GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1997
SESSION LAW 1998-69
AN ACT TO ABOLISH TAX WAIVERS FOR THE TRANSFER OR DELIVERANCE OF A DECEDENT'S PROPERTY.
The General Assembly of North Carolina enacts:
Section 1. G.S. 105-2.1 reads as rewritten:
"§
105-2.1. Internal Revenue Code definition. Definitions.
As used in this Article, the term "Code"has
the same meaning as in G.S. 105-228.90. The following definitions apply
in this Article:
(1) Code. - Defined in G.S. 105-228.90.
(2) Collector. - Defined in G.S. 28A-1-1.
(3) Personal representative. - Defined in G.S. 28A-1-1."
Section 2. G.S. 105-11 is repealed.
Section 3. G.S. 105-11.1 is repealed.
Section 4. G.S. 105-12 is repealed.
Section 5. Article 1 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-13.1. Notices to Secretary of certain payments.
(a) Life Insurance Policy. - When a company pays the proceeds of a life insurance policy as a result of the death of an individual who owned the policy and was the named insured under the policy, the company must notify the Secretary of the payment on a form approved by the Secretary unless one of the following applies:
(1) The payment is to the surviving spouse.
(2) The payment is to a Class A beneficiary, as described in G.S. 105-4(a), and the proceeds of the policy do not exceed one hundred thousand dollars ($100,000).
(b) Annuity and IRA. - When a company pays the initial payment of an annuity or the initial distribution of an IRA as a result of the death of the annuitant or owner of the IRA, the company must notify the Secretary of the payment or distribution on a form approved by the Secretary unless one of the following applies:
(1) The payment or distribution is to the surviving spouse.
(2) The payment or distribution is to a Class A beneficiary, as described in G.S. 105-4(a), and the total amount to be paid under the annuity or distributed under the IRA does not exceed one hundred thousand dollars ($100,000)."
Section 6. G.S. 105-20 reads as rewritten:
"§ 105-20.
Legacy charged upon real estate, heir or devisee to deduct and pay tax;
limitation; Inheritance or Estate Tax Waiver. Taxes are a lien on real
property in an estate.
Whenever such legacy shall be charged upon or payable out
of real estate, the heir or devisee of such real estate, before paying the same
to such legatee, shall deduct the tax therefrom at the rates aforesaid, and pay
the amount so deducted to the executor or administrator or the Secretary of
Revenue, and the same shall remain a charge upon such real estate until paid,
and in default thereof the same shall be enforced by the decrees of the court
in the same manner as the payment of such legacy may be enforced: Provided,
that all taxes imposed by this Article shall be a lien upon the real and
personal property of the estate on which the tax is imposed or upon the
proceeds arising from the sale of such property from the time said tax is due
and payable, and shall continue a lien until said tax is paid and receipted for
by the proper officer of the State: Provided further, that no lien for
inheritance or estate taxes shall attach or affect the land after 10 years from
the date of death of the decedent: Provided further, that no taxes imposed by
this Article shall be a lien upon real property that is released by an
Inheritance or Estate Tax Waiver issued by the Secretary of Revenue. An Inheritance
or Estate Tax Waiver issued by the Secretary of Revenue and bearing the
signature or official facsimile signature of the Secretary of Revenue covering
real property may be registered in the office of the Register of Deeds of the
county or counties where the real estate described in the waiver is
located. No formalities as to acknowledgement, probate, or approval by
any officer shall be required as a condition to such registration. An
Inheritance or Estate Tax Waiver so registered shall be conclusive evidence
that the real property described in such waiver is not subject to the lien of
any taxes imposed by this Article.
The taxes imposed by this Article on the transfer of real or personal property are a lien on the real property in an estate and on the proceeds arising from the sale of real property. The lien is created at the date of death of the decedent and continues until the tax is paid, 10 years have elapsed since the date of the decedent's death, or the lien is released. A lien is released when the Secretary issues a tax waiver for the lien, the Secretary issues an inheritance tax certificate, or the personal representative files a tax certification with the clerk of superior court. A tax waiver may be filed in the office of the register of deeds of each county where the property is located. No formalities as to acknowledgment, probate, or approval by any officer are required as a condition to filing. The filing of a tax waiver is conclusive evidence that the real property described in the waiver is not subject to a lien for taxes imposed by this Article."
Section 7. G.S. 105-24 reads as rewritten:
"§ 105-24.
Tax waiver required for transfer of decedents' property in some cases;
inventory of lock boxes; withdrawal of bank deposits, etc., payable to either
husband or wife or survivor. Inventory of safe-deposit boxes.
(a) No safe
deposit company, trust company, corporation, bank, or other institution, person
or persons having in possession or control or custody, in whole or in part,
securities, deposits, assets, or property belonging to or standing in the name
of a decedent, or belonging to or standing in the joint names of decedent and
one or more persons, shall deliver or transfer the same to any person
whatsoever, whether in a representative capacity or not, or to the survivor or
to the survivors when held in the joint names of a decedent and one or more
persons, without retaining a sufficient portion or amount thereof to pay taxes
or interest assessed under this Article on property transferred by the
decedent; but the Secretary of Revenue may consent in writing to such delivery
or transfer, and such consent shall relieve said safe deposit company, trust
company, corporation, bank or other institution, person or persons from the
obligation herein imposed. Securities whose declaration date is after the
decedent's death, or interest that accrues after the decedent's death on money
on deposit at a bank, savings and loan association, credit union, or other
corporation, however, may be transferred or delivered without retaining a
portion of the property for the payment of taxes or interest and without
obtaining the written consent of the Secretary to the delivery or transfer.
Provided: The clerk of superior court of the resident county of a decedent may
authorize in writing one or more banks, safe deposit companies, trust companies
or any other institutions to transfer to the properly qualified representative
of the estate any funds on deposit in the name of the decedent or the decedent
and one or more persons when the aggregate amount of all such deposits in all
such institutions is two thousand dollars ($2,000) or less, and when such
deposit or deposits compose the total cash assets of the estate. Such
authorization shall have the same force and effect as when issued in writing by
the Secretary of Revenue.
(b) Except as provided in
subsection (c) of this section, every safe deposit company, trust company,
corporation, bank or other institution, person, or persons engaged in the
business of renting lock safe-deposit boxes for the safekeeping
of valuable papers and personal effects, or having in their possession or
supervision in such lock safe-deposit boxes such valuable papers
or personal effects shall, upon the death of any person using or having access
to such lock safe-deposit box, as a condition precedent to the
opening of such lock safe-deposit box by the executor,
administrator, personal representative lessee representative,
collector, lessee, or cotenant of such deceased person, require the
presence of the clerk of the superior court of the county in which such lock
the box is located. It shall be the duty of the clerk of the
superior court, or his representative, in the presence of an officer or a
representative of the safe deposit company, trust company, corporation,
bank, or other institution, person or persons, to make an inventory of the
contents of such lock the box and to furnish a copy of such
inventory to the Secretary of Revenue, to the executor,
administrator, personal representative, collector, lessee, or
cotenant of the decedent, and a copy to the safe deposit company, trust
company, corporation, bank, or other institution, person, or persons having
possession of such lock the safe-deposit box; provided, that for lock
boxes to which decedent merely had access the inventory shall include only
assets in which the decedent has or had an interest. Immediately after After
the clerk of superior court has made an inventory of the contents of the lock
safe-deposit box, the safe deposit company, trust company,
corporation, bank or other institution, or person shall, upon request, release
to the lessee personal representative, collector, lessee, or
cotenant of the lock box any life insurance policy stored in the lock
box for delivery to the beneficiary named in the policy. No other
contents of the lock box may be released except Notwithstanding any of the
provisions of this section any life insurance company may pay the proceeds of
any policy upon the life of a decedent to the person entitled thereto as soon
as it shall have mailed to the Secretary of Revenue a notice, in such form as
the Secretary of Revenue may prescribe, setting forth the fact of such payment;
but if such notice be not mailed, all of the provisions of this section shall
apply. the contents of the box.
(c) Notwithstanding the
provisions of subsection (b) of this section, if the properly qualified
personal representative of an estate personal representative, collector,
lessee, or cotenant believes upon reliable information that a lock safe-deposit
box to which the decedent had access is empty, the personal
representative that person may so certify to the clerk of superior
court of the county in which the lock box is located. Upon receipt of
this certificate, the clerk may authorize in writing the personal representative
or the personal representative's named agent representative, collector,
lessee, or cotenant to open the lock box outside of the clerk's
presence. The personal representative or the personal representative's agent
authorized person shall open the lock box in the presence of an
officer or a representative of the institution having control or
custody of the lock box, and the personal representative or the
personal representative's agent shall certify to the clerk whether the lock
box is or is not empty. The certificate shall include the name of the officer
or representative of the institution who was present at the time the lock
box was opened and shall be signed by the officer or representative
to indicate that he or she the representative was present. If
the lock box is empty, no tax waiver will be required from, and no notice given
to, the Secretary of Revenue. If the lock safe-deposit box
is not empty, the officer or representative of the institution shall
close the lock box at once and the lock box may be reopened only
in accordance with subsection (b) of this section.
(d) Notwithstanding
any of the provisions of this section, in any case where a bank deposit has
been heretofore made or is hereafter made, or where savings and loan stock has
heretofore been issued or is hereafter issued, in the names of two or more
persons and payable to either or the survivor or survivors of them, such bank
or savings and loan association may, upon the death of either of such persons,
allow the person or persons entitled thereto to withdraw as much as fifty
percent (50%) of such deposit or stock, and the balance thereof shall be
retained by the bank or savings and loan association to cover any taxes that may
thereafter be assessed under this Article. When it is ascertained that there is
no liability of such deposit or stock for taxes under this Article, the
Secretary of Revenue shall furnish the bank or savings and loan association his
written consent for the payment of the retained percentage to the person or
persons entitled thereto by law; and the Secretary of Revenue may furnish such
written consent to the bank or savings and loan association upon the
qualification of a personal representative of the deceased. If the person
entitled to funds in an account is the surviving spouse and the account is a
joint account of the surviving spouse and the decedent with right of
survivorship, no tax waiver is required from the Secretary of Revenue to
release the funds in the account.
(e) Failure to comply with the provisions of this section shall render such safe deposit company, trust company, corporation, bank or other institution, person or persons liable for the amount of the taxes and interest due under this Article on property transferred by the decedent. In any action brought under this provision it shall be a sufficient defense that the delivery or transfer of securities, deposits, assets, or property was made in good faith without knowledge of the death of the decedent and without knowledge of circumstances sufficient to place the defendant on inquiry."
Section 8. G.S. 105-30 is repealed.
Section 9. G.S. 105-31 reads as rewritten:
"§ 105-31.
Additional remedies for enforcement of tax. Action to collect tax
due.
In addition to all other remedies which may now exist
under the law, or may hereafter be established, for the collection of the taxes
imposed by the preceding sections of this Article, the tax so imposed shall be
a lien upon all of the property and upon all of the estate, with respect to
which the taxes are levied, as well as collectible out of any other property,
resort to which may be had for their payment; and the said taxes shall
constitute a debt, which may be recovered in an action brought by the Secretary
of Revenue in any court of competent jurisdiction in this State, and/or in any
court having jurisdiction of actions of debt in any state of the United States,
and/or in any court of the United States against an administrator, executor,
trustee, or personal representative, and/or any person, corporation, or concern
having in hand any property, funds, or assets of any nature, with respect to
which such tax has been imposed. No title or interest to such estate, funds,
assets, or property shall pass, and no disposition thereof shall be made by any
person claiming an interest therein until said taxes have been fully paid or
until the Secretary of Revenue has released such property by the issuance of an
Inheritance or Estate Tax Waiver. Taxes payable under this Article are a
debt that may be recovered in an action brought by the Secretary against the
personal representative or against any other person having in hand any property
with respect to which the taxes have been imposed."
Section 10. G.S. 25-4-405(c) reads as rewritten:
"(c) A transaction,
although subject to this Article, is also subject to G.S. 105-24, 41-2.1,
53-146.1, 54-109.58, and 54B-129, and in case of conflict between the
provisions of this section and either of those sections, the provisions of
those sections control."
Section 11. G.S. 41-2.1(f) reads as rewritten:
"(f) Nothing herein
contained shall be construed to This section does not repeal or
modify any of the provisions of G.S. 105-24 relating to the administration
of the inheritance laws or any other provisions of the law relating to
inheritance taxes."
Section 12. G.S. 41-2.2(d) reads as rewritten:
"(d) Nothing herein
contained shall be construed to This section does not repeal or
modify any of the provisions of G.S. 105-2, 105-11, and 105-24,
relating to the administration of the inheritance tax laws, or any other provisions
of the law relating to inheritance taxes."
Section 13. G.S. 53-146.1(b) reads as rewritten:
"(b) Nothing herein
contained shall be construed to This section does not repeal or
modify any of the provisions of G.S. 105-24, relating to the administration
of the estate tax laws of this State, or provisions of laws relating to
estate taxes; the provisions herein shall regulate, govern and protect taxes.
This section regulates and protects the bank in its relationship with such
joint owners of deposit accounts as herein provided. accounts."
Section 14. G.S. 53-146.2(d) reads as rewritten:
"(d) Nothing herein
contained shall be construed to This section does not repeal or
modify any of the provisions of G.S. 105-24, relating to the administration
of the estate tax laws of this State, or provisions of laws relating to
estate taxes."
Section 15. G.S. 54-109.58(b) reads as rewritten:
"(b) Nothing herein
contained shall be construed to This section does not repeal or
modify any of the provisions of G.S. 105-24, relating to the administration
of the estate tax laws of this State, or provisions of laws relating to
estate taxes; the provisions herein shall regulate, govern and protect taxes.
This section regulates and protects the credit union in its relationship
with such joint owners of accounts as herein provided. accounts."
Section 16. G.S. 54B-129(b) reads as rewritten:
"(b) Nothing herein
contained shall be construed to This section does not repeal or
modify any of the provisions of G.S. 105-24, relating to the administration
of the estate tax laws of this State, or provisions of law relating to
estate taxes; the provisions herein shall regulate, govern and protect taxes.
This section regulates and protects the association in its relationships
with such joint owners of deposit accounts as herein provided. accounts."
Section 17. G.S. 54B-130(d) reads as rewritten:
"(d) Nothing herein
contained shall be construed to This section does not repeal or
modify any of the provisions of G.S. 105-24, relating to the administration
of the estate tax laws of this State, or provisions of laws relating to
estate taxes."
Section 18. G.S. 54C-165(b) reads as rewritten:
"(b) Nothing in this
section is construed to This section does not repeal or modify any provision
of G.S. 105-24 relating to the administration of the estate tax laws of this
State or any other law relating to estate taxes. This section shall
regulate, govern, and protect regulates and protects the savings
bank in its relationships with the joint owners of deposit accounts."
Section 19. G.S. 54C-166(d) reads as rewritten:
"(d) Nothing in this
section is construed to This section does not repeal or modify any provision
of G.S. 105-24 relating to the administration of estate tax laws of this State
or any other law relating to estate taxes."
Section 20. This act becomes effective August 1, 1998, and applies to estates of decedents who die on or after that date.
In the General Assembly read three times and ratified this the 22nd day of July, 1998.
s/ Dennis A. Wicker
President of the Senate
s/ Harold J. Brubaker
Speaker of the House of Representatives
s/ James B. Hunt, Jr.
Governor
Approved 8:34 a.m. this 30th day of July, 1998