1973, February, Pg. 11. Multiple Life Estates and Inheritance Tax.

• Author: by Richard M. Hall

2 Colo.Law. 11

The Colorado Lawyer

1973.

1973, February, Pg. 11.

Multiple Life Estates and Inheritance Tax

11Vol. 2, No. 4, Pg. 11Multiple Life Estates and Inheritance Taxby Richard M. HallRichard M. Hall is a graduate of the University of Denver College of Law. As student analyst employed by the Inheritance Tax Division, he wrote the example problems that are to be used within the division. He is now employed by Petrie, Woodrow, and Roushar in Montrose, Colorado.In June of 1972 a procedural change occurred in the Colorado Inheritance Tax Division that should make it much easier for attorneys to accurately compute the tax that will be assessed by the State Tax Analyst. This of course, will mean better utilization of the 5% discount provision under C.R.S. 1963, § 138-3-33 and avoidance of the surprise "balance due" that is so difficult to explain to clients who believe they have already paid too much. Up to June 1972 the Inheritance Tax Commission used the formulae from the book, Inheritance Tax Calculations, 2d. ed. (1937), by S. Herbert Wolfe, to compute the taxable values of multiple life estates. That book, alas, has been out of print for over 30 years and cannot be ordered even through the publisher, and the few copies that exist are yellowed with age and guarded closely by the banks and large firms. The result was that the majority of lawyers had to trust in the care and competence of the analyst.

In 1972 the Inheritance Tax Commission looked again at C.R.S. 138-3-19 and determined that it is quite possible to use the actuarial table in C.R.S. 138-3-19 to do all the life estate problems that are normally encountered. An analyst was assigned to do several problems using both the Wolfe and the non-Wolfe method so that the results could be compared. The difference between the two was so small that, because of the greater ease and availability of the non-Wolfe method, Wolfe was abandoned. The problems that follow are from the final draft of a series of sample problems to be used within the Inheritance Tax Division to create uniformity among the analysts.

C.R.S. 138-3-19 is now the only approved reference source for life estate or annuity problems. There are four columns in the table. Column 1 represents two distinct time concepts: the number of years, if the bequest to be taxed is a term for years, or the age at...