Court Opinion

ID: 4706604
Source: CourtListenerOpinion
Date Created: 2021-07-26 23:42:53.889093+00
Date Added: 2024-06-11T08:06:37.709074
License: Public Domain

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                           This
                                                                             was
                                                                                   
                                                                                      flied for 
                                                                                                record 
                    FILE                                                   opinion
                    IN CLERKS OFFICE
          lllJPREME COURT, STATE OF WASIIINGTON                         ~~~,16~
                                                                         ~   P/f/
                         OCT 0 2 2014
                DATE
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                                                                                        p Fitar
                                                                            Suprarne Court Clark

                IN THE SUPREME COURT OF THE STATE OF WASHINGTON

                In re the Matter of the:                            )
                                                                    )
                ESTATE OF HELEN M. HAMBLETON,                       )               No. 89419-1
                                                                    )
                             Deceased,                              )
                                                                    )
                STEVE HAMBLETON, in his capacity as personal        )
                representative of the Estate of Helen M. Hambleton, )
                                                                    )
                             Respondent,                            )
                v                                                   )             consolidated with
                                                                    )
                STATE OF WASHINGTON, DEPARTMENT OF                  )
                REVENUE,                                            )
                                                                    )
                                    Appellant.                      )
                --------------------------- ))
                In re the Matter of the:                         )
                                                                                    No. 89500-7
                                                                 )
                ESTATE OF JESSIE CAMPBELL MACBRIDE,              )
                                                                                       En Bane
                                                                 )
                            Deceased,                            )
                                                                          Filed    OCT 0 2 2014
                                                                 )                --------
                THOMAS A. MACBRIDE Ill and PHILIP MACBRIDE, )
                Personal Representatives of the Estate of Jessie )
                Campbell Macbride,                               )
                                                                    )
                                   Appellants,                      )
                v                                                   )
                                                                    )
                STATE OF WASHINGTON, DEPARTMENT OF                  )
                REVENUE,                                            )
                                                                    )
                                    Respondent.                     )
                                                                    )
                                               
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                        WIGGINS, J.-ln 2013, the legislature amended the Estate and Transfer Tax

              Act, chapter 83.1 00 RCW, in response to our decision in In re Estate of Bracken, 175

              Wn.2d 549, 290 P.3d 99 (2012), in which we narrowly construed the term "transfer."

              The amendment allows the Department of Revenue (DOR) to tax qualified terminable

              interest property (QTIP) as part of a surviving spouse's estate. A QTIP trust is created

              by a deceased spouse and gives the surviving spouse a life interest in the income or

              use of trust property. See 26 U.S.C. § 2056(b )(7)(B)(i)-(ii). The advantage of QTIP

              trusts is that no estate tax is paid on the death of the first spouse; the property is taxed

              only upon the death of the surviving spouse.

                        In these consolidated cases, the estates of Hambleton and Macbride

              (collectively Estates) challenge the amendment on a variety of grounds. We reject

              the Estates' challenges and reverse summary judgment in In re Estate of Hambleton,

              No. 89419-1, and affirm the summary judgment in In re Estate of Macbride, No. 89500-

              7.

                                                     Background

                        A brief discussion of the history of Washington's current estate tax law, the

              Bracken decision, 175 Wn.2d 549, and the facts of the consolidated cases, places this

              case in context.

                                       Washington Estate Tax Law Pre-Bracken

                        For many years, Washington did not have an independent estate tax. Instead,

              Washington participated in a federal tax sharing system, referred to as "pickup" taxes.

                                                           2
    In re
                Estate
                      of Hambleton,
                                                      
                                        No. 89419-1
          consolidated with
          In re Estate of Macbride, No. 89500-7

          Bracken, 175 Wn.2d at 557. Under the pickup tax system, the federal government

          became the principal estate tax collector in exchange for sharing with states a

          generous percentage of the amount collected.          /d.   In 2001, Congress passed

          legislation that gradually eliminated the pickup tax system. /d. at 558. Our legislature

          responded by "revis[ing] existing statutes to tie estate taxation to provisions of the

           Internal Revenue Code as they existed [under the former pickup tax system], with

           DOR continuing to collect the same amount of tax as before." /d. at 558-59. We

           invalidated the revisions and instructed the legislature to either create a stand-alone

           estate tax or remain under the former pickup tax system. /d. at 559; Estate of Hemphill

           v. Dep't of Revenue, 153 Wn.2d 544, 551, 105 P.3d 391 (2005).

                 In 2005, the legislature answered by enacting a stand-alone estate tax, the

           Estate and Transfer Tax Act (Act).     LAWS OF   2005, ch. 516, § 1.   The legislature

           modeled the stand-alone tax after the federal estate tax regime. See Bracken, 175

           Wn.2d at 559. "It incorporates concepts and definitions from federal law and operates

           almost entirely in tandem with taxable estate and tax calculation and reporting for

           federal estate tax purposes."    /d.   For example, the "'Washington taxable estate'

           means the federal taxable estate, less: [specified deductions]."    LAWS OF   2005, ch.

           516, § 2(13).

                  Under federal law, Congress provides a deduction for QTIP trust assets. QTIP

           is property in a testamentary trust created by a deceased spouse for the benefit of the

           surviving spouse. The result of the deduction is that "[t]he spouse who dies first

                                                      3
                                                
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              controls the final disposition of the property, while allowing the surviving spouse to use

              the property or receive the income it generates, unreduced by front-end estate

              taxation." Bracken, 175 Wn.2d at 556. Typically, terminable interests, such as life

              estates, do not qualify for the marital tax deduction.         See id. at 555.     However,

              Congress created an exception for QTIP assets. The effect of the deduction is that

              the property is ultimately taxed, but the property is not taxed when the first spouse

              creates the life estate. /d. at 556. The transfer of property is taxed when the second

              spouse dies and the ultimate beneficiaries become present interest holders. /d.

                      Estate taxes are excise taxes. West     v.   Okla. Tax Comm'n, 334 U.S. 717, 727,

              68 S. Ct. 1223, 92 L. Ed. 1676 (1948). Whether a tax is an excise tax or a direct tax

              is significant because the Washington State Constitution imposes a uniformity

              requirement on direct taxes, but the uniformity requirement does not apply to excise

              taxes. CaNST. art. VII,§ 1; Dean v. Lehman, 143 Wn.2d 12, 25-26, 18 P.3d 523 (2001 ).

              A tax is an "excise" or "transfer" tax if the government is taxing "a particular use or

              enjoyment of property or the shifting from one to another of any power or privilege

              incidental to the ownership or enjoyment of property." Fernandez       v.   Wiener, 326 U.S.

              340, 352, 66 S. Ct. 178, 90 L. Ed. 116 (1945).

                      The 2005 Act imposed a tax on "every transfer of property located in

              Washington" and applied prospectively to estates of decedents dying on or after May

              17, 2005. LAWS OF 2005, ch. 516, §§ 3(1 ), 20. Therefore, a transfer (upon which the

              excise tax operates) must occur on or after May 17, 2005.

                                                          4
                                           
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                                                Estate of Bracken

                     In Bracken, we held that DOR overstepped its authority by adopting regulations

              that taxed QTIP assets when the deceased spouse died before the effective date of

              the 2005 Act. Bracken, 175 Wn.2d at 554; see LAWS OF 2005, ch. 516, § 20. In

              Bracken, the deceased spouses made QTIP elections under federal law before

              Washington enacted its stand-alone estate tax and the surviving spouses died after

              the legislature passed the Act. See 175 Wn.2d at 556, 561-62. The estate in Bracken

              argued that the taxable transfer occurred when the first spouse died (before the Act

              came into effect), while DOR argued that a taxable transfer occurred when the second

              spouse died (after the Act came into effect). See id. at 561-63.

                     We interpreted "transfer" narrowly and reasoned that the only "transfer"

              occurred at the husbands' deaths when they created the QTIP trusts. See id. at 554,

              563. Any transfers that occurred later upon the wives' deaths were fictional. /d. at

              554. Therefore, DOR exceeded its authority under the Act, which requires a transfer,

              by creating regulations that allowed taxation of fictional transfers. /d. According to

              our interpretation in Bracken, the "real" transfers occurred before the 2005 estate law

              was enacted. DOR could not tax these transfers because the legislature declared

              that the Act was prospective only. See LAWS OF 2005, ch. 516, § 20. The court did

              not reach alleged constitutional issues because it construed the estate tax to apply

              only to real transfers. See 175 Wn.2d at 563.

                                                         5
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                      The concurring/dissenting opinion disagreed with the majority's narrow

              interpretation of "transfer."   See id. at 576 (Madsen, C.J., concurring/dissenting).

              However, the concurring/dissenting opinion still agreed that the legislature did not

              intend to tax the QTIP, but for reasons differing from the majority. /d. at 594 (Madsen,

              C.J., concurring/dissenting) ("The 2006 regulations on their face and according to their

              plain language effectuate the obvious purpose of the legislature's determination to

              allow a state QTIP election: the surviving spouses' estates are not subject to state

              estate taxation on federal estate QTIP elections that did not benefit the first spouses'

              estates on any state estate tax returns by allowing a state marital deduction when the

              first spouses died."). The concurring/dissenting justices noted that the legislature

              could amend the statute if it intended a different result, so long as the amendments

              did not offend the constitution. /d. at 594-95.

                      The result of the Bracken decision was that the State could not tax the QTIP

              trusts created by spouses dying before the Act was enacted because the spouse did

              not make a state QTIP election. See id. at 554.

                                                 2013 Amendments

                      In 2013, the legislature responded to Bracken by amending the Act to tax QTIP

              assets upon the death of the surviving spouse. LAWS OF 2013, 2d Spec. Sess., ch. 2,

              § 1. Disagreeing with Bracken's narrow interpretation of the term "transfer," the

              legislature noted that under the federal estate tax code "transfer" is "construed broadly

              and extends to the 'shifting from one to another of any power or privilege incidental to

                                                          6
                                              
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

          the ownership or enjoyment of property' that occurs at death." /d. § 1(3) (quoting

              Fernandez, 326 U.S. at 352). The legislature also found that Bracken

                      (a) Creates an inequity never intended by the legislature because
                      unmarried individuals did not enjoy any similar opportunities to avoid or
                      greatly reduce their potential Washington estate tax liability; and (b) may
                      create disparate treatment between QTIP property and other property
                      transferred between spouses that is eligible for the marital deduction.

              /d. § 1(4 ).   In response to its findings, the legislature broadened the meaning of

              "transfer" to its "broadest possible meaning consistent with established United States

              supreme court precedents .... " /d. § 1(5).

                      The legislature intended for the amendments to "apply both prospectively and

              retroactively to all estates of decedents dying on or after May 17, 2005." /d. § 9.

              However, the amendments do "not affect any final judgment, no longer subject to

              appeal, entered by a court of competent jurisdiction before the effective date of this

              section[, June 14, 2013]." /d.§ 10.

                      The amendment modified the definition of "transfer." The definition of "transfer"

              now reads, '"Transfer' means 'transfer' as used in section 2001 of the internal revenue

              code and includes any shifting upon death of the economic benefit in property or any

              power or legal privilege incidental to the ownership or enjoyment of property. ... " /d.

              § 2(12) (italics indicate added language). Section 2001 of the Internal Revenue Code

              (IRC) uses "transfer" in the following context: "A tax is hereby imposed on the transfer

              of the taxable estate of every decedent who is a citizen or resident of the United

              States." 26 U.S.C. § 2001 (a).

                                                           7
                                                      
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                       The legislature also amended the definition of the "Washington taxable estate."

              The amended definition is, in relevant part, "the federal taxable estate and includes,

              but is not limited to, the value of any property included in the gross estate under

              section 2044 of the internal revenue code, regardless of whether the decedent's

              interest in such property was acquired before May 17, 2005 . ... "            LAWS OF   2013, 2d

              Spec. Sess., ch. 2, § 2(14) (italics indicate added language). Section 2044 requires

              that QTIP assets be included in the value of the surviving spouse's gross estate. See

              26 U.S.C. § 2044(a).

                       The legislature's amendments clarified the intent of the legislature to include

              QTIP trusts created before 2005 in the surviving spouse's Washington taxable estate

              (if the surviving spouse died after the Act's effective date).

                       We now turn to the facts of the two cases before us.

                                                     Estate of Hambleton

                       Floyd Hambleton died on April 13, 2005, when there was no Washington estate

              tax in effect. His will left a testamentary trust for the benefit of his wife that qualified

              for the federal QTIP election. His estate made the federal QTIP election, but no such

              election existed under state law. His wife, Helen M. Hambleton, died on October 11,

              2006. Helen's 1 federal taxable estate included the value of the QTIP trust property,

              but the estate did not include the property in its Washington taxable estate. DOR

              1   For the sake of clarity, we refer to the spouses by their first names. We intend no disrespect.

                                                                8
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              disallowed a $4.7 million QTIP deduction and filed findings fixing the tax due. DORis

              seeking an additional $1,184,989.16 in taxes. The estate filed objections to findings

              fixing the tax due and petitioned for declaratory and other relief. The parties agreed

              to stay the matter pending our decision in Bracken.

                     Following Bracken, the estate filed a motion for summary judgment, arguing

              that the Washington taxable estate could not include the federal QTIP election. The

              trial court granted summary judgment in favor of the estate, DOR appealed, and our

              court accepted certification under RAP 4.2.

                                                Estate of Macbride

                     Thomas Macbride died on October 20, 1999, leaving a QTIP marital deduction

              trust for the lifetime benefit of his wife, Jessie C. Macbride. His estate made a federal

              election under 26 U.S.C. § 2056(b)(7). Jessie later died on October 21, 2007. The

              estate timely deposited funds with the State prior to filing either its federal or state

              estate tax returns. The estate paid taxes on the QTIP under protest and then sought

              a refund of $643,953, the taxes paid on the QTIP assets.                  The personal

              representatives brought this action for a refund, but the superior court granted

              summary judgment to DOR.

                     The estate filed a notice of appeal, seeking review of the order denying

              summary judgment in favor of petitioners, the order affirming agency action, and the

              order denying a motion for reconsideration.       After this court accepted review of

              Bracken (but before the court set a date for oral argument), DOR moved to stay

                                                          9
                                               
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              review.    The estate opposed the motion, and the Court of Appeals commissioner

              denied the motion. In the ruling, the commissioner explained that Bracken was not

              yet set for oral argument and the parties could seek to transfer the case to the

              Washington Supreme Court after briefing was complete. Thereafter, neither party

              sought transfer. After the Bracken argument was set, the commissioner asked the

              parties to brief whether the Court of Appeals should stay review pending resolution of

              Bracken. The record contains a response only from DOR. The commissioner stayed

              the appeal until our court resolved Bracken, whereupon we granted DOR's motion to

              transfer the case to this court and consolidate it with Hambleton.

                                                       Analvsis

                        The Estates challenge the 2013 amendments on a variety of grounds. The

              constitutional arguments focus on the separation of powers doctrine, due process

              clause (U.S. CONST. amend XIV), impairment of contracts clause (U.S. Const. art. I, §

              10, cl. 2; WASH. CONST. art. I,§ 23), and article VII, section 1 of the state constitution.

              The ex post facto clauses of the state and federal constitutions apply only to penalties

              and, therefore, do not apply to taxes.    See In re Pers. Restraint of Yates, 180 Wn.2d

              33, 51, 321 P.3d 1195 (2014). The delegates to Washington's constitutional

              convention of 1889 could have included an ex post facto clause applicable to civil

              cases; they did not.    Hence, the Estates rely on other constitutional clauses. We

              analyze this case under principles applicable to civil cases, not criminal cases.

                                                          10
                                            
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                     As a general rule, our state legislature possesses plenary power to tax except

              as limited by the constitution. Be/as v. Kiga, 135 Wn.2d 913, 919-20, 959 P.2d 1037

              (1998). We presume that statutes are constitutional and place "the burden to show

              unconstitutionality ... on the challenger." Amunrud v. Bd. of Appeals, 158 Wn.2d 208,

              215, 143 P.3d 571 (2006).

                     The arguments unrelated to the constitution include estoppel, the statute of

              limitations, and the existence of a final judgment. We review questions of law de novo,

              as well as orders granting summary judgment.       Cost Mgmt. Servs., Inc. v. City of

              Lakewood, 178 Wn.2d 635, 641, 310 P.3d 804 (2013); Smith        v. Safeco Ins. Co., 150
              Wn.2d 478, 483, 78 P.3d 1274 (2003).

                                              Separation of Powers

                     We hold that the legislature did not intrude upon judicial power when it

              retroactively amended the Estate and Transfer Tax Act.     The legislature was careful

              not to affect the rights of any parties to a prior judgment, reopen a case, or interfere

              with any judicial function. See Lummi Indian Nation v. State, 170 Wn.2d 247, 263,

              241 P.3d 1220 (2010).

                     Our system of checks and balances incorporates the important concept of the

              separation of powers. Hale   v. Wellpinit Sch. Dist. No. 49, 165 Wn.2d 494, 503, 506,
              198 P.3d 1021 (2009). The doctrine "preserves the constitutional division between

              the three branches of government, ensuring that the activity of one does not threaten

              or invade the prerogatives of another." State   v. Elmore, 154 Wn. App. 885, 905, 228

                                                         11
                                             
          In re Estate of Hambleton, No. 89419-1
          consolidated with
          In re Estate of Macbride, No. 89500-7

....          P.3d 760 (201 0).   The legislature violates separation of powers principles when it

              infringes on a judicial function. Haberman v. Wash. Pub. Power Supply Sys., 109

              Wn.2d 107, 143, 744 P.2d 1032, 750 P.2d 254 (1987). The function of the judiciary is

              to say what the law is, whereas the legislature's function is to set policy and draft and

              enact law. Hale, 165 Wn.2d at 506. It is important to note that although the separate

              and coequal branches fill different roles, the branches "must remain partially

              intertwined to maintain an effective system of checks and balances. The art of good

              government requires cooperation and flexibility among the branches." /d. at 507.

                      In Hale, the late Justice Tom Chambers wrote for a unanimous court when we

              rejected the argument that the legislature's retroactive amendment violated the

              separation of powers doctrine. /d. at 509-10. The facts grew out of McClarty v. Totem

              Electric, 157 Wn.2d 214, 137 P.3d 844 (2006). In McClarty, the court interpreted the

              term "disability" in a way that limited the reach of Washington's Law Against

              Discrimination (WLAD), chapter 49.60 RCW. See Hale, 165 Wn.2d at 501. Just as

              the legislature responded to Bracken by retroactively changing the law, the legislature

              changed the definition of "disability" announced by the court in McClarty. /d. at 501;

              see LAWS OF 2007, ch. 317, § 1. The amendment applied retroactively to all causes

              of actions occurring before the McClarty opinion was filed and prospectively to all

              causes of action occurring after the legislature passed the amendment. Hale, 165

              Wn.2d at 502; LAWS OF 2007, ch. 317, § 1.

                                                          12
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                     The practical effects of the McClarty decision and the amendments on the

              parties in Hale were tangible. Hale was diagnosed with an anxiety disorder. Hale,

              165 Wn.2d at 499. After we decided McClarty, the trial judge granted summary

              judgment in favor of Hale's employer, the Wellpinit school district, because Hale's

              ailment did not qualify as a disability. See id.     Shortly thereafter, the legislature

              amended the WLAD to include a broad definition of "disability." /d. at 500. Hale filed

              a motion for reconsideration, which the trial court denied, reasoning that applying the

              amendment retroactively would violate the separation of powers doctrine. /d. The

              trial judge then certified the issue to our court. /d. We unanimously held that applying

              the amendment retroactively to Hale did not intrude upon judicial powers. /d. at 510.

                     Justice Chambers explained that although it is the court's obligation to

              determine and carry out the intent of the legislature, the legislature is occasionally

              disappointed with the court's interpretation. /d. at 509. By amending the statute, "the

              legislature acted wholly within its sphere of authority to make policy, to pass laws, and

              to amend laws already in effect." /d. He noted, "The legislature was careful not to

              reverse our decision in McClarty nor did the legislature interfere with any judicial

              function." /d. at 510. He praised the cooperation between the legislature and the

              court, stating:

                     [The court's interpretation of the statute and the legislature's responsive
                     amendment] should serve as a model of how two separate and
                     independent branches of government can work together in harmony and
                     in the spirit of reciprocal deference to the other's important role and
                     function in the art of governing.

                                                         13
                                                
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              /d.

                     The court held similarly in Lummi Indian Nation, 170 Wn.2d at 262-63. The

              facts in Lummi Indian Nation arose out of Department of Ecology v. Theodoratus, 135

              Wn.2d 582, 957 P.2d 1241 (1998), and the legislature's subsequent amendment to

              municipal water law. See Lummi Indian Nation, 170 Wn.2d at 251. In Theodoratus,

              we held that under a then-existing statute, private water rights not did vest until the

              water was put to an "actual beneficial use." /d. at 255.      This was a departure from

              the Department of Ecology's practice of issuing permits and certificates based upon a

              showing of need and capacity. /d. We cautioned that the opinion did not consider

              municipal water rights, which were treated differently under the law. /d. at 251, 255.

              The legislature responded to our opinion by amending the municipal water law to

              "explicitly define certain nongovernmental water suppliers as municipal and to make

              that definition retroactive."   /d. at 251.

                     The issue before the court in Lummi Indian Nation was whether the amendment

              violated the separation of powers doctrine when its retroactive application narrowed

              the applicability of our holding. /d. at 260. Writing again for a unanimous court, Justice

              Chambers concluded that the retroactive amendments did not offend the separation

              of powers doctrine. /d. at 262-63.      He relied heavily on Hale. See id. at 261-63.

                             In Hale, we said that in order to decide whether the retroactive
                     application of a statute violates separation of powers we must determine
                     "whether the activity of one branch threatens the independence or
                     integrity or invades the prerogatives of another." . . . Retroactive
                     legislation that interferes with vested rights established by judicial rulings
                     interferes with a judicial function or results in manifest injustice or

                                                            14
                                                
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                     threatens the independence, integrity, or prerogatives of the judicial
                     branch may violate separation of powers.

                            However, in Hale, we also firmly rejected the contention that just
                     because an appellate court's statutory interpretation relates back to the
                     time the statute was originally adopted, any retroactive amendment of
                     that statute violates separation of powers. Indeed, it is wholly within the
                     sphere of authority of the legislative branch to make policy, to pass laws,
                     and to amend laws already in effect.

              /d. at 262 (citations omitted) (internal quotation marks omitted) (quoting Hale, 165

              Wn.2d at 507). Applying these principles, the unanimous court found no separation

              of powers violation. !d. at 263. "The legislature made no attempt to apply the law to

              an existing set of facts, affect the rights of parties to the court's judgment, or interfere

              with any judicial function."      /d.   Its actions did not threaten the independence or

              integrity of the judiciary. /d.

                     We apply the principles and reasoning announced in Hale to the facts before

              us and hold that the retroactive amendment does not offend the separation of powers

              doctrine. The sequence of events here is very similar to those in Hale. In Hale, the

              employer's alleged discriminatory conduct occurred in 2002-03. Hale, 165 Wn.2d at

              499. In 2006, Hale filed suit against the employer. /d. On July 6, 2006, we issued

              the McClarty decision, in which we interpreted "disability" narrowly. See McClarty,

              157 Wn.2d at 228. The trial judge granted partial summary judgment against Hale

              because Hale was not disabled under the definition we adopted in McClarty. Hale,

              165 Wn.2d at 499. The following month, the legislature rejected our interpretation of

              "disability," statutorily defined the term, and applied the amendment retroactively

                                                             15
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              (except for cases occurring between the dates when McClarty was announced and

              the amendment was enacted). See id. at 500.

                       Here, the estate of Hambleton objected to DOR's disallowing the QTIP

              deduction and petitioned for declaratory relief. After we issued Bracken, the trial court

              granted the estate summary judgment because there was no taxable transfer under

              our narrow interpretation of "transfer." The legislature then amended the definition to

              include QTIP transfers and applied the amendment retroactively. The sequence of

              events is identical to those in Hale. 2

                       The court unequivocally allowed a retroactive amendment to change our

              interpretation of a statute in Hale. We will not overrule the rules announced in Hale

              and Lummi Indian Nation. Therefore, we hold the same today. The 2013 amendment

              does not offend the separation of powers doctrine. The legislature was careful to draft

              the law so that it "does not affect any final judgment, no longer subject to appeal,

              entered by a court of competent jurisdiction before the effective date of this section[,

              June 14, 2013]." LAWS OF 2013, 2d Spec. Sess., ch. 2, § 10. Like in Hale and Lummi

              Indian Nation, the legislature was threatening neither the independence nor the

              2The sequence of events is slightly different in Macbride, but this does not change our
              analysis. The trial court granted DOR summary judgment well before the Bracken opinion
              was filed. The case was pending before the Court of Appeals when Bracken became law.
              And, the case was still pending when the legislature enacted the 2013 amendments. As in
              Hale, this case was pending before the courts when a decision by our court was released.
              The legislature retroactively changed the law. And, we apply the change in law to cases
              pending in the courts.

                                                         16
                                                    
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              integrity of the court, nor was it invading the court's prerogative. See Hale, 165 Wn.2d

              at 510; Lummi Indian Nation, 170 Wn.2d at 263.

                       It is additionally important to note that the legislature is not prohibited from

              passing amendments that directly impact cases pending in our court system. 3 Wash.

              State Farm Bureau Fed'n v. Gregoire, 162 Wn.2d 284, 304, 174 P.3d 1142 (2007)

              ("Nor is the legislature prohibited from 'pass[ing] a law that directly impacts a case

              pending in Washington courts.' 'Litigation often brings to light latent ambiguities or

              unanswered questions that might not otherwise be apparent.' The legislature violates

              separation of powers principles by prescribing new rules to be applied to pending

              litigation only when doing so infringes on a judicial function by 'imped[ing] upon the

              court's right and duty to apply new law to the facts of this case,' 'dictat[ing] how the

              court should decide a factual issue,' or 'affect[ing] a final judgment.'" (alterations in

              original) (citations and internal quotation marks omitted) (quoting Port of Seattle v.

              Pollution Control Hr'gs Bd., 151 Wn.2d 568, 625-26, 90 P.3d 659 (2004) and United

              States v. Morton, 467 U.S. 822, 835 n.21, 104 S. Ct. 2769, 81 L. Ed. 2d 680 (1984)).

              When a legislature makes clear that an act is intended to apply retroactively, "an

              appellate court must apply that law in reviewing judgments still on appeal that were

              rendered before the law was enacted, and must alter the outcome accordingly." Plaut

              3 The Estates are really arguing this appeal as a matter of fairness. None of their
              constitutional arguments dictate that they get the relief they seek. The decision to
              retroactively amend the statute was a policy decision, properly in the sphere of the legislature.

                                                             17
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              v. Spendthrift Farm, Inc., 514 U.S. 211, 226, 115 S. Ct. 1447, 131 L. Ed. 2d 328 (1995).

              In Plaut, the Court reasoned:

                      [The judiciary is a] department composed of "inferior Courts" and "one
                      supreme Court." Within that hierarchy, the decision of an inferior court
                      is not (unless the time for appeal has expired) the final word of the
                      department as a whole. It is the obligation of the last court in the
                      hierarchy that rules on the case to give effect to Congress's latest
                      enactment, even when that has the effect of overturning the judgment of
                      an inferior court, since each court at every level, must "decide according
                      to existing laws."

              /d. at 227 (quoting United States v. Schooner Peggy, 5 U.S. (1 Cranch) 103, 109, 2 L.

              Ed. 49 (1801 )).

                      The legislature did not violate the separation of powers doctrine when it passed

              the retroactive amendment to the Act.

                                                    Due Process

                      Applying a rational basis standard, the 2013 amendment's retroactive

              application does not violate due process of law. See United States v. Carlton, 512

              U.S. 26, 30-31, 114 S. Ct. 2018, 129 L. Ed. 2d 22 (1994 ). The legislature has a

              legitimate purpose for the retroactive amendment, and the period of retroactivity is

              rationally related to that purpose. /d.

                      States must not "deprive any person of life, liberty, or property, without due

              process of law . . . . "    U.S. CONST. amend. XIV, § 1; CONST. art. I, § 3.         This

              constitutional protection guards against arbitrary and capricious government action.

              Amunrud, 158 Wn.2d at 219. Our analysis follows that of the federal constitution

              because the state constitution does not afford broader due process protection than

                                                          18
                                                 
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              the Fourteenth Amendment to the United States Constitution.                 See In re Pers.

              Restraint of Dyer, 143 Wn.2d 384, 394, 20 P.3d 907 (2001 ); State      v.   Morgan, 163 Wn.

              App. 341, 352,261 P.3d 167 (2011). We use a rational basis standard for examining

              the 2013 amendment:

                     The due process standard to be applied to tax statutes with retroactive
                     effect ... is the same as that generally applicable to retroactive economic
                     legislation:

                        "Provided that the retroactive application of a statute is supported by
                        a legitimate legislative purpose furthered by rational means,
                        judgments about the wisdom of such legislation remain within the
                        exclusive province of the legislative and executive branches ....

                            "To be sure, ... retroactive legislation does have to meet a burden
                        not faced by legislation that has only future effects .... The retroactive
                        aspects of legislation, as well as the prospective aspects, must meet
                        the test of due process, and the justifications for the latter may not
                        suffice for the former .... But that burden is met simply by showing
                        that the retroactive application of the legislation is itself justified by a
                        rational legislative purpose."

              Carlton, 512 U.S. at 30-31 (emphasis added) (most alterations in original) (internal

              quotation marks omitted) (quoting Pension Benefit Guar. Corp. v. R.A. Gray & Co.,

              467 U.S. 717, 729-30, 104 S. Ct. 2709, 81 L. Ed. 2d 601 (1984 )); see WR. Grace &

              Co.   v. Oep't of Revenue, 137 Wn.2d 580, 602-03, 973 P.2d 1011 (1999) (Our court
              applied the same standard when examining the retroactive application of a business

              and occupation tax.).

                     Applying the rational basis standard, the Court in Carlton held that the

              retroactive application of revisions to the IRC did not violate the due process clause.

              Carlton, 512 U.S. at 28-29. As background, the IRC created a deduction for "half the

                                                           19
                                           
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              proceeds of 'any sale of employer securities by the executor of an estate' to 'an

              employee stock ownership plan."' /d. at 28 (quoting former 26 U.S.C. § 2057(b) (1982

              ed. & Supp. IV)). In order to receive the deduction, the sale of securities had to take

              place before an estate filed its tax return. /d. The estate in Carlton bought and sold

              the securities for the purpose of taking advantage of the § 2057 deduction. /d. The

              transaction reduced the taxable estate by $2,501,161. /d. One week after the estate

              took advantage of the deduction, the Internal Revenue Service (IRS) announced that

              it would treat the deductions as available only to "estates of decedents who owned

              the securities in question immediately before death." /d. at 29. Almost a year later,

              Congress amended the statute to conform to the IRS' policy. The amendment was to

              be applied retroactively, "as if it had been contained in the statute as originally

              enacted" a year prior. /d. The IRS disallowed the estate's deduction, and the estate

              in Carlton argued that this violated its due process rights. /d. The Court found no due

              process violation. /d. at 32-33.

                     First, there was a legitimate purpose. Congress enacted the amendment to

              correct a mistake that "would have created a significant and unanticipated revenue

              loss." /d. at 32. This purpose was neither arbitrary nor illegitimate. /d. Second, the

              means were rationally related to the purpose. /d. at 32-33. The period of retroactivity

              extended slightly longer than one year. /d. at 33. The amendments were introduced

              in Congress shortly after the problem was discovered, and it took time to pass national

              legislation. See id. at 32-33. In reaching its conclusion in Carlton, the Court noted

                                                        20
                                               
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              that it "repeatedly has upheld retroactive tax legislation against a due process

              challenge." /d. at 30.

                      Courts have upheld retroactive periods that are short and limited to that

              required by the practicalities of producing legislation and have upheld longer

              retroactive periods as well. See United States v. Oarusmont, 449 U.S. 292, 297, 101

              S. Ct. 549, 66 L. Ed. 513 (1981 ); WR. Grace, 137 Wn.2d at 586-87; Mont. Rail Link}

              Inc.   v. United States, 76 F. 3d 991, 993-94 (9th Cir. 1996); Enter. Leasing Co. of
              Phoenix   v. Ariz. Oep}t of Revenue, 221 Ariz. 123, 125-29, 211 P.3d 1 (Ct. App. 2008).
              Our court found that a retroactive period spanning more than seven years did not

              violate the due process clause in WR. Grace. 137 Wn.2d at 586-87.

                      The facts in WR. Grace involved the legislature's amending an unconstitutional

              business and occupation tax. The amendment limited taxpayer relief to a tax credit

              and applied retroactively. /d. at 586. A challenger sought relief from taxes it paid

              seven years before the amendment was enacted.            See id. at 587. We found that

              there was a "rational legislative purpose" and the "retroactive application of the ...

              remedial legislation [did] not offend constitutional principles." /d. at 603.

                      Similarly, an amendment to the Railroad Retirement Tax Act, 26 U.S.C. § 3231,

              which applied retroactively for seven years, passed constitutional muster because it

              served a legitimate purpose (i.e., preventing a loss of government revenue and

              protecting employees who relied on receiving higher retirement benefits) and the

              period of retroactivity bore "a rational relation to [the] underlying legislative purpose."

                                                          21
                                                 
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              Mont. Rail Link, Inc., 76 F. 3d at 993-94. "A shorter period of retroactivity would have

              been arbitrary and irrational." /d. at 994. 4

                       Here, the retroactive application of the 2013 amendments meets the rational

              basis standard. See Carlton, 512 U.S. at 30-31. As stated in§ 1 of the amendment,

              the purpose is to "restore parity between married couples and unmarried individuals

              [by not allowing married individuals to avoid or greatly reduce their potential

              Washington estate tax liability], restore parity between QTIP property and other

              property eligible for the marital deduction, and prevent the adverse fiscal impacts of

              the Bracken decision .... "        LAWS OF   2013, 2d Sp. Sess., ch. 2, § 1(5). Like the

              legitimate purpose in Carlton, the purpose of the 2013 amendment is largely

              economic. Carlton, 512 U.S. at 32. According to the DOR fiscal note, the legislation

              was anticipated to

                       increase revenues to the education legacy trust account by an estimated
                       $118.4 million in Fiscal Year 2014. The estimated revenue increase
                       reflects the retroactive clarifications of the definitions of "transfer" and
                       "Washington taxable estate" to conform to the Department's
                       interpretation, thereby eliminating any refund claims resulting from the
                       recent court decision, other than for the Estate of Bracken. It also reflects
                       other changes made to existing estate tax law.

              4 The Estates' briefs suggest that Carlton creates a threshold on the period of retroactivity.
              Our court has allowed periods of retroactivity extending beyond one year, as have other
              jurisdictions. WR. Grace, 137 Wn.2d at 586-87; Mont. Rail Link, Inc., 76 F. 3d at 993-94;
              Enter. Leasing Co., 221 Ariz. At 127 ("We do not interpret our precedents as creating a
              talismanic cutoff of one year.").

                                                              22
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              Agency Fiscal Note to Engrossed H.B. 2075, at 3, 63d Leg., 2d Spec. Sess. (Wash.

              2013) (prepared by DOR). Preventing unanticipated and significant fiscal shortfall is

              a legitimate purpose for amending tax legislation. Carlton, 512 U.S. at 32.

                      The period of retroactivity is also rationally related to preventing the fiscal

              shortfall. It provides the necessary funds, and the length of retroactivity is directly

              linked with the purpose of the amendment, which is to remedy the effects of Bracken.

              The amendment applies to all estates since our State enacted the Act. This period of

              retroactivity is not arbitrary.   However, any period less than eight years would be

              arbitrary. It would allow some estates to escape the tax while similarly situated estates

              would be subject to it. Additionally, the eight-year period of retroactivity is not far

              outside other retroactive periods that courts have accepted. See WR. Grace, 137

              Wn.2d at 586-87; Mont. Rail Link, Inc., 76 F.3d 993-94; Enter. Leasing Co., 211 P.3d

              1. Therefore, the retroactive period meets the due process clause's rational basis

              test.

                      The Estates make two failing arguments regarding the due process clause.

              First, the Estates argue that the 2013 amendments impose a wholly new tax, making

              the Carlton standard inapplicable. The Ninth Circuit rejected this argument in Quarty

              v. United States, 170 F. 3d 961, 966-67 (9th Cir. 1999). The parties were attempting

              avoid the application of Carlton and, instead, invoke precedent from the 1920s. /d. at

              966. The 1920s cases considered retroactive application of the first gift tax, which

              violated due process. /d. The Ninth Circuit quoted Carlton:

                                                          23
                                                 
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                       "Those cases were decided during an era characterized by exacting
                       review of economic legislation under an approach that 'has long since
                       been discarded.' To the extent that their authority survives, they do not
                       control here. Blodgett and Untermyer, which involved the Nation's first
                       gift tax, essentially have been limited to situations involving 'the creation
                       of a wholly new tax,' and their 'authority is of limited value in assessing
                       the constitutionality of subsequent amendments that bring about certain
                       changes in the operation of the tax laws."'

              Quarty, 170 F. 3d at 966-67 (citations omitted) (quoting Carlton, 512 U.S. at 34 (quoting

              Ferguson v. Skrupa, 372 U.S. 726, 730, 83 S. Ct. 1028, 10 L. Ed. 2d 93 (1963); United

              States   v. Hemme, 476 U.S. 558, 568, 106 S. Ct. 2071, 90 L. Ed. 2d 538 (1986))). The
              court concluded, "[A] new tax is imposed only when the taxpayer has 'no reason to

              suppose that any transactions of the sort will be taxed at all."' /d. at 967 (quoting

              Darusmont, 449 U.S. at 298, 300).

                       The 2013 amendments did not create a wholly new tax. Washington has long

              received revenue from estate taxes, and the taxpayers had "reason to suppose" that

              the state would tax shifting interests in assets upon death.           See id.    Therefore,

              Carlton's rational basis test applies. See id.

                       The Estates' second unsuccessful argument is that applying the amendments

              retroactively is unconstitutional because it impairs a vested right acquired under

              existing law. Appellant's Suppl. Br. at 27 ("the existing law here being, in effect, no

              estate tax at all, or rather the 'pickup' tax Washington instituted in 1981 "). "A statute

              may not be applied retroactively to infringe a vested right." In re Pers. Restraint of

              Carrier, 173 Wn.2d 791, 810, 272 P.3d 209 (2012). We recently stated:

                                                            24
                                               
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                     This notion finds root in the due process clauses of the Fifth and
                     Fourteenth Amendments. While due process generally does not prevent
                     new laws from going into effect, it does prohibit changes to the law that
                     retroactively affect rights which vested under the prior law. We have said
                     that

                         [a] vested right, entitled to protection from legislation, must be
                         something more than a mere expectation based upon an anticipated
                         continuance of the existing law; it must have become a title, legal or
                         equitable, to the present or future enjoyment of property, a demand,
                         or a legal exemption from a demand by another.

              /d. at 811 (alteration in original) (citations omitted) (quoting Godfrey v. State, 84 Wn.2d

              959, 963, 530 P.2d 630 (1975)). For example, we declined to apply an amendment

              retroactively when the legislature was silent as to retroactivity and a party had a vested

              interest. In re F.D. Processing, Inc., 119 Wn.2d 452,460,463,832 P.2d 1303 (1992).

                     Here, DOR correctly notes that the Estates do not explain what vested right the

              remainder beneficiaries held in the QTIP that was impacted by the amendment. The

              remaindermen had vested rights in the trust property upon the death of the first

              spouse.    This interest became a vested present interest upon the death of the

              surviving spouse, and the legislature is taxing the shift in interest. The estate tax does

              not deprive the remaindermen of their interest in the property or change the nature of

              their interest. It simply taxes the transfer of assets.

                     On a related note, in Carlton, the Supreme Court stated,

                     Tax legislation is not a promise, and a tax payer has no vested right in
                     the Internal Revenue Code. Justice Stone explained in Welch v. Henry,
                     305 U.S. [134, 146-47, 59 S. Ct. 121, 83 L. Ed. 87 (1938):]

                         ''Taxation is neither a penalty imposed on the taxpayer nor a liability
                         which he assumes by contract. It is but a way of apportioning the

                                                          25
    In re
                 Estate
                       of Hambleton,
                                                         
                                         No. 89419-1
          consolidated with
          In re Estate of Macbride, No. 89500-7

                     cost of government among those who in some measure are privileged
                     to enjoy its benefits and must bear its burdens. Since no citizen
                     enjoys immunity from that burden, its retroactive imposition does not
                     necessarily infringe due process .... "

           Carlton, 512 U.S. at 33 (alteration in original). Similarly, the Estates here do not have

           a vested right in Washington's pre-2005 pickup tax scheme.

                 There is no due process violation because the 2013 amendments serve a

           legitimate purpose and the period of retroactivity is rationally related to that purpose.

                                           Impairment of Contract

                 The 2013 amendments do not violate the impairment of contracts clause

           because the amendments are not a substantial impairment to a contract and the

           legislative amendment was reasonably necessary.

                  Both the federal constitution and Washington State Constitution protect citizens

           from state laws that impair the obligation of contracts. CONST. art. I, § 23; U.S. CONST.

           art. I, § 10, cl. 1; see Wash. Fed'n of State Emps. v. State, 101 Wn.2d 536, 539, 682

           P.2d 869 (1984) ("[Const. art. I, § 23] is substantially the same as U.S. Const. art. 1,

           § 10 and is to be given the same effect."). Like many other constitutional rights, the

           clause's protections are not absolute; "its prohibition must be accommodated to the

           inherent police power of the State 'to safeguard the vital interests of its people."'

           Energy Reserves Grp., Inc. v. Kan. Power& Light Co., 459 U.S. 400,410, 103 S. Ct.

           697, 74 L. Ed.2d 569 (1983) (quoting Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S.

           398, 434, 54 S. Ct. 231, 78 L. Ed. 413 (1934)).

                                                       26
    In re
                 Estate
                       of Hambleton,
                                                       
                                         No. 89419-1
          consolidated with
          In re Estate of Macbride, No. 89500-7

                 As a threshold matter, we inquire into "whether the state law has, in fact,

           operated as a substantial impairment of a contractual relationship." /d. at 411 (quoting

           Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244, 98 S. Ct. 2716, 57 L. Ed.

           2d 727 (1978)). "The impaired relationship must be a 'contract' in the usual sense of

           the word 'signifying an agreement of two or more minds, upon sufficient consideration,

           to do or not to do certain acts."' Haberman, 109 Wn.2d at 145 (quoting Crane v. Hahlo,

           258 U.S. 142, 146, 42 S. Ct. 214, 66 L. Ed. 514 (1922)). However, in 1931, the United

           States Supreme Court applied the contracts clause to a trust deed. Coolidge v. Long,

           282 U.S. 582, 595, 51 S. Ct. 306, 75 L. Ed. 562 (1931 ). "A contract is impaired by a

           statute which alters its terms, imposes new conditions or lessens its value." Caritas

           Servs., Inc. v. Dep't of Soc. & Health Servs., 123 Wn.2d 391, 404, 869 P.2d 28 (1994 ).

           We look for a substantial impairment. Margo/a Assocs. v. City of Seattle, 121 Wn.2d

           625, 653, 854 P.2d 23 (1993). An impairment may be substantial if a party relied on

           the supplanted clause. Caritas, 123 Wn.2d at 405. However, "a party who enters into

           a contract regarding an activity 'already regulated in the particular [way] to which he

           now objects' is deemed to have contracted 'subject to further legislation upon the

           same topic'." Margo/a Assocs., 121 Wn.2d at 653 (quoting Veix v. Sixth Ward Bldg. &

           Loan Ass'n, 310 U.S. 32, 38, 60 S .Ct. 792, 84 L. Ed. 1061 (1940)).

                  If the threshold is met and the contract is between private parties, we determine

           whether the enactment was reasonably necessary. Carlstrom v. State, 103 Wn.2d

           391, 394, 694 P.2d 1 (1985). "The contracts clause does not prohibit the states from

                                                      27
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              repealing or amending statutes generally, or from enacting legislation with retroactive

              effects." Haberman, 109 Wn.2d at 145.

                      Here, the threshold inquiry is not met and the amendments were reasonably

              necessary. There was no substantial impairment of the trust because it was reasonable

              for the Estates to expect that the estate tax law would change. See Coolidge, 282 U.S.

              at 595. Additionally, the 2013 amendments meet the "reasonably necessary" standard

              for contracts where the State is not a party. The purpose of the amendments is to provide

              revenue to fund education. See    LAWS OF   2013, 2d Spec. Sess., ch. 2, § 1(1). "'[T]he

              State ... has an affirmative paramount duty to make ample provision for funding the

              'basic education' .... " McCleary   v. State, 173 Wn.2d 477, 517, 269 P.3d 227 (2012)
              (second alteration in original) (quoting Seattle Sch. Dist. No. 1 v. State, 90 Wn.2d 476,

              520, 585 P.2d 71 (1978)). Imposing a tax on the Estates prevented the fiscal shortfall

              created by Bracken. Therefore, the 2013 amendments do not unconstitutionally impair

              contracts.

                                                Article VII, Section 1

                      We hold that the amendments do not violate article VII, section 1 of the

              Washington State Constitution. Article VII, section 1 provides, "All taxes shall be

              uniform upon the same class of property within the territorial limits of the authority

              levying the tax and shall be levied and collected for public purposes only."        This

              uniformity requirement applies only to property tax and not excise tax. Dean, 143

              Wn.2d at 25-26 ("Excise taxes also fall beyond the breadth of the uniformity

                                                          28
                                               
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              requirement."). Because the estate tax is an excise tax, the 2013 amendments do not

              violate article VII, section 1 of the Washington Constitution.

                     A tax is an "excise" or "transfer" tax if the government is taxing "a particular use

              or enjoyment of property or the shifting from one to another of any power or privilege

              incidental to the ownership or enjoyment of property." Fernandez, 326 U.S. at 352. An

              estate tax is an excise tax because the tax is "not levied on the property of which an

              estate is composed. Rather it is imposed upon the shifting of economic benefits and

              the privilege of transmitting or receiving such benefits." West, 334 U.S. at 727.

                     Transfers are broadly construed at death under federal estate tax law-the

              system upon which the Act is based. For example, the United States Supreme Court

              stated:

                     [T]he [federal] estate tax as originally devised and constitutionally
                     supported was a tax upon transfers. But the power of Congress to
                     impose death taxes is not limited to the taxation of transfers at death. It
                     extends to the creation, exercise, acquisition, or relinquishment of any
                     power or legal privilege which is incident to the ownership of property,
                     and when any of these is occasioned by death, it may as readily be the
                     subject of the federal tax as the transfer of the property at death.

              Fernandez, 326 U.S. at 352 (citations omitted). The First Circuit Court of Appeals has

              stated that the estate tax is not "in a strict sense a tax upon a 'transfer' of the property

              by the death of the decedent. It is an excise tax upon the happening of an event,

              namely, death, where the death brings about certain described changes in legal

              relationships affecting property." Chickering v. Comm'r of Internal Revenue, 118 F.2d

              254, 257-58 (1st Cir. 1941 ).

                                                          29
                                                      
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                       Following these general principles, taxing QTIP assets upon the death of a

              surviving spouse qualifies as an excise tax. The surviving spouse had the economic

              benefit of using the income from QTIP assets during his or her life. And, upon the

              surviving spouse's death, the remainder beneficiaries of the trust gained a present

              interest in the assets and income. The death of the surviving spouse brought about

              "changes in legal relationships affecting property."          /d. Therefore, the Estate and

              Transfer Tax Act is an excise tax and not subject to article VII, section 1.

                                             Equitable & Collateral Estoppel

                       DOR is not equitably estopped from applying the 2013 amendments to the

              estate of Macbride. 5 The elements of equitable estoppel are:

                       (1) a party's admission, statement or act inconsistent with its later claim;
                       (2) action by another party in reliance on the first party's act, statement
                       or admission; and (3) injury that would result to the relying party from
                       allowing the first party to contradict or repudiate the prior act, statement
                       or admission.

              5 Neither of the Estates raises the issue of judicial estoppel. "'Judicial estoppel is an equitable
              doctrine that precludes a party from asserting one position in a court proceeding and later
              seeking an advantage by taking a clearly inconsistent position."' Anfinson v. FedEx Ground
              Package Sys., Inc., 174 Wn.2d 851, 861, 281 P.3d 289 (2012) (internal quotation marks
              omitted) (quoting Arkison v. Ethan Allen, Inc., 160 Wn.2d 535, 538, 160 P.3d 13 (2007)).
              Three factors guide judicial estoppel: "(1) whether 'a party's later position' is 'clearly
              inconsistent with its earlier position'; (2) whether 'judicial acceptance of an inconsistent
              position in a later proceeding would create the perception that either the first or the second
              court was misled'; and (3) 'whether the party seeking to assert an inconsistent position would
              derive an unfair advantage or impose an unfair detriment on the opposing party if not
              estopped."' Arkison, 160 Wn.2d at 538-39 (internal quotation marks omitted) (quoting New
              Hampshire v. Maine, 532 U.S. 742, 750-51, 121 S. Ct. 1808, 149 L. Ed. 2d 968 (2001 )).
              Judicial estoppel is not applicable. The parties have not taken inconsistent positions, nor
              have they misled the court. It was the legislature that changed the law that applies to the
              cases.

                                                              30
    In                                    
               re Estate of Hambleton, No. 89419-1
           consolidated with
           In re Estate of Macbride, No. 89500-7

            Kramarevcky v. Dep't of Soc. & Health Servs., 122 Wn.2d 738, 743, 863 P.2d 535

           ( 1993). Assertions of equitable estoppel against the government are not favored;

           parties must demonstrate that equitable estoppel is necessary to prevent a manifest

           injustice and that the exercise of governmental functions will not be impaired as a

           result of the estoppel.   /d.   Generally, we "should be most reluctant to find the

           government equitably estopped when public revenues are involved." /d. at 744.

                 The estate of Macbride bases its estoppel argument on the fact that had it

           transferred its appeal to our court alongside Bracken, the 2013 amendment would not

           apply to it. However, the estate fails to prove the second element with clear, cogent,

           and convincing evidence, in that the estate failed to prove reliance on DOR's

           statements. See City of Seattle v. St. John, 166 Wn.2d 941, 948-49, 215 P.3d 194

           (2009).

                 DOR moved to stay proceedings pending our decision in Bracken. It reasoned

           that the current case and Bracken involved the same legal issues and that our decision

           in Bracken would likely resolve the estate of Macbride's appeal and make any further

           proceedings moot. Even if the motion is a statement or assertion, the estate did not

           rely upon it. Instead, the estate filed a response that opposed DOR's motion to stay.

           Given these facts, equitable estoppel does not apply.

                 Additionally, collateral estoppel does not prevent DOR from relitigating issues.

           Before a court will invoke collateral estoppel,

                 the party asserting the doctrine must prove: (1) the issue decided in the
                 prior adjudication is identical with the one presented in the second action;

                                                      31
                                              
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                     (2) the prior adjudication must have ended in a final judgment on the
                     merits; (3) the party against whom the plea is asserted was a party or in
                     privity with the party to the prior adjudication; and (4) application of the
                     doctrine does not work an injustice.

              Nielson v. Spanaway Gen. Med. Clinic, Inc., 135 Wn.2d 255, 262-63, 956 P.2d 312

              (1998). However, an issue may not be precluded if "a new determination is warranted

              in order to take account of an intervening change in the applicable legal context or

              otherwise to avoid inequitable administration of the laws." RESTATEMENT (SECOND) OF

              JUDGMENTS § 28(2)(b) (1982).         Here, the applicable law has been amended.

              Therefore, review is warranted to take account of this change. See id.

                                                Statute of Limitations

                     The statute of limitations does not prevent the 2013 amendments from applying

              to the estate of Hambleton.        Under RCW 83.1 00.095(3), "[n]o assessment or

              correction of an assessment for additional taxes ... may be made by the department

              more than four years after the close of the calendar year in which a Washington return

              is due ...." DOR issued its assessment of taxes due on November 18, 2008, only

              two years after Helen Hambleton passed away. In the assessment, the amount owing

              was "attributable to the [e]state's exclusion of . . . '§2044 property' from the

              Washington taxable estate." Clerk's Papers at 17-18. The estate filed its Washington

              State estate tax return on January 11, 2008. Therefore, DOR issued its assessment

              well within the four year statute of limitations. See RCW 83.1 00.095(3). The estate

              offers no support as to why a new or corrected assessment is needed.                  The

              assessment has always included QTIP trust property. The estate has had notice of

                                                          32
                                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

              the amount due since 2008. Therefore, the 2013 amendments are not barred by the

              statute of limitations. See RCW 83.1 00.095(3).

                                                  Final Judgment

                     The estate of Hambleton argues that the trial court's ruling was final at the time

              the legislature enacted the 2013 amendment, so the amendment should not apply to

              it. See LAWS OF 2013, 2d Spec. Sess., ch. 2, § 10 ("[The] act does not affect any final

              judgment, no longer subject to appeal, entered by a court of competent jurisdiction

              before the effective date of this section."). We disagree. The estate arrives at this

              conclusion by arguing that DOR had no basis in law upon which to appeal the order

              granting summary judgment because DOR appealed the order before the

              amendments were enacted. This reasoning is unpersuasive.

                     Generally, "[w]hen a new law makes clear that it is retroactive, an appellate

              court must apply that law in reviewing judgments still on appeal that were rendered

              before the law was enacted, and must alter the outcome accordingly." Plaut, 514 U.S.

              at 226.    Therefore, despite the existence of a "final" trial court ruling, retroactive

              amendments may apply to cases pending on appeal.

                     A party may appeal final trial court judgments. RAP 2.2(a)(1 ). However, parties

              may not frivolously appeal or appeal simply for purposes of delay.         RAP 18.9(c).

              Appellate courts will, on motion from the opposing party, dismiss frivolous appeals and

              appeals brought for purposes of delay. RAP 18.9(c).

                                                         33
                                         
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                     Here, the trial court entered its order granting summary judgment on April 19,

              2013 and DOR filed a notice of appeal on May 16, 2013. The estate of Hambleton

              did not move under RAP 18.9(c) to dismiss the appeal, and the appeal was still

              pending when the legislature enacted the 2013 amendment. Therefore, the retroactive

              amendment applies to the case.

                                                   Conclusion

                     No barriers prohibit the retroactive application of the 2013 amendment to the

              Estates of Hambleton and Macbride. No genuine issues of material fact exist in the

              cases, and judgment may be entered as a matter of law.

                     We reverse the order granting summary judgment to the estate of Hambleton,

              and remand for the entry of judgment in accordance with this opinion. We affirm the

              denial of summary judgment to the estate of Macbride and affirm the order affirming

              agency action and granting judgment as a matter of law to DOR.

                                                        34
                             
              In re Estate of Hambleton, No. 89419-1
              consolidated with
              In re Estate of Macbride, No. 89500-7

                     WE CONCUR.

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