AN ACT relating to inheritance tax exemptions.

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AN ACT relating to inheritance tax exemptions. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 140.080 is amended to read as follows: 3
(1) The following exemptions chargeable against the lowest bracket or brackets of 4
inheritable interests shall be free from any tax under the preceding provisions of 5
this chapter: 6
(a) Surviving spouse, total inheritable interest. Effective as to decedents dying 7
after August 1, 1985, notwithstanding anything in this chapter to the contrary, 8
if the decedent's personal representative (or trustee or transferee, absent a 9
personal representative) shal l so elect, the spouse's inheritable interest shall 10
include the entire value of any trust or life estate which is in a form that 11
qualifies for the federal estate tax marital deductions under 26 U.S.C. sec. 12
2056(b)(5) or (7) [ section 2056(b)(5) or 2056(b)(7 ) of the Internal Revenue 13
Code of 1954] , as amended through December 31, 1984, regardless of 14
whether or not the federal estate tax marital deduction is elected by the 15
decedent's personal representative. To be valid, the election referred to in the 16
sentence immediately preceding must be made in the form prescribed by the 17
Department of Revenue and must be filed on or before the due date of the tax 18
return (plus extensions) or with the first tax return filed, whichever last 19
occurs; 20
(b)[ Class A beneficiaries as defined in KRS 140.070, other than the surviving 21
spouse, of estates of decedents dying prior to July 1, 1995, as follows: 22
1. Infant child by blood or adoption, $20,000; 23
2. Child by blood who has been declared mentally disabled by a court of 24
competent jurisdiction, $20,000; 25
3. Child adopted during infancy who has been declared mentally disabled 26
by a court of competent jurisdiction, $20,000; or a 27
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4. Child adopted during adulth ood who was reared by the decedent during 1
infancy and who has been declared mentally disabled by a court of 2
competent jurisdiction, $20,000; 3
5. Parent, $5,000; 4
6. Child by blood, $5,000; 5
7. Stepchild, $5,000; 6
8. Child adopted during infancy, $5,000; 7
9. Child adopted during adulthood who was reared by the decedent during 8
infancy, $5,000; or a 9
10. Grandchild who is the issue of a child by blood, the issue of a stepchild, 10
the issue of a child adopted during infancy or the issue of a child 11
adopted during adulth ood who was reared by the decedent during 12
infancy, $5,000; 13
(c)] Class A beneficiaries as defined in KRS 140.070, [ other than the 14
surviving spouse, of estates of decedents dying on or after July 1, 1995, 15
shall be as follows: 16
1. For decedents dying between J uly 1, 1995, and June 30, 1996, the 17
greater of the exemption established pursuant to paragraph (1)(b) of this 18
section or one-fourth (1/4) of each beneficiary's inheritable interest; 19
2. For decedents dying between July 1, 1996, and June 30, 1997, the 20
greater of the exemption established pursuant to paragraph (1)(b) of this 21
section or one-half (1/2) of each beneficiary's inheritable interest; 22
3. For decedents dying between July 1, 1997, and June 30, 1998, the 23
greater of the exemption established pursuant to p aragraph (1)(b) of this 24
section or three -fourths (3/4) of each beneficiary's inheritable interest; 25
and 26
4. For each decedent dying after June 30, 1998,] each beneficiary's total 27
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inheritable interest; 1
(c)[(d)] All persons of Class B, under KRS 140.070, as follows: 2
1. For decedents dying prior to January 1, 2027, $1,000; and 3
2. For decedents dying on or after January 1, 2027, each beneficiary's 4
total inheritable interest; and 5
(d)[(e)] All persons of Class C, under KRS 140.070, $500. 6
(2) If the decedent was not a resident of this state, the exemption shall be the same 7
proportion of the allowable exemption in the case of residents that the property 8
taxable by this state bears to the whole property transferred by the decedent. 9