February 9, 1982

You request a ruling concerning the inheritance tax consequences of the fact pattern described below:

X and Y, Massachusetts residents, were remaindermen under an inter vivos trust established by their California aunt in 1933. The aunt died in 1942, Y died intestate in 1968 and X died in 1973. X's estate was probated and a final accounting allowed. Neither X nor Y received any property under the trust because they failed to outlive the life beneficiaries of the trust and their interests were contingent upon surviving the life beneficiaries.

In 1981 a California Superior Court ordered the trust assets returned to the aunt's estate because upon the death of the last surviving life beneficiary there were no living remainderen to receive property under the trust. The Court determined that the aunt died intestate and ordered that the trust property be distributed by intestate succession.

You represent beneficiaries of the estate's of X and Y who will receive inheritances as a result of the assets of the trust flowing by intestacy from the aunt's estate into the estates of X and Y.

The Massachusetts inheritance tax, General Laws Chapter 65, applies to estates of decedents dying before January 1, 1976. Section 27 of Chapter 65 states that

"…[i]f after assessment and certification of the full amount of the tax upon an estate or any interest therein or part thereof the estate shall receive or become entitled to property in addition to that shown in the inventory or disclosed to the Commissioner at or before the time of the assessment and certification of the tax in full, the executor, administrator, trustee or other fiduciary shall forthwith notify the commissioner who shall, upon being thus or otherwise informed, assess the amount of additional tax, if any, due and payable thereon and shall certify the said amount to the person by whom such tax is payable..."

Section 13 of Chapter 65 provides that with certain exceptions not here applicable,..."the tax imposed by this Chapter shall be assessed upon the value of the property at the time of death of the decedent."

Based on the foregoing it is ruled that beneficiaries of the estate of X, and beneficiaries of the estate of Y, who receive property as a result of the estates becoming entitled to property in addition to that disclosed to the Commissioner at the time of the assessment and certification of the tax, are subject to taxation under Chapter 65. Beneficiaries receiving property from X's estate shall be assessed a tax based on the value of the property at X's death. Beneficiaries receiving property from Y's estate shall be assessed a tax based on the value of the property at Y's death.

Very truly your,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 82-13