House File 2437 - Introduced HOUSE FILE 2437 BY SALMON , FISHER , HEARTSILL , KAUFMANN , SHEETS , LANDON , DEYOE , and SCHULTZ A BILL FOR An Act exempting from the inheritance tax the entire amount 1 of property, interest in property, and income passing to a 2 natural person, and including applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5555YH (5) 85 mm/sc

H.F. 2437 Section 1. Section 450.1, subsection 1, paragraph e, Code 1 2014, is amended by striking the paragraph. 2 Sec. 2. Section 450.7, subsection 1, paragraph a, Code 2014, 3 is amended to read as follows: 4 a. The share of the estate passing to the surviving spouse, 5 and parents, grandparents, great-grandparents, and other lineal 6 ascendants, children including legally adopted children and 7 biological children entitled to inherit under the laws of this 8 state, stepchildren, and grandchildren, great-grandchildren, 9 and other lineal descendants a natural person is excluded from 10 taxation under this chapter . 11 Sec. 3. Section 450.9, Code 2014, is amended to read as 12 follows: 13 450.9 Individual exemptions Exemption . 14 In computing the tax on the net estate, the entire 15 amount of property, interest in property, and income 16 passing to the surviving spouse, and parents, grandparents, 17 great-grandparents, and other lineal ascendants, children 18 including legally adopted children and biological children 19 entitled to inherit under the laws of this state, stepchildren, 20 and grandchildren, great-grandchildren, and other lineal 21 descendants are a natural person is exempt from tax. 22 Sec. 4. Section 450.10, subsections 1, 2, 5, and 6, Code 23 2014, are amended by striking the subsections. 24 Sec. 5. Section 450.22, subsection 2, Code 2014, is amended 25 by striking the subsection. 26 Sec. 6. Section 450.22, subsection 3, Code 2014, is amended 27 to read as follows: 28 3. a. However, this This section does not apply and a 29 return is not required to be filed, even though real estate 30 is involved, if the estate does not have a federal estate tax 31 filing obligation and if all the estate’s assets are described 32 in any of the following categories: 33 (1) Assets held in joint tenancy with right of survivorship 34 between husband and wife alone. 35 -1- LSB 5555YH (5) 85 mm/sc 1/ 3

H.F. 2437 (2) a. Assets held in joint tenancy with right of 1 survivorship solely between the decedent and individuals listed 2 in section 450.9 as individuals that are entirely exempt from 3 Iowa inheritance tax a natural person . 4 (3) b. Assets passing by beneficiary designation, pursuant 5 to a trust intended to pass the decedent’s property at death 6 or through any other nonprobate transfer solely to individuals 7 listed in section 450.9 as individuals that are entirely exempt 8 from Iowa inheritance tax natural persons . 9 b. This subsection does not apply to interests in an asset 10 or assets that pass to both an individual listed in section 11 450.9 and to that individual’s spouse. 12 Sec. 7. Section 450.53, subsection 1, paragraph b, Code 13 2014, is amended to read as follows: 14 b. Notwithstanding paragraph “a” , an inheritance tax return 15 is not required to be filed if the estate does not have a 16 federal estate tax filing obligation and if all the estate or 17 trust assets pass solely to individuals listed in section 450.9 18 as individuals that are entirely exempt from Iowa inheritance 19 tax natural persons . This paragraph is not applicable if 20 interests in the asset pass to both an individual listed in 21 section 450.9 and to that individual’s spouse. 22 Sec. 8. APPLICABILITY. This Act applies to estates of 23 decedents dying on or after July 1, 2014. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill relates to the exemption from the Iowa inheritance 28 tax of the shares of the estate passing to certain persons. 29 Under current law, the entire amount of property, interest in 30 property, and income passing to the surviving spouse or the 31 lineal ascendants and descendants of the decedent are exempt 32 from the inheritance tax. The bill exempts the entire amount 33 of property, interest in property, and income passing to any 34 natural person from the inheritance tax. 35 -2- LSB 5555YH (5) 85 mm/sc 2/ 3

H.F. 2437 The bill also makes several conforming changes relating to 1 the exemption from the requirement to file an inheritance tax 2 return to provide that a return need not be filed if the estate 3 does not have a federal estate tax filing obligation and all 4 assets pass solely to natural persons. 5 The bill applies to estates of decedents dying on or after 6 July 1, 2014. 7 -3- LSB 5555YH (5) 85 mm/sc 3/ 3