Vanderbilt Law Review

First Page



When a man dies, it must be decided how his property shall be distributed. Ordinarily, the distribution will follow his express intention as evidenced in a will or the presumed intention of the state laws of intestacy. In these ordinary situations, the state death tax is applied to the various legacies and devises and to the property passing by descent in the manner provided by the state tax statutes. Thus, the majority of testamentary distributions are carried out without any state death tax problems.

However, in some cases, events occur after the death of the decedent which change the testator's or intestacy law's scheme of distribution. A legatee or devisee may renounce under the will, leaving the property to be distributed elsewhere. The wife of the decedent may elect to take her dower interest, her statutory share, or her interest under an ante-nuptial agreement rather than what her husband has provided in his will. The appointee of a power may renounce his interest under such power. There may be a will contest, which upsets the will of the decedent in favor of his heirs. Or there may be a compromise agreement between interested parties to prevent costly litigation. Any of these events will raise state death tax problems.

Where state death tax statutes are of the inheritance tax type, these changes in the distribution plans may have an important effect on the amount of the tax. The inheritance tax is imposed on the transfer of the property, and the relation of the transferee to the decedent is directly reflected in the rates. Some statutes have no inheritance tax at all on transfers to close relatives. Other statutes tax transfers to close relatives at a low rate, and transfers to "strangers" at a higher rate. Also, the rates on charitable gifts may be of importance. These changes after the death of the decedent will frequently cause a change in the beneficiary, which may mean a change in the tax rate. A change in the beneficiary may also alter the statutory exemption. Particularly is this so where spouses or charities are involved. The question which arises when the state government assesses the tax is what rates and exemptions shall be applied. This discussion will be directed toward answering that question.