security.
(32) "Nonresident decedent" means a decedent who was domiciled in another jurisdiction at the time of death.
(33) "Organization" means a corporation, business trust, estate, trust, partnership, joint venture, association, government or governmental subdivision or agency, or any other legal or commercial entity.
(34) "Parent" includes any person entitled to take, or who would be entitled to take if the child died without a will, as a parent under chapters 1 through 5 by intestate succession from the child whose relationship is in question and excludes any person who is only a stepparent, foster parent, or grandparent.
(35) "Payor" means a trustee, insurer, business entity, employer, government, governmental agency or subdivision, or any other person authorized or obligated by law or a governing instrument to make payments.
(36) "Person" means an individual, a corporation, an organization, or other legal entity.
(37) "Personal representative" includes executor, administrator, successor personal representative, special administrator, and persons who perform substantially the same function under the law governing their status. "General personal representative" excludes special administrator.
(38) "Petition" means a written request to the court for an order after notice.
(39) "Proceeding" includes action at law and suit in equity.
(40) "Property" includes both real and personal property or any interest in that property and means anything that may be the subject of ownership.
(41) "Protected person" has the meaning provided in 72-5-101.
(42) "Protective proceeding" has the meaning provided in 72-5-101.
(43) "Security" includes any note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease; collateral trust certificate; transferable share; voting trust certificate; in general, any interest or instrument commonly known as a security; any certificate of interest or participation; or any temporary or interim certificate, receipt, or certificate of deposit for or any warrant or right to subscribe to or purchase any of the foregoing.
(44) "Settlement", in reference to a decedent's estate, includes the full process of administration, distribution, and closing.
(45) "Special administrator" means a personal representative as described by chapter 3, part 7.
(46) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or insular possession subject to the jurisdiction of the United States.
(47) "Successor personal representative" means a personal representative, other than a special administrator, who is appointed to succeed a previously appointed personal representative.
(48) "Successors" means persons, other than creditors, who are entitled to property of a decedent under the decedent's will or chapters 1 through 5.
(49) "Supervised administration" refers to the proceedings described in chapter 3, part 4.
(50) "Survive" means that an individual has neither predeceased an event, including the death of another individual, nor is considered to have predeceased an event under 72-2-114 or 72-2-712. The term includes its derivatives, such as "survives", "survived", "survivor", and "surviving".
(51) "Testacy proceeding" means a proceeding to establish a will or determine intestacy.
(52) "Testator" includes an individual of either sex.
(53) "Trust" includes an express trust, private or charitable, with additions thereto to the trust, wherever and however
created. The term also includes a trust created or determined by judgment or decree under which the trust is to be
administered in the manner of an express trust. The term excludes other constructive trusts and excludes resulting trusts;
conservatorships; personal representatives; trust accounts as defined in 72-6-111 and Title 72, chapter 6, parts 2 and 3;
custodial arrangements pursuant to chapter 26 of this title; business trusts providing for certificates to be issued to
beneficiaries; common trust funds; voting trusts; security arrangements; liquidation trusts; trusts for the primary purpose of
paying debts, dividends, interest, salaries, wages, profits, pensions, or employee benefits of any kind; and any arrangement
under which a person is nominee or escrowee for another.
(54) "Trustee" includes an original, additional, or successor trustee, whether or not appointed or confirmed by court.
(55) "Ward" means an individual described in 72-5-101.
(56) "Will" includes codicil and any testamentary instrument that merely appoints an executor, revokes or revises another will, nominates a guardian, or expressly excludes or limits the right of an individual or class to succeed to property of the decedent passing by intestate succession."
Section 17. Section 72-3-607, MCA, is amended to read:
"72-3-607. Inventory -- appraisal -- copy to department of revenue. (1) Within If the estate must file a United States
estate tax return, within the time required for the filing of a the United States estate tax return plus any extensions granted
by the internal revenue service, a personal representative, who is not a special administrator or a successor to another
representative who has previously discharged this duty, shall prepare and file or mail an inventory,. which The inventory
shall must include a listing of all property which that:
(a) the decedent owned, had an interest in or control over, individually, in common, or jointly, or otherwise had at the
time of his the decedent's death;
(b) the decedent had possessory or dispository rights over at the time of his death or had disposed of for less than its fair
market value within 3 years of his the decedent's death; or
(c) was affected by the decedent's death for the purpose of inheritance or estate taxes.
(2) The inventory shall must include a statement of the full and true value of the decedent's interest in every item listed
in such the inventory. In this connection, the personal representative shall appoint one or more qualified and disinterested
persons to assist him the personal representative in ascertaining the fair market value as of the date of the decedent's death
of all assets included in the estate. Different persons may be employed to appraise different kinds of assets included in the
estate. The names and addresses of any appraiser shall must be indicated on the inventory with the item or items he
appraised.
(3) The personal representative shall send a copy of the inventory to interested persons who request it, or he the
personal representative may file the original of the inventory with the court. In any event, a copy of the inventory and
statement of value shall must be mailed to the department of revenue."
Section 18. Section 72-3-618, MCA, is amended to read:
"72-3-618. Persons dealing with personal representative -- protection. (1) A person who in good faith and without
notice either assists a personal representative or deals with him a personal representative for value is protected as if the
personal representative properly exercised his the personal representative's power. The fact that a person knowingly deals
with a personal representative does not alone require the person to inquire into the existence of a power or the propriety of
its exercise. Except for restrictions on powers of supervised personal representatives which that are endorsed on letters as
provided in 72-3-404(3), no a provision in any will or order of court purporting to limit the power of a personal
representative is not effective except as to persons with actual knowledge thereof of the provision.
(2) A person is not bound to see to the proper application of estate assets paid or delivered to a personal representative.
(3) The protection here expressed in this section extends to instances in which some procedural irregularity or
jurisdictional defect occurred in proceedings leading to the issuance of letters, including a case in which the alleged
decedent is found to be alive. The protection here expressed in this section is not by a substitution for that provided by
comparable provisions of the laws relating to commercial transactions and laws simplifying transfers of securities by
fiduciaries, nor does it in any way limit the provisions of 72-16-432 and 72-16-433."
Section 19. Section 72-3-631, MCA, is amended to read:
"72-3-631. Compensation of personal representative. (1) A personal representative is entitled to reasonable
compensation for his services. Such The compensation shall may not exceed 3% of the first $40,000 of the value of the
estate as reported for federal estate tax or state inheritance tax purposes, whichever is larger, and 2% of the value of the
estate in excess of $40,000 as reported for federal estate tax or state inheritance tax purposes, whichever is larger. However,
a personal representative is entitled to a minimum compensation of the lesser of $100 or the value of the gross estate.
(2) In proceedings conducted for the termination of joint tenancies, the compensation of the personal representative
shall may not exceed 2% of the interest passing.
(3) In proceedings conducted for the termination of a life estate, the compensation allowed the personal representative
shall may not exceed 2% of the value of the life estate if it is terminated in connection with a probate or joint tenancy
termination. If a life estate is terminated separately, the personal representative's compensation shall may not exceed 2% of
the value of the estate, except that it shall may not be less than $100.
(4) If there is more than one personal representative, only one compensation is allowed.
(5) The court may allow additional compensation for extraordinary services. Such The additional compensation shall
may not be greater than the amount which that is allowed for the original compensation.
(6) If the will provides for the compensation of the personal representative and there is no contract with the decedent
regarding compensation, the personal representative may renounce the provision before qualifying and be entitled to
compensation under the terms of this section. A personal representative also may renounce his the right to all or any part of
the compensation. A written renunciation of fee may be filed with the court."
Section 20. Section 72-3-807, MCA, is amended to read:
"72-3-807. Classification of claims as to priority of payment. (1) If the applicable assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in the following order:
(a) costs and expenses of administration;
(b) reasonable funeral expenses and reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending the decedent;
(c) federal estate and Montana state estate and inheritance taxes;
(d) debt for a current support obligation and past-due support for the decedent's children pursuant to a support order as defined in 40-5-201;
(e) debts with preference under federal and Montana law;
(f) other federal and Montana state taxes;
(g) all other claims.
(2) A preference may not be given in the payment of any claim over any other claim of the same class, and a claim due and payable may not be entitled to a preference over claims not due."
Section 21. Section 72-3-1004, MCA, is amended to read:
"72-3-1004. Closing estate by sworn statement of personal representative. (1) Unless prohibited by order of the
court and except for estates being administered in supervised administration proceedings, a personal representative may
close an estate by filing with the court no earlier than 6 months after the date of original appointment of a general personal
representative for the estate, a verified statement stating that he the personal representative, or a prior personal
representative whom he has succeeded, has:
(a) determined that the time limitation for presentation of creditors' claims has expired;
(b) fully administered the estate of the decedent by making payment, settlement, or other disposition of all claims which
that were presented, expenses of administration, and estate, inheritance, and other death taxes, except as specified in the
statement, and that the assets of the estate have been distributed to the persons entitled; if any claims remain undischarged,
the statement shall must state whether the personal representative has distributed the estate subject to possible liability with
the agreement of the distributees, or it shall must state in detail other arrangements which that have been made to
accommodate outstanding liabilities; and
(c) sent a copy thereof of the statement to all distributees of the estate and to all creditors or other claimants of whom he
the personal representative is aware whose claims are neither paid nor barred and has furnished a full account in writing of
his the administration to the distributees whose interests are affected thereby; and
(d) complied with the provisions of 72-3-1006 by the accounting.
(2) If no proceedings involving the personal representative are not pending in the court 1 year after the closing
statement is filed, the appointment of the personal representative terminates."
Section 22. Section 72-3-1006, MCA, is amended to read:
"72-3-1006. Certificate or receipt showing taxes paid required to close estate. (1) In all probate proceedings under
this code, before final distribution to successors is made and before any petition is granted under 72-3-1001, 72-3-1002,
72-3-1003, or 72-3-1004, there shall must have been filed with the clerk:
(a) a certificate from the department of revenue stating that any inheritance estate tax due on the assets of the estate has
been paid; or
(b) an agreement with the department of revenue for extension of time for payment of inheritance estate taxes; or
(c) a receipt from the county treasurer stating that any inheritance estate tax due on the assets of the estate has been
paid.
(2) This section shall does not prohibit such a partial distribution as that may become necessary in the course of
administration."
Section 23. Section 72-3-1104, MCA, is amended to read:
"72-3-1104. Small estates -- closing by sworn statement of personal representative. (1) Unless prohibited by order of the court and except for estates being administered by supervised personal representatives, a personal representative may close an estate administered under the summary procedures of 72-3-1103 by filing with the court, at any time after disbursement and distribution of the estate, a verified statement stating that:
(a) to the best knowledge of the personal representative, the value of the entire estate, less liens and encumbrances, did not exceed homestead allowance, exempt property, family allowance, costs and expenses of administration, reasonable funeral expenses, and reasonable, necessary medical and hospital expenses of the last illness of the decedent;
(b) the personal representative has fully administered the estate by payment of inheritance estate taxes and by
disbursing and distributing it to the persons entitled thereto to it; and
(c) the personal representative has sent a copy of the closing statement to all distributees of the estate and to all creditors
or other claimants of whom he the personal representative is aware whose claims are neither paid nor barred and has
furnished a full account in writing of his the administration to the distributees whose interests are affected.
(2) If no actions or proceedings involving the personal representative are not pending in the court 1 year after the
closing statement is filed, the appointment of the personal representative terminates.
(3) A closing statement filed under this section has the same effect as one filed under 72-3-1004."
Section 24. Section 72-16-215, MCA, is amended to read:
"72-16-215. County treasurer -- monthly report -- payment of collections to state treasurer -- interest on unpaid
amounts. Between the 1st and 20th days of each month, each county treasurer shall make a report under oath to the
department of revenue listing all payments received by him under the inheritance estate tax laws during the preceding
month and stating for what estate, by whom, and when paid. The form of such the report shall must be prescribed by the
department. He The county treasurer shall at the same time pay the state treasurer all the payments received by him under
the inheritance estate tax laws and not previously paid to the state treasurer., and for all such For payments collected by him
and but not paid to the state treasurer within 5 days from the time herein required, he the county treasurer shall pay interest
at the rate of 10% per annum a year."
Section 25. Section 72-16-502, MCA, is amended to read:
"72-16-502. Determination and payment of tax when no personal representative -- procedure -- exception
Definition of decedent. (1) For the purposes of this section part, a decedent is one who dies leaving no property that
requires the appointment of a personal representative and who:
(a)(1) was the owner of a life estate that terminated at death; or
(b)(2) was the owner of property with another or others as a joint tenant with right of survivorship and not as a tenant in
common; or
(c) was the owner of any other interest in property requiring the determination of inheritance tax because of death.
(2) Except as provided in subsection (6), a remainderman, surviving joint tenant, or other interested party shall, upon
the death of a decedent, file with the department of revenue:
(a) a copy of the death certificate;
(b) a verified application, in a form prescribed by the department, containing information that the department considers
necessary; and
(c) evidence of the instruments that created the life estate, joint tenancy, or other interest requiring determination of
inheritance tax, if required by the department.
(3) Upon receipt of the application, the department shall:
(a) stamp the filing date upon the application;
(b) issue a certificate showing the inheritance tax due, if any;
(c) affix the certificate to a certified copy of the application and return the certificate and copy to the applicant or the
applicant's attorney; and
(d) affix a copy of the certificate to the original application and keep it on file with the department.
(4) The applicant shall pay the inheritance tax determined to the county treasurer for transmittal to the state treasurer.
The county treasurer shall issue a receipt for the payment of the tax.
(5) If disputes arise as to tax computation, they must be resolved as provided under the laws applicable to the
determination of inheritance taxes in estates.
(6) A surviving joint tenant described in 72-16-313(1) or (2) of a decedent whose aggregate value of the interest in the
joint property is less than the federal estate tax filing requirement is not required to file under subsection (2)."
Section 26. Section 72-16-503, MCA, is amended to read:
"72-16-503. Additional filings required when real property involved and no representative -- release of lien. (1) If
an interest in real property is involved under 72-16-502, the applicant shall record with the clerk and recorder of each
county in which the real property or any part of the property is located a document containing those matters required by
7-4-2613(3). A surviving joint tenant described in 72-16-313(1) or (2) is not subject to the recording requirements under
7-4-2613(3).
(2) A surviving joint tenant described in 72-16-313(1) or (2) with an interest in real property under 72-16-502 shall record with the clerk and recorder of each county in which the real property is located an acknowledged statement that the holder of the nonprobate interest has died and that the holder's interest in the property is terminated. The acknowledged statement must include a legal description of the real property.
(3) The recording of the documents under subsection (1) or (2) constitutes release of any lien for inheritance taxes."
Section 27. Section 72-16-903, MCA, is amended to read:
"72-16-903. Taxable situs of property. For the purpose of this the estate tax, the following have taxable situs of
property shall be the same as the taxable situs for inheritance tax purposes in this state:
(1) real property located in this state;
(2) tangible personal property located in this state; and
(3) intangible personal property owned by a resident regardless of where it is located."
Section 28. Section 72-16-904, MCA, is amended to read:
"72-16-904. Estate tax imposed. In addition to the inheritance taxes hereinabove imposed, an An estate tax is hereby
imposed upon the transfer of the estate of every decedent leaving an estate which that is subject to the federal estate tax
imposed by the United States of America under the applicable provisions of the Internal Revenue Code and which that has,
in whole or in part, a taxable situs in this state."
Section 29. Section 72-16-905, MCA, is amended to read:
"72-16-905. Estate tax -- how computed. The tax hereby imposed upon the transfer of each such estate shall be is
equal to the maximum tax credit allowable for state death taxes against the federal estate tax imposed with respect to the
portion of the decedent's estate having a taxable situs in this state, less the inheritance taxes, if any, due this state, it being.
It is the purpose and intent of this part to impose only such those additional taxes hereunder as that may be necessary to
give this state the full benefit of the maximum tax credit allowable against the federal estate tax imposed with respect to a
decedent's estate which that has a taxable situs in this state. If only a portion of a decedent's estate has a taxable situs in this
state, such the maximum tax credit shall must be determined by multiplying the entire amount of the credit allowable
against the federal estate tax for state death taxes by the percentage which that the value of the portion of the decedent's
estate which that has a taxable situs in this state bears to the value of the entire estate."
Section 30. Section 72-16-907, MCA, is amended to read:
"72-16-907. Department to determine tax -- rehearing and appeal -- rulemaking. (1) (a) The department of revenue
shall enter an order determining such the state estate tax and the amount thereof so due and payable.
(2)(b) Any person in with an interest aggrieved by such the department's determination shall have the same right to
apply for may appeal the determination to district court determination and of rehearing and appeal as is now provided for in
the determination of inheritance taxes.
(2) The department shall adopt rules necessary for the administration and enforcement of this part."
Section 31. Section 72-16-909, MCA, is amended to read:
"72-16-909. When and where tax payable -- interest. (1) The estate tax shall be is payable to the county treasurer of
the county in which such the estate is being probated in the same manner provided for the payment of inheritance taxes in
72-16-441.
(2) If the tax is not paid within 18 months of the death of the decedent, interest must be charged and collected at the rate of 10% a year from the time that the tax accrued, unless because of claims made upon the estate, necessary litigation, or other unavoidable cause of delay, the tax is not determined and paid on time. Interest at the rate of 6% must be charged upon the amount of tax due from the time of accrual until the cause of the delay is removed, and after that time, interest at the rate of 10% must be charged.
(3) Litigation to defeat the payment of the tax is not necessary litigation.
(4) When permission has been granted to defer payment of tax under 72-16-910, interest must be charged at the rate of 6% after 1 year from the date of death until the date of payment."
Section 32. Section 72-16-1007, MCA, is amended to read:
"72-16-1007. Applicability of other taxes -- rulemaking Rulemaking. The provisions of Title 72, chapter 16, parts 1
through 8, relating to the tax on inheritances and transfers, apply to 72-16-1001 through 72-16-1006 unless they are in
conflict with this part. The department shall adopt rules necessary for the administration and enforcement of this part."
Section 33. Section 80-12-305, MCA, is amended to read:
"80-12-305. Tax exemption of bonds. Bonds issued by the authority under this chapter and their transfer and income,
including any profits made on their sale, are exempt from taxation by the state or any political subdivision or other
instrumentality of the state, except for inheritance, estate, and gift taxes. The authority is not required to pay recording or
transfer fees or taxes on instruments recorded by it."
Section 34. Section 90-6-125, MCA, is amended to read:
"90-6-125. Tax exemption of bonds. Bonds, notes, or other obligations issued by the board under this part or by local
housing authorities under Title 7, chapter 15, parts 21, 44, and 45, their transfer, and their income (including any profits
made on their sale) shall be are free from taxation by the state or any political subdivision or other instrumentality of the
state, excepting inheritance, except for estate, and gift taxes. The board is not required to pay recording or transfer fees or
taxes on instruments recorded by it."
Section 35. Code commissioner instruction. The code commissioner shall renumber 72-16-217 as an integral part of Title 50, chapter 15.
Section 36. Repealer. Sections 72-4-304, 72-14-303, 72-16-101, 72-16-102, 72-16-201, 72-16-203, 72-16-204, 72-16-205, 72-16-206, 72-16-207, 72-16-208, 72-16-209, 72-16-210, 72-16-211, 72-16-212, 72-16-213, 72-16-214, 72-16-216, 72-16-218, 72-16-301, 72-16-302, 72-16-303, 72-16-304, 72-16-305, 72-16-306, 72-16-307, 72-16-308, 72-16-311, 72-16-312, 72-16-313, 72-16-314, 72-16-315, 72-16-316, 72-16-317, 72-16-318, 72-16-319, 72-16-321, 72-16-322, 72-16-323, 72-16-331, 72-16-332, 72-16-333, 72-16-334, 72-16-335, 72-16-336, 72-16-337, 72-16-338, 72-16-339, 72-16-340, 72-16-341, 72-16-342, 72-16-343, 72-16-344, 72-16-345, 72-16-346, 72-16-347, 72-16-348, 72-16-349, 72-16-401, 72-16-402, 72-16-403, 72-16-411, 72-16-412, 72-16-413, 72-16-414, 72-16-415, 72-16-416, 72-16-417, 72-16-418, 72-16-419, 72-16-420, 72-16-421, 72-16-422, 72-16-423, 72-16-424, 72-16-425, 72-16-431, 72-16-432, 72-16-433, 72-16-434, 72-16-435, 72-16-436, 72-16-437, 72-16-438, 72-16-439, 72-16-440, 72-16-441, 72-16-442, 72-16-443, 72-16-445, 72-16-446, 72-16-447, 72-16-448, 72-16-449, 72-16-450, 72-16-451, 72-16-452, 72-16-453, 72-16-454, 72-16-455, 72-16-456, 72-16-457, 72-16-458, 72-16-459, 72-16-460, 72-16-461, 72-16-462, 72-16-463, 72-16-464, 72-16-465, 72-16-471, 72-16-472, 72-16-473, 72-16-474, 72-16-475, 72-16-476, 72-16-477, 72-16-478, 72-16-479, 72-16-480, 72-16-481, 72-16-482, 72-16-491, 72-16-492, 72-16-493, 72-16-504, 72-16-505, 72-16-701, 72-16-702, 72-16-703, 72-16-704, 72-16-705, 72-16-706, 72-16-801, 72-16-802, 72-16-803, 72-16-804, 72-16-805, and 72-16-902, MCA, are repealed.
Section 37. Effective date. This act is effective upon approval by the electorate.
Section 38. Applicability. This act applies to deaths occurring after December 31, 2000.
Section 39. Submission to electorate. This act shall be submitted to the qualified electors of Montana at the general election to be held in November 2000 by printing on the ballot the full title of this act and the following:
[] FOR repealing state inheritance taxes.
[] AGAINST repealing state inheritance taxes.
- END -
Latest Version of HB 7 (HB0007.ENR)
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