Opinion
No. 77-498
Decided June 1, 1978. Rehearing denied July 13, 1978. Certiorari denied October 30, 1978.
Under circumstances where wife and husband were killed in plane crash, Department of Revenue sought to include in the wife's estate the full amount of the proceeds of an insurance policy that insured the husband's life and that named the wife as beneficiary. From adverse district court judgment, department appealed.
Affirmed
1. TAXATION — Simultaneous Death Act — Presumption — Unaffected by Trust — Contrary Terms — Proceeds — Insurance Policy — Husband's Life — Not Includable — Wife's Estate — Tax Purposes. Because order of death of husband and wife was not ascertainable, and because language of pour-over provisions of trust established by husband had the effect of creating presumption as to order of death contrary to that specified in simultaneous death act, the Department of Revenue sought to include full proceeds of insurance on husband in the estate of the beneficiary, the wife; however, there being no words in the contract of insurance reversing the statutory presumption and there being nothing said in the wife's will pertaining to simultaneous death, the presumption as to survivorship in the trust did not result in a distribution of property different from that provided for by use of the statutory presumption, and thus only the interpolated terminal reserve value of the policy owned by the wife was includable in her estate for tax purposes.
Appeal from the District Court of Pueblo County, Honorable Richard D. Robb, Judge.
Kettelkamp Vento, P.C., Joseph A. Vento, for plaintiff-appellee.
J. D. MacFarlane, Attorney General, David W. Robbins, Deputy Attorney General, Edward G. Donovan, Assistant Attorney General, Daniel Muse, Assistant Attorney General, Linda Palmieri Rigsby, Assistant Attorney General, for defendant-appellant.
Nancy Ohre, her husband Christopher, and their only two children were killed in an airplane crash on February 17, 1974. There was insufficient evidence to establish the order of death, so it is assumed they all died simultaneously. Nancy owned and was sole beneficiary of a $100,000 life insurance policy on the life of Christopher. There were no contingent beneficiaries named. The insurance policy provided that, upon the death of the insured, if there were no then surviving beneficiaries, the proceeds were to be paid to the owner or to her executor. The department of revenue issued its report of appraisement and assessment of tax on the basis that the entire cash proceeds of the policy were includable in Nancy's estate for inheritance tax purposes. Nancy's estate objected, and claimed that the only interest transferred on this policy at the time of her death was the interpolated terminal reserve in the amount of $1,940.67. At a hearing on the objection, the district court determined that the simultaneous death act provided for the distribution of the insurance proceeds as if the insured had survived the beneficiary, and reduced the assessment from the cash proceeds value to the interpolated terminal reserve value. The department appeals. We affirm.
The Uniform Simultaneous Death Act in effect at the time of the accident provided:
"Insurance Policies. — Where the insured and the beneficiary in a policy of life or accident insurance have died and there is no sufficient evidence that they have died otherwise than simultaneously the proceeds of the policy shall be distributed as if the insured had survived the beneficiary . . . ." 1967 Perm. Supp., C.R.S. 1963, 153-18-5 (now § 15-11-613(5), C.R.S. 1973).
"Article does not apply if decedent provides otherwise. — This article shall not apply in the case of wills, living trusts, deeds, or contracts of insurance or any other situation where provision is made for distribution of property different from the provisions of this article, or where provision is made for presumption as to survivorship which results in a distribution of property different from that here provided." 1967 Perm. Supp., C.R.S. 1963, 153-18-6 (now § 15-11-613(6), C.R.S. 1973).
In Nancy's will, she bequeathed all of her property to Christopher if he survived her by 30 days; otherwise, she gave her property to the trustee of a trust set up by Christopher prior to the execution of her will. In the trust agreement were provisions that on Christopher's death, if Nancy survived, there was to be a marital trust for her benefit for her life and then over as she shall appoint by will, with pour-over into the residual trust in default of appointment. The residual trust, including the marital trust if she did not survive him or failed to appoint, was for the benefit of his wife and children or in event of death of all, was to be paid over half to his mother and one-half to her mother and father. Christopher's trust specified that:
"In determining whether [Christopher's] wife survives him for the purposes of either of the trust estates, if there is no sufficient evidence to establish the order of their death, [Nancy] shall be deemed to have survived him."
The department contends that the above-quoted provision in the trust agreement brings the matter within the exceptions set forth in § 153-18-6 and reverses the statutory presumption of § 153-18-5. We do not agree.
Under § 153-18-5, Nancy, as the owner-beneficiary of the policy on Christopher's life, is treated for property purposes as if Christopher, the insured, still survived at the instant of her death. The value of the policy at the time of her death, see § 39-23-142, C.R.S. 1973, was the cash surrender value or the so-called "interpolated terminal reserve." Nothing but Christopher's death could have fully matured the policy, and his death according to the statute came after Nancy's. See Estate of Wien v. Commissioner of Internal Revenue, 441 F.2d 32 (5th Cir. 1971).
[1] There are no words in the contract of insurance in any way reversing the statutory presumption, nor is there anything said in Nancy's will pertaining to simultaneous death. Consequently, here, the presumption as to survivorship contained in Christopher's trust does not result in a distribution of property different from that provided for by use of the statutory presumption. Here, on the instant of the simultaneous deaths, the right to the devolution of the trust assets vested in the parents of Nancy and Christopher, who were mentioned as the ultimate beneficiaries, regardless of who was presumed to have died first.
Judgment affirmed.
JUDGE ENOCH and JUDGE BERMAN concur.