Cory

The Controller of the State of California, Kenneth Cory (Controller), appeals from a judgment which sustains the objections to the report of an inheritance tax referee fixing the tax in a decedent’s estate. The issue presented is whether assets which constituted the corpus of two inter vivos trusts were subject to the California inheritance tax, in the trustor-decedent’s estate. In reversing the judgment we will conclude that the property in question is taxable under statutory provisions (Rev. & Tax. Code, §§ 13641-13649) dealing with inter vivos transfers. (All further statutory references are to that code unless otherwise indicated.)

Initially, we focus on the relevant statutes. Sections 13641 through 13649, inclusive, impose inheritance taxes on specified inter vivos transactions. Section 13649 (formerly § 13648) cautions: “It is hereby declared to be the intent and purpose of this part to tax every transfer made in lieu of, or to avoid, the passing of property by will or the laws of succession.” Consistent with this expression, we have held that the sections “represent a legislative scheme to prevent inheritance tax evasion by imposing on the courts an obligation to…