Estate of Allen

In this case, following the death of a retired airline employee’s spouse, the Controller sought to impose an inheritance tax on one-half of the pension that the surviving employee spouse was receiving, despite the fact that receipt of the pension preceded and was unaffected by the decedent’s passing. We concur in the superior court’s conclusion that such a tax would be improper by virtue of the fact that the community property interest of the nonemployee spouse did not pass to her husband at her death but simply terminated at that time. In reaching this conclusion we reject the Controller’s two preliminary contentions and hold that the prong of the “terminable interest” rule articulated in Waite v. Waite (1972) 6 Cal.3d 461 [ 99 Cal.Rptr. 325 , 492 P.2d 13 ], is still viable and that the rationale of Waite , which involved a public pension plan, is equally applicable to the private pension plan involved here.

Orpha and Herbert Allen had been married for 36 years when Orpha Allen died in 1977. By then Mr. Allen had retired from Pan American World Airways, his employer throughout the marriage, and was receiving retirement income from Pan American.

The terms of the…