Chap. 128.—An ACT to amend the Code of Virginia by adding a new section
numbered 5440-b, to apportion the payment of Federal estate taxes on resident
decedents among those who receive the property on which the tax is based,
and to provide that the section shall apply also to State assessments made under
Section 115 of the Tax Code of Virginia. [H B 253]

Approved March 7, 1946

Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia of nineteen hundred nineteen, as
amended, be further amended by adding thereto a new section numbered
fifty-four hundred and forty (b), as follows:

Section 5440 (b). Apportionment of Federal estate taxes; execu-
tor or administrator to deduct taxes from shares of beneficiaries.

1. For the purposes of this Code section the term “persons in-
terested in the estate” shall include all persons, firms and corporations
who may be entitled to receive or who have received any property or
interest which is required to be included in the gross estate of the de-
cedent, or any benefit whatsoever with respect to any such property or in-
terest, whether under a will or intestacy, or by reason of any transfer,
trust, estate, interest, right, power or relinquishment of power, taxable
under any estate tax law of the United States heretofore or hereafter
enacted.

(2) Whenever it appears upon any settlement of accounts or in any
other appropriate action or proceeding, that an executor, administrator.
curator, trustee or other person acting in a fiduciary capacity, has paid
an estate tax levied or assessed under the provisions of any estate tax
law of the United States heretofore or hereafter enacted, upon or with
respect to any property required to be included in the gross estate of a
decedent under the provisions of any such law, the amourit of the tax
so paid (except in a case where a testator otherwise directs in his will,
and except in a case where by written instrument executed inter vivos
direction is given for apportionment within the fund of taxes asssesed
upon the specific fund dealt with in such inter vivos instrument) shall
be prorated among the persons interested in the estate to whom such
property is or may be transferred or to whom any benefit accrues. Such
apportionment shall be made in the proportion that the value of the
property, interest or benefit of each such person bears to the total value of
the property, interests and benefits received by all such persons interested
in the estate, except that in making such proration each such person shall
have the benefit of any exemptions, deductions and exclusions allowed by
such act in respect of such person or the property passing to him; and
except that, notwithstanding anything hereinabove contained, in cases
where a trust is created, or other provision made whereby any person is
given an interest in income, or an estate for years, or for life, or other
temporary interest in any property or fund, the tax on both such tempo-
rary interest and on the remainder thereafter shall be charged against
and paid out of the corpus of such property or fund without apportion-
ment between remainders and temporary estates.

(3) So far as is practicable and unless otherwise directed by the
will of the decedent the tax shall be paid by the executor, administrator,
or other fiduciary as such out of the estate before its distribution. In all
cases in which any property required to be included in the gross estate
does not come into the possession of the executor, administrator or other
fiduciary as such, he shall be entitled, and it shall be his duty, to recover
from whomever is in possession, or from the persons interested in the
estate, the proportionate amount of such tax payable by the persons in-
terested in the estate with which such persons interested 1n the estate are
chargeable under the provisions of this section.

(4) No executor, administrator or other person acting 1n a fiduciary
capacity shall be required to transfer, pay over or distribute any fund
or property with respect to which a federal estate tax is imposed until
the amount of such tax or taxes due from the devisee, legatee, distributee,
or other person to whom such property is transferred 1s paid to such
fiduciary, or, if the apportionment of tax has not been determined, ade-
quate security is furnished by the transferee for such payment.

(5) The court, wherein the estate is administered, upon making or
approving a determination as provided in subdivision two of this section,
shall make a decree or order directing the executor, administrator or other
fiduciary to charge the prorated amounts against the persons as to whom
the tax has been so prorated in so far as such fiduciary is in possession
of property or interests of such persons against whom such charge may

made.

(6) This section shall also apply to State taxes assessed and paid
under the provisions of section one hundred fifteen of the Tax Code of
Virginia to the effect that the minimum State tax upon the transfer at
death of the estates of resident decedents shall not be less than the fed-
eral credit.