Bill Summary – FastDemocracy

1

                                                         ____________________________

                                                        Councilmember Kenyan McDuffie

4

5

                                             A BILL

                                    ______________________

 8

                 IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

10

                       _______________________________________

12

 To amend section 19-114 of the District of Columbia Official Code to include in the

       elected spousal share of a surviving spouse or domestic partner both probate and

       non-probate assets; to amend An Act To establish a code of law for the District of

       Columbia to allow real property held by spouses or domestic partners by tenancy

       of the entirety that they convey to a trustee to retain immunity from creditors

       while in the trust; and to amend section 47-3702 of the District of Columbia

       Official Code to allow a surviving spouse or domestic partner to claim a deceased

       spousal unused exclusion amount on the estate tax.

         BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA,

 That this act may be cited as the Trust and Estate Conformity Amendment Act of 2020.

         Sec. 2. Section 19-114 of the District of Columbia Official Code is amended as

 follows:

         (a) The existing text is designated as subsection (a).

         (b) A new subsection (b) is added to read as follows:

         (b) A surviving spouse or domestic partner is entitled to probate and non-probate

 assets of the estate, including:

                 (1) Insurance policies;

                 (2) Retirement benefits exclusive of federal social security benefits;

                                                   1

                  (3) Annuities;

                  (4) Pension plans;

                  (5) Deferred compensation arrangements;

                  (6) Employee benefit plans to the extent owned by, vested in, or subject

  to the control of the decedent on the date of the decedents death or the date of an

  irrevocable transfer by the decedent during decedents lifetime; and

                  (7) All such insurance policies and other benefits notwithstanding the

  presence of language contained in any statute otherwise providing that neither they nor

  their proceeds shall be liable to attachment, garnishment, levy, execution, or other legal

 process or be seized, taken, appropriated, or applied by any legal or equitable process or

 operation of law or any other such similar language..

         Sec. 3. Section 1031 of An Act To establish a code of law for the District of

 Columbia, approved March 3, 1901 (31 Stat. 1189; D.C. Official Code  42-516), is

 amended by adding new subsections (d) through (i) to read as follows:

         (d) Property of spouses or domestic partners held in tenancy by the entirety and

 subsequently conveyed to the trustee of one or more trusts and the proceeds of that

 property shall have the same immunity from the claims of the separate creditors of the

 husband and wife as would exist if the spouses or domestic partners continued holding

 the property or proceeds from the property as tenants by the entirety, as long as:

                 (1) The spouses remain married or in a domestic partnership;

                 (2) The property or the proceeds from the property continue to be held in

 trust by the trustee or trustees or the successors in trust of the trustee or trustees;

                 (3) Both spouses or domestic partners are beneficiaries of the trust or

                                                     2

  trusts; and

                  (4) Beginning 30 days after the effective date of this subsection, the trust

  instrument, deed, or other instrument of conveyance provides that this section shall apply

  to the property or the proceeds from the property.

          (e) After the death of a spouse or domestic partner, all property held in trust that

  was immune from the claims of separate creditors under subsection (d) of this section

  immediately prior to the death of the individual shall continue to have the same immunity

  from the claims of the separate creditors of the decedent as would have existed if the

  spouses or domestic partners continued holding the property conveyed in trust or the

 proceeds from the property as tenants by the entirety.

         (f) A spouse or domestic partner may waive immunity from the claims of

 separate creditors under subsections (d) and (e) of this section as to each specific creditor,

 all separate creditors of a spouse or domestic partner or specifically described trust

 property, or all former tenancy by the entirety property conveyed to the trustee or trustees

 by:

                 (1) The express provisions of a trust instrument; or

                 (2) The written consent of both spouses or domestic partners.

         (g)(1) Except as provided in paragraph (2) of this subsection, immunity from the

 claims of separate creditors under subsections (d) and (e) of this section shall be waived

 if a trustee executes and delivers a financial statement for the trust that fails to disclose

 the requested identify of property held in trust that is immune from the claims of separate

 creditors.

                 (2) Immunity is not waived under this subsection if the identity of the

                                                    3

  property that is immune from the claims of separate creditors is otherwise reasonably

  disclosed by:

                         (A) A publicly recorded deed or other instrument of conveyance

  by spouses or domestic partners to the trustee;

                         (B) A written memorandum by the spouses or domestic partners,

  or by a trustee, that is recorded among the land records or other public records in the

  jurisdiction where the records of the trust are regularly maintained; or

                         (C) The terms of the trust instrument, including a schedule or

  exhibit attached to the trust instrument, if a copy of the trust instrument is provided with

 the financial statement.

                 (3) A waiver under this subsection shall be effective only as to:

                        (A) The person to whom the trustee delivers the financial

 statement;

                        (B) The particular trust property held in trust, which the immunity

 from the claims of separate creditors is insufficiently disclosed on the financial statement;

 and

                        (C) The transaction, which the disclosure was sought.

         (h) In a dispute relating to the immunity of trust property from the claims of a

 separate creditor of a spouse or domestic partner, the trustee has the burden of proving

 immunity of the trust property from the claims of the creditor.

         (i) After a conveyance to a trustee described in subsection (d) of this section, the

 property transferred shall no longer be held by the spouse or domestic partner as tenants

 by the entirety..

                                                   4

         Sec. 4. Section 47-3702(a-1) of the District of Columbia Official Code is

  amended as follows:

         (a) Paragraph (1) is amended by striking the phrase at 0%, and if and inserting

  the phrase at 0%, plus any deceased spousal unused exclusion amount calculated in

  accordance with subsection (d) of this section, and if in its place.

         (b) A new subsection (d) is added to read as follows:

         (d)(1) For purposes of this section, the term deceased spousal unused exclusion

   amount means the application exclusion amount in effect at the time of the death of

   the last predeceased spouse or domestic partner of the decedent reduced by the taxable

  estate of the last predeceased spouse:

                    (A) As reported on an estate tax return filed with the District; or

                    (B) As reported on a federal estate tax return if the last predeceased

  spouse was not a District resident and no property with District estate tax situs was

  includible in the gross estate of the last predeceased spouse.

                (2) The deceased spousal unused exclusion amount shall apply provided

  that if the last predeceased spouse or domestic partner:

                        (A) Died on or after January 1, 2019, a District estate tax return is

  timely filed for the last predeceased spouse on which the deceased spousal unused

  exclusion amount is calculated and an irrevocable election is made that the deceased

  spousal unused exclusion amount may be taken into account; or

                        (B) Died before January 1, 2019, or was not a District resident

  and no property with a District estate tax situs was includible in the gross estate of the

  last predeceased spouse or domestic partner, an election was made under section

                                                   5

   2010(c) of the Tax Reform Act of 1976, approved October 4, 1976 (90 Stat. 1848; 26

   U.S. C  2010(c)), on the federal estate tax return of the last predeceased spouse or

   domestic partner..

         Sec. 5. Fiscal impact statement.

         The Council adopts the fiscal impact statement in the committee report as the

  fiscal impact statement required by section 4a of the General Legislative Procedures Act

  of 1975, approved October 16, 2006 (120 Stat. 2038; D.C. Official  1-301.47a).

         Sec. 6. Effective date.

         This act shall take effect following approval by the Mayor (or in the event of veto

 by the Mayor, action by the Council to override the veto), a 30-day period of

 congressional review as provided in section 602(c)(1) of the District of Columbia Home

 Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code  1-

 206.02(c)(1)), and publication in the District of Columbia Register.

                                                 6