Estate of Elsman

McCutchen, Doyle, Brown & Enersen, Mortimer Smith III, James C. Fowler and Brent M. Abel for Objectors and Respondents.

OPINION

SIMS, Acting. P.J.

The State Controller has appealed from an amended order fixing inheritance tax which sustained the executors' objections to the amended report of the inheritance tax appraiser. It deleted and reduced the clear market value of the property, subject to inheritance tax in the estate of the resident decedent, by the gross value of the remainder interest of an irrevocable trust, in which he retained a life interest, created by the decedent when a nonresident, 40 years before his death. The Controller states the issue as follows: "Are the remainder interests taxable under the California inheritance tax law where, as Trustor, a resident of the State of Nevada executed an irrevocable trust (intangibles) with a New York trustee reserving to himself all income for the duration of his life and thereafter he becomes and dies a resident and domiciliary of California?" The executors, in a more specific analysis, focus on the two following issues: "1. May an inheritance tax statute be applied retroactively to tax a lifetime transfer that was…