1975, May, Pg. 1025. CPC Newsletter.

4 Colo.Law. 1025

Colorado Lawyer

1975.

1975, May, Pg. 1025.

CPC Newsletter

1025Vol. 4, No. 5, Pg. 1025CPC NewsletterThe Colorado Probate Code and Federal Estate Taxes

Since the Uniform Probate Code was adapted and enacted into Colorado law as the Colorado Probate Code several questions have arisen about the interaction of some of the Colorado Code provisions and the federal estate tax law.

The Exempt Property AllowanceOne uncertainty is whether property passing to a surviving spouse under the exempt property allowance qualifies for the estate tax marital deduction. There are no cases on the marital deduction issue in any of the states which are under the Uniform Probate Code. The comments on the Uniform Code do not address this issue.

The federal statute creating the estate tax marital deduction contains a prohibition against terminable interests qualifying for that deduction. A terminable interest is a property interest which terminates or fails owing to lapse of time or the occurrence or failure of a condition or contingency. A life estate created by the decedent which terminates upon the death of the surviving spouse is one such interest. The theory underlying this provision is that terminable interests may escape taxation in the estate of the surviving spouse.

The most productive approach is to analogize the exempt property allowance to the widow's allowance, where there are many cases. The leading case on the widow's allowance and terminable interests is Jackson v. United States, 376 U.S. 503 (1964).

Jackson sets out three major points concerning the deductibility of widow's allowances. First, an absolute right to the allowance must vest in the widow as of date of death of the decedent. Second, no portion of the allowance may be terminated by death or remarriage of the surviving spouse. Third, mere inclusion of the property in the surviving spouse's estate does not grant qualification.

C.R.S. 1973, § 15-11-402, regarding the Colorado exempt property allowance, contains the following language: ". . . the surviving spouse ... is entitled to an exempt property allowance." When the Jackson decision is applied to the exempt property allowance, the issue becomes whether or not the phrase "entitled to" vests the property in the surviving spouse as of date of death. No cases were found in Colorado which...