Assigned to FIN FOR COMMITTEE

ARIZONA STATE SENATE

Phoenix, Arizona

FACT SHEET FOR H.B. 2667

estate tax; repeal consent requirements

Purpose

Eliminates the requirement for institutions holding safe deposit boxes and brokerage houses to hold the assets of a decedent until consent is received from the Department of Revenue (DOR).

Background

In 1937, legislation was passed in Arizona requiring institutions holding safe deposit boxes and brokerage houses to freeze the assets of a decedent until the institution has received consent from DOR. The requirement to hold these assets was affected in order to protect the State from problems with collecting estate taxes. If the estate owes taxes, the State can attach assets in the estate and sell them to pay the taxes due. At that time, the Federal exemption level for estate tax purposes was $60,000. Currently, the exemption level is $625,000 and will be $1,000,000 by the year 2006.

When notification of death is received by a bank, as per statutory requirement, the bank is required to prohibit access to the decedent's safe deposit box. After the bank receives a certified copy of the decedent's death certificate, the bank must inventory the box and send the written inventory to DOR. DOR then releases a clearance (consents) so the estate representative can gain access to the box. The entire process may take weeks.

According to DOR, most consents are issued for estates with no estate tax liability. Any asset information needed by DOR is disclosed on the estate tax return or provided through Internal Revenue Service information sharing. Minimal additional estate taxes have been received recently as a result of holding these assets.

Proponents of this legislation feel that the process delays the administration of the estate for undue reasons and is a problem for all concerned. Additionally, in complying with these regulations, bank employees often receive complaints from upset customers about bureaucratic delays. Brokerage houses have similar problems with the process. H.B. 2667 addresses these concerns by eliminating the requirement that institutions holding safe deposit boxes and brokerage houses freeze the assets of a decedent until the institution has received consent from DOR.

FACT SHEET H.B. 2667 Page

Provisions

1. Eliminates the requirement that institutions holding safe deposit boxes receive consent from DOR to release the contents of a decedent's safe deposit box to persons having right of access to the box.

2. Eliminates the requirement that DOR consent for brokers or corporations in this state to release or transfer a decedent's assets in brokerage accounts or on a corporation's books.

3. Contains a general effective date.

House Action

WM 2/17/98 DP 7-2-0-2

3rd Read 2/23/98 57-0-3-0

Prepared by Senate Staff

March 19, 1998

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