Section 14345 - Delivery of Property-Insurance Companies(a) Insurance on Life of Decedent. Except as provided in subdivisions (1), (2) and (3) below, unless the Controller issues a written consent, delivery of payment by reason of the death of an insured to the beneficiary or beneficiaries under a policy of life or accident insurance may not be made by the insuring company without retaining a sufficient amount to pay any inheritance tax and interest which may thereafter be assessed and without first giving notice to the Controller of the time and place of payment at least ten days prior thereto. (See Revenue and Taxation Code Section 14345.) These provisions are modified by the following exceptions whereby, pursuant to the authority granted by Revenue and Taxation Code Section 14348, the State Controller has dispensed with the written consent or withholding and prior notice requirements of Revenue and Taxation Code Section 14345 in the following cases except as otherwise specified:
(1) When proceeds are payable to a named beneficiary if the aggregate paid by the company is not in excess of $5,000.(2) Subject to the notice under subdivision (9), and in situations other than those indicated in subdivisions (3), (4), (5) and (6), when payable to a named beneficiary if the aggregate paid by the company to the beneficiary is over $5,000 but not in excess of $25,000, and if the company can affirm that to its knowledge the total amount of insurance written by all companies on the life of the decedent does not exceed $50,000.(3) When payable to the surviving spouse of the decedent with a date of death on or after January 1, 1981 in any amount, provided that notice under subdivision (9) be given of payment in excess of $100,000.(4) Subject to the notice under subdivision (9) when payable to the surviving spouse of a decedent with a date of death prior to January 1, 1981, if the aggregate paid by the company does not exceed $25,000 plus 50 percent of any proceeds in excess of $25,000.(5) Subject to the notice under subdivision (9) when payable to a child of the decedent if the aggregate paid by the company does not exceed $25,000 plus 50 percent of any proceeds in excess of $25,000.(6) Subject to the notice under subdivision (9) of amounts over $2,000, when payable to the estate of a decedent or the executor or administrator of decedent's estate in any amount, if the company has obtained a certified copy of letters testamentary or letters of administration issued in a probate proceeding by a California court to a California resident executor or administrator.(7) When payable in any amount and the company has obtained a certified copy of the decedent's death certificate which contains entries showing the death to have occurred outside the State of California and that the last usual residence of the decedent was in a state of the United States other than California and the length of stay therein was not less than two years.(8) When payable in any amount and the company has either not obtained a death certificate, or having obtained one, it shows that the decedent died outside the State of California but is indeterminate as to his last usual residence or length of stay therein, and the company has obtained an affidavit of residence stating that the decedent died outside the State of California, that he or she was a legal resident of a state of the United States other than California and that he or she was not present in California for a period longer than six months during the last two years of his life.(9) Payments authorized in the situations described in subdivisions (a)(2), (3), (4), (5) and (6), are subject to the condition that notice of such payment is sent to the District Office of the Division of Tax Administration-Inheritance Tax serving the county of which the decedent was a resident, within 35 days after the date of such payment. (See Section 14732 for counties comprising each district.) The notice must indicate the number of the insurance policy, name of the insuring company, nature and type of the policy, name of the insured decedent and residence at time of death, name and residence of beneficiary and beneficiary's relationship to the decedent, the face value of the policy, the amount payable, the amount paid to the beneficiary and the amount retained for future payment, if any.(10) When the policy is not owned by the insured decedent at death, payment may be made to a named beneficiary if the aggregate is not in excess of $5,000, or pursuant to the circumstances described in subdivisions (a)(3), (4) and (5) and subject to notice under subdivision (a)(9). Payment of all other amounts are subject to the provisions of Revenue and Taxation Code Section 14345. The request for consent to transfer will be processed in the District Office of the Division of Tax Administration-Inheritance Tax serving the county of decedent's residence. See Section 14732 for counties comprising each district. To facilitate processing the request should include the policy number, name and last residence of the insured decedent, name of the beneficiary, relationship of the beneficiary to the decedent, the amount payable, name of the policy owner, relationship of the owner to the insured, effective date of the current ownership, whether the owner was the original applicant, how ownership was acquired, the extent to which consideration may have been given by the owner to the insured, whether the insured retained any incidents of ownership or policy rights, and the extent to which the insured may have paid the premiums on the policy.(b) Annuity Contract. In the case of an insurance company which had issued an annuity contract, under which any amount is due as a result of the death of a decedent, or under which payments continue after the death of a decedent, the company shall comply with the notice and withholding requirements specified in Revenue and Taxation Code Section 14345 unless the consent specified in that section is first secured; provided, payment may be made to the following persons up to the amount indicated if contemporaneously with such payment notice thereof is given to the State Controller: (1) If the transferee entitled thereto is the spouse of the decedent, payments may be made without limit.(2) If the transferee entitled thereto is the lineal ancestor or lineal issue of the decedent, i.e., parent, grandparent, child, grandchild, etc., payments may be made in a total amount not in excess of $15,000.(3) If the transferee entitled thereto is the brother, sister or descendant of a brother or sister of the decedent, payments may be made in a total amount not in excess of $7,500.(4) If the transferee entitled thereto is not in any of the foregoing classes, payments may be made in a total amount not in excess of $2,000. For purposes of this regulation, the word transferee is defined to include, but is not limited to, surviving joint annuitant.
(c) Application for Consent to Transfer. An application for the State Controller's "Consent to Transfer" proceeds of policies should state the number of the policy, the amount payable, the last known address of decedent and the place of his death, the name and address of the beneficiary and his relationship to the decedent, and the total amount of insurance payable by reason of the death of the decedent carried with the applicant and with other companies so far as is known. The application should be sent to the District Office of the Division of Tax Administration-Inheritance Tax nearest the place of decedent's residence. For the District Offices, see Section 14732.
NOTE: As to the taxation of insurance proceeds, see Sections 13722, 13723, 13724, 13724.1, 13724.2 and Revenue and Taxation Code Sections 13721 through 13724.
Cal. Code Regs. Tit. 18, § 14345
1. Amendment filed 7-2-81; effective thirtieth day thereafter (Register 81, No. 27). Note: Authority cited: Section 14740, Revenue and Taxation Code. Reference: Section 14345, Revenue and Taxation Code.
1. Amendment filed 7-2-81; effective thirtieth day thereafter (Register 81, No. 27).