California Code of Regulations › Title 18 - Public Revenues › Division 2.5 - State Controller › Chapter 2 - Gift Tax › Article 5 - Valuation › Section 15552.2 - Estates, Income and Annuities for Joint Lives of Several Persons

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Joint Lives of
				  Two Persons.
If income, an annuity, or an estate is given to two persons
					 for their use or enjoyment during their joint lives, the present values of the
					 respective interests of the transferees are computed as follows:
(1) Determine in accordance with Section
				  15552.1
				  what the present value of the older donee's life interest would be if he were
				  the only donee.
(2) Divide by two
				  the value ascertained pursuant to step (1). The quotient will be the present
				  value of the older donee's interest in the joint estate.
(3) Determine in accordance with Section
				  15552.1 what the present value of
				  the younger donee's life interest would be if he were the only donee.
(4) Subtract the present value of the elder
				  donee's single life interest, as determined pursuant to step (1), from the
				  present value of the younger donee's single life interest, as determined
				  pursuant to step (3).
(5) Add the
				  remainder determined pursuant to step (4) to one-half of the present value of
				  the elder donee's single life interest determined pursuant to step (1). The sum
				  is the present value of the younger donee's interest in the joint estate.
The provisions of subdivision (a) may be illustrated by the
					 following example:
EXAMPLE.
A gives to B and C the annual income from a sum of $10,000
					 for their joint lives, the survivor to enjoy the entire income until his death,
					 with a remainder over to D. At the time of the gift, B, a male, is 40 years of
					 age and C, a female, is 25 years of age. Table A(1) of Section
					 15552.8 indicates the life estate
					 factor for a male aged 40 is .78923. The product of this factor multiplied by
					 $10,000 is $7,892, the present value of B's single life estate. One-half of
					 $7,892, or $3,946, is the present value of B's interest in the joint life
					 estate. Table A(2) indicates the life estate factor for the life of a female
					 aged 25 is .92375. The product of this factor multiplied by $10,000 is $9,238,
					 the present value of C's single life estate. The difference between B's and C's
					 single life estate, $1,345, is added to one-half of the present value of B's
					 single life estate ($3,946), resulting in the sum of $5,291, the present value
					 of C's interest in the joint and successive life estate. The value of D's
					 remainder is $762 ($10,000 less the sum of B's and C's joint and successive
					 life interest).
The above computation may be simplified by combining the
					 last two steps, i.e., (4) and (5) of subdivision (a) into one computation in
					 the following manner. After determining the value of B's interest in a joint
					 life estate and the present value of C's single life estate as set forth above
					 (pursuant to steps (1), (2) and (3)), subtract the value of B's interest in the
					 joint life estate ($3,946) from the value of C's single life estate ($9,238).
					 The difference represents C's interest in the joint and successive life estate
					 ($9,238 - $3,946 = $5,292).