Estate of Brooks v. Commissioner of Revenue Services

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ESTATE OF HELEN B. BROOKS
ET AL. v. COMMISSIONER
OF REVENUE SERVICES
(SC 19577)
Palmer, Eveleigh, McDonald, Espinosa and Robinson, Js.
Argued December 5, 2016—officially released May 23, 2017
Dennis A. Zagroba, with whom were Heather Spaide
and Patricio Suarez, for the appellants (plaintiffs).
Dinah J. Bee, assistant attorney general, with whom
were Matthew Budzik, assistant attorney general, and,
on the brief, George Jepsen, attorney general, for the
appellee (defendant).
Opinion
EVELEIGH J. The plaintiffs, the coexecutors of the
estate of Helen B. Brooks,1 appeal from the trial court’s
rendering of summary judgment in favor of the defen-
dant, the Commissioner of Revenue Services.2 The trial
court upheld the decision of the defendant to deny the
plaintiffs’ request for a refund of estate taxes paid by
the estate of the decedent, Helen B. Brooks (decedent).
On appeal, the plaintiffs claim that the trial court incor-
rectly concluded that the defendant had statutory
authority to include in the decedent’s gross estate the
value of certain qualified terminable interest property
(QTIP) in which the decedent enjoyed a life interest
and levy an estate tax upon such property. The plaintiffs
also assert that the defendant’s construction of the stat-
ute resulted in a violation of the plaintiffs’ due process
rights. We disagree with the plaintiffs and, accordingly,
affirm the judgment of the trial court.
The following facts and procedural history are rele-
vant to this appeal. The material facts in this case are
not in dispute. The decedent died on September 22,
2009, domiciled in Connecticut. She was predeceased
by her husband, Everett Brooks (Everett), who died
January 31, 2000. Everett was a resident of Florida at
the time of his death. At that time, Florida and Connecti-
cut each had an estate tax based on the amount of the
federal credit allowed for state death taxes. See 26
U.S.C. § 2011 (2000); General Statutes (Rev. to 1999)
§ 12-391; Fla. Stat. § 198.02 (2000). Everett’s will was
probated in Florida. Pursuant to Everett’s will, two
trusts were created to hold certain assets of the estate.3
The decedent, acting as executor of Everett’s estate,
elected to qualify both trusts as QTIP marital deduction
trusts. See 26 U.S.C. § 2056 (b) (7) (2000). Pursuant to
Everett’s will, the decedent enjoyed a beneficial life
interest in the assets of the trusts. Everett’s will also
granted the decedent a testamentary limited power of
appointment to direct the remainder of the trusts among
Everett’s children. In the absence of such an appoint-
ment by the decedent, the principal of the trusts was
to be distributed according to Everett’s will. The trusts
consisted of intangible personal property—namely,
cash and publicly traded stocks and bonds. The dece-
dent and Attorney Herbert J. Hummers were appointed
trustees of the trusts. Hummers was given the power
to invade the principal of the trusts for the benefit of
the decedent.4 The decedent did not have the power to
invade the principal of the trust. In or about 2002, the
decedent moved to Connecticut and lived in the state
continuously until her death.
After the decedent’s death, the plaintiffs timely filed
a request for extension and made an estimated tax
payment of $1,435,000. On November 4, 2010, the plain-
tiffs timely filed a Connecticut estate tax return for the
decedent’s estate that intentionally omitted the value
of the trusts and claimed a refund in the amount of
$988,827. The plaintiffs included a statement on the
return asserting that the value of those assets was not
properly includable in the Connecticut gross estate of
the decedent. The defendant’s audit division disallowed
the plaintiffs’ request for a refund. The plaintiffs subse-
quently filed a timely appeal to the defendant’s appellate
division, which affirmed. The plaintiffs then filed a
timely appeal from that decision to the trial court pursu-
ant to General Statutes §§ 12-395 (a) (1) and 12-554.
See generally Coyle v. Commissioner of Revenue Ser-
vices, 142 Conn. App. 198, 203–205, 69 A.3d 310 (2013),
appeal dismissed, 312 Conn. 282, 91 A.3d 902 (2014).
On cross motions for summary judgment, the trial court
concluded that the assets of the trusts were properly
included in the decedent’s gross estate and, therefore,
were subject to the estate tax. In addition, the trial
court concluded that the imposition of the tax upon
the estate did not violate the due process clause of the
fourteenth amendment to the United States constitu-
tion. Accordingly, the trial court denied the plaintiffs’
motion for summary judgment and granted the defen-
dant’s motion. The trial court then rendered judgment
thereon in favor of the defendant. This appeal followed.
Additional facts and procedural history will be set forth
as necessary.
‘‘Because the decision to grant a motion for summary
judgment is a question of law, our review of the trial
court’s decision is plenary.’’ Dattco, Inc. v. Commis-
sioner of Transportation, 324 Conn. 39, 44, 151 A.3d
823 (2016). ‘‘On appeal, we must determine whether
the legal conclusions reached by the trial court are
legally and logically correct and whether they find sup-
port in the facts set out in the memorandum of decision
of the trial court.’’ (Internal quotation marks omitted.)
Cefaratti v. Aranow, 321 Conn. 637, 645, 138 A.3d
837 (2016).
I
We begin by discussing the background of the federal
tax concepts implicated in the present case. In 1981,
Congress enacted ‘‘the most dramatic and expansive
liberalization of the [m]arital [d]eduction in history.’’
Estate of Clayton v. Commissioner of Internal Reve-
nue, 976 F.2d 1486, 1492 (5th Cir. 1992). Such a feat
was achieved in two ways. First, Congress provided for
the unlimited marital deduction. Economic Recovery
Tax Act of 1981, Pub. L. 97-34, § 403 (a), 95 Stat. 301; see
also 26 U.S.C. § 2056 (a).5 Federal law did not, however,
previously allow for the deduction of terminable inter-
ests. Estate of Clayton v. Commissioner of Internal
Revenue, supra, 1492. Mindful of rising divorce and
remarriage rates, Congress created an exception to the
general rule against allowing a deduction for the inter-
spousal transfer of terminable interests so that a dece-
dent may exert more control over the ultimate
disposition of certain assets while still financially pro-
viding for the surviving spouse with such assets unbur-
dened by front end taxation. See id., 1492–93 and n.26.
Thus, the concept of QTIP was born. Id., 1493.
Federal tax law currently operates by granting the
marital deduction to the first to die spouse in the
amount of the value of certain property, subject to cer-
tain qualifications, so long as the first to die spouse
gives a beneficial life interest in such property to the
surviving spouse. 26 U.S.C. § 2056 (b) (7).6 In order to
ensure that the property does not pass to the remainder
beneficiaries untaxed, the federal tax code imposes a
tax upon the happening of two events. During the life
of the surviving spouse, any disposition of a qualifying
life interest in property is treated as a transfer of the
remainder interest in such property for purposes of the
gift tax. See 26 U.S.C. § 2519 (a).7 To the extent that
the surviving spouse did not make any inter vivos dispo-
sition of any qualifying life interest in property, the
entire value of the property in which the surviving
spouse enjoyed a qualifying life interest is included in
his or her gross estate and is treated as property passing
therefrom. See 26 U.S.C. § 2044.8 In short, a fictional
transfer occurs from the first to die spouse to the surviv-
ing spouse, and a second fictional transfer occurs upon
the death of the surviving spouse to the remainder bene-
ficiaries. We note that, in the present case, it is undis-
puted that the assets contained within the trusts
established pursuant to Everett’s will were properly
included in the decedent’s federal gross estate.
II
First, we address the plaintiffs’ claim that, pursuant to
General Statutes § 12-391 (c) (3),9 the assets contained
within the trusts are not includable in the decedent’s
gross estate. Specifically, the plaintiffs claim that the
relevant federal estate tax provisions have been incor-
porated into the state estate tax provisions and, there-
fore, the assets contained within the trusts form part
of the decedent’s state gross estate only if the state
allowed a deduction with respect to the transfer of such
property to the decedent following Everett’s death. The
defendant claims that such an interpretation of § 12-
391 (c) (3) is inconsistent with the plain meaning of
the provision—namely, that the gross estate for state
estate tax purposes is the same as the gross estate for
federal estate tax purposes. We agree with the
defendant.
The plaintiffs’ claim implicates a matter of statutory
construction. Our standard of review for statutory con-
struction claims is well established. ‘‘When construing
a statute, [the court’s] fundamental objective is to ascer-
tain and give effect to the apparent intent of the legisla-
ture. . . . In other words, [the court seeks] to
determine, in a reasoned manner, the meaning of the
statutory language as applied to the facts of [the] case,
including the question of whether the language actually
does apply. . . . In seeking to determine that meaning
. . . [General Statutes] § 1-2z directs [the court] first
to consider the text of the statute itself and its relation-
ship to other statutes. If, after examining such text and
considering such relationship, the meaning of such text
is plain and unambiguous and does not yield absurd or
unworkable results, extratextual evidence of the mean-
ing of the statute shall not be considered. . . . The test
to determine ambiguity is whether the statute, when
read in context, is susceptible to more than one reason-
able interpretation.’’ (Internal quotation marks omit-
ted.) Allen v. Commissioner of Revenue Services, 324
Conn. 292, 307–308, 152 A.3d 488 (2016). ‘‘[A]long with
these principles, we are also guided by the applicable
rules of statutory construction specifically associated
with the interpretation of tax statutes. . . . [W]hen the
issue is the imposition of a tax, rather than a claimed
right to an exemption or a deduction, the governing
authorities must be strictly construed . . . in favor of
the taxpayer. . . . Nevertheless, [i]t is also true . . .
that such strict construction neither requires nor per-
mits the contravention of the true intent and purpose of
the statute as expressed in the language used.’’ (Internal
quotation marks omitted.) Groton v. Commissioner of
Revenue Services, 317 Conn. 319, 328–29, 118 A.3d 37
(2015).
We acknowledge that ‘‘when our tax statutes refer
to the federal tax code, federal tax concepts are incor-
porated into state law.’’ (Internal quotation marks omit-
ted.) Allen v. Commissioner of Revenue Services, supra,
324 Conn. 305 n.15. Nevertheless, we have explained
that ‘‘this rule does not require the wholesale incorpora-
tion of the entire body of federal tax principles into our
state income tax scheme . . . .’’ (Internal quotation
marks omitted.) Id. Instead, ‘‘where a reference to the
federal tax code expressly is made in the language of
a statute, and where incorporation of federal tax prin-
ciples makes sense in light of the statutory language
at issue, our prior cases uniformly have held that incor-
poration should take place.’’ (Emphasis added; internal
quotation marks omitted.) Id.
In the present case, the statutory language provides
that the term gross estate ‘‘means the gross estate, for
federal estate tax purposes.’’ General Statutes § 12-391
(c) (3). The plain language of the statute requires noth-
ing more than the gross estate as reported on the federal
estate tax return. The construction urged by the plain-
tiffs would result in a value of the gross estate for state
estate tax purposes that would differ from the value of
the gross estate for federal estate tax purposes. Specifi-
cally, looking at whether Connecticut deducted the
value of a QTIP trust from the estate of the first to die
spouse in order to ascertain whether such assets are
to be included in the state gross estate of the surviving
spouse would not be ‘‘for federal estate tax purposes.’’
General Statutes § 12-391 (c) (3). Thus, according to
§ 12-391 (c) (3), if assets are included in a decedent’s
federal gross estate, they are included in his or her state
gross estate as well.
In addition, this construction is buttressed by § 12-
391 (f) (2), which provides: ‘‘An election under said [26
U.S.C. § 2056 (b) (7)] may be made for state estate tax
purposes regardless of whether any such election is
made for federal estate tax purposes. The value of the
gross estate shall include the value of any property in
which the decedent had a qualifying income interest
for life for which an election was made under this sub-
section.’’ (Emphasis added.) Thus, the legislature has
created a separate state QTIP election and inclusion
provision. Construing § 12-391 (c) (3) to require the
state to have first granted a deduction for the value of
a QTIP trust from the gross estate of the first to die
spouse in order to properly include the value of such
in assets in the gross estate of the surviving spouse
would, in essence, create a state QTIP election by incor-
poration that would render a separate election under
§ 12-391 (f) (2) superfluous. See, e.g., Allen v. Commis-
sioner of Revenue Services, supra, 324 Conn. 309 (‘‘stat-
utes shall not be construed to render any sentence,
clause, or phrase superfluous or meaningless’’ [internal
quotation marks omitted]). Accordingly, we conclude
that the plain language of the statute, when read in
context with other related provisions, clearly provides
that the assets contained within the trusts at issue are
includable in the decedent’s gross estate pursuant to
§ 12-391 (c) (3) because they were included in the dece-
dent’s gross estate for federal estate tax purposes.
Not advancing a textual basis for their construction
of the provision, the plaintiffs rely principally upon case
law for their claim that the federal estate tax code is
incorporated into § 12-391 (c) (3). At first blush, our
holding in Berkley v. Gavin, 253 Conn. 761, 772–75, 756
A.2d 248 (2000), would appear to strongly support the
plaintiffs’ position in the present case. In Berkley, the
issue was whether the phrase ‘‘as determined for federal
income tax purposes’’ in the statute defining adjusted
gross income; General Statutes (Rev. to 1999) § 12-701
(a) (19); ‘‘means as determined in accordance with fed-
eral income tax methodology, or as reported on a tax-
payer’s federal income tax return.’’ Berkley v. Gavin,
supra, 772. Relying on case law, this court held that the
phrase meant the former because the pertinent federal
tax provisions for determining adjusted gross income
were incorporated into this state’s income tax provi-
sions. Id., 774. This included the tax benefit rule. 26
U.S.C. § 111.10 As a result, whether certain recovered
losses were included in Connecticut adjusted gross
income in the present year would depend on whether
the taxpayer had reduced his state income tax liability,
but not necessarily his federal income tax liability, in
a previous year as a result of such previously reported
losses. In essence, the incorporation of the federal tax
benefit rule resulted in a ‘‘Connecticut tax benefit rule
. . . .’’ (Emphasis in original.) Id., 783 (Sullivan, J.,
dissenting).11 This is precisely the interpretation the
plaintiffs seek in the present case—namely, that the
inclusion of a QTIP marital deduction trust in a dece-
dent’s state gross estate requires the state to have
granted a corresponding deduction to the estate of the
first to die spouse. Justice Sullivan, in his dissent in
Berkley, pointed out that the result reached by the
majority in that case was inconsistent with the plain
language of the statute because such a modification of
Connecticut adjusted gross income was not ‘‘for federal
income tax purposes . . . .’’ (Internal quotation marks
omitted.) Id., 784. Indeed, as a result of the holding
in Berkley, the legislature subsequently clarified the
definition of adjusted gross income by adding the
phrase ‘‘and as properly reported on such person’s fed-
eral income tax return.’’ Public Acts, Spec. Sess., June,
2001, No. 01-6, § 35; see also Public Acts, Spec. Sess.,
June, 2001, No. 01-6, § 36 (stating legislative intent).
To construe the provision defining gross estate in the
present case to incorporate the federal estate tax code
would result, as Justice Sullivan pointed out in Berkley,
in a construction inconsistent with the plain language
of the relevant statute. We conclude, especially in light
of the principles of § 1-2z, which was not in effect when
Berkley was decided, that incorporation of federal tax
statutes into our statutory provisions should be deter-
mined in the first instance with reference to the plain
meaning of § 12-391 (c) (3).
Next, we disagree with the plaintiffs’ contention that
our holding in New York Trust Co. v. Doubleday, 144
Conn. 134, 145, 128 A.2d 192 (1956), incorporated all
provisions of the federal estate tax into our estate tax
code. In that case, we stated the following ‘‘The Con-
necticut estate tax statute . . . adopts as the base for
computing the tax 80 [percent] of the amount of the
basic federal estate tax. Inferentially, then, our statute
incorporates within itself the provisions of the federal
estate tax statute, governing the computation of the
federal estate tax, including all of the provisions of the
latter statute for exemptions and deductions.’’ Id. The
estate tax statute at issue in that case bears no resem-
blance to the estate tax at issue in the present case.12
The previous estate tax, known as the pick up tax,
was principally based upon the federal credit available
under 26 U.S.C. § 2011. See G. Wilhelm & L. Weintraub,
Connecticut Estate Practice: Death Taxes in Connecti-
cut (4th Ed. 2013) § 1:2, p. 1-6. Under the previous estate
tax, ‘‘[t]he amount of the tax was the amount by which
such credit exceeded the total amount of all death taxes,
including the Connecticut succession tax, actually paid
to the several states and territories.’’ Id., pp. 1-6 through
1-7. We described our estate tax at that time as one
that did ‘‘no more than to divert into the state treasury
what would otherwise be taken by the federal govern-
ment as a part of the federal estate tax.’’ New York
Trust Co. v. Doubleday, supra, 145. After Congress
repealed the state death tax credit,13 the legislature
enacted a new, stand alone estate tax applicable to
decedents dying on or after January 1, 2005. See Public
Acts 2005, No. 05-251, § 69. The decedent’s estate is
being taxed under the present, stand-alone estate tax,
not the pick up tax. Accordingly, we construe the pres-
ent estate tax statute anew, unbound by this court’s
construction of a substantively different and inopera-
tive tax statute.
In sum, we conclude that the value of the QTIP marital
deduction trusts at issue in the present case are
included in the decedent’s gross estate for Connecticut
estate tax purposes because those assets are included
in the decedent’s gross estate for federal estate tax
purposes.
III
We next address the plaintiffs’ claim that § 12-391
does not permit the defendant to tax the assets con-
tained within the QTIP marital deduction trusts because
the decedent did not own the property subject to the
tax. In particular, the plaintiffs claim that the statutory
language in effect at the time of the decedent’s death;
General Statutes (Rev. to 2009) § 12-391 (d) (3);14 limits
the authority of the defendant to impose a tax upon
intangible personal property to only such property
owned by the decedent and that, therefore, the assets
contained within the trusts at issue are not taxable. The
defendant claims that No. 13-247, § 120, of the 2013
Public Acts (P.A. 13-247), and No. 14-155, § 12, of the
2014 Public Acts (P.A. 14-155), clarified the original
intention of the legislature with respect to the meaning
of the relevant provision and, therefore, applies retroac-
tively. Specifically, P.A. 13-247, § 120, amended § 12-
391 (d) (3) to, inter alia, replace the words ‘‘owned by
the decedent’’ with ‘‘included in the gross estate of the
decedent,’’ and P.A. 14-155, § 12, expressly declared the
legislative intent of P.A. 13-247, § 120, to be ‘‘clarifying
in nature and applicable to all open estates.’’ The defen-
dant points to the legislative history of both acts in
support of his claim. The plaintiffs counter that, not-
withstanding the legislature’s belated attempt in P.A.
14-155 to declare its intent regarding the amendments,
P.A. 13-247 amounted to a substantive change to the
law that can only be applied prospectively. As evidence,
the plaintiffs point to the effective date of January 1,
2013, contained in P.A. 13-257, § 120. The plaintiffs fur-
ther claim that if § 12-391 (d) (3) were construed in
accordance with its plain meaning, it would be evident
that the amendment amounted to a substantive change.
The plaintiffs also dispute that the legislative history is
sufficient to support the conclusion that the amendment
was clarifying in nature. We agree with the defendant.
We begin by discussing the legal standard we apply in
determining whether the legislature intended statutory
amendments to be clarifying in nature. ‘‘We presume
that, in enacting a statute, the legislature intended a
change in existing law. . . . This presumption, like any
other, may be rebutted by contrary evidence of the
legislative intent in the particular case. An amendment
which in effect construes and clarifies a prior statute
must be accepted as the legislative declaration of the
meaning of the original act. . . . Furthermore, an
amendment that is intended to clarify the intent of an
earlier act necessarily has retroactive effect.’’ (Citation
omitted; internal quotation marks omitted.) Bhinder v.
Sun Co., 263 Conn. 358, 368–69, 819 A.2d 822 (2003).
‘‘This court has a long tradition of embracing clarifying
legislation.’’ Greenwich Hospital v. Gavin, 265 Conn.
511, 520, 829 A.2d 810 (2003); accord State v. Banks,
321 Conn. 821, 841–42, 146 A.3d 1 (2016); see also Fair-
windCT, Inc. v. Connecticut Siting Council, 313 Conn.
669, 685 n.21, 99 A.3d 1038 (2014) (‘‘there is no question
that the legislature has the power to enact clarifying
legislation’’).15 ‘‘[W]e have often held . . . that it is as
much within the legislative power as the judicial
power—subject, of course, to constitutional limits other
than the separation of powers—for the legislature to
declare what its intent was in enacting previous legisla-
tion.’’ (Internal quotation marks omitted.) Greenwich
Hospital v. Gavin, supra, 520. Accordingly, as a matter
of statutory construction, we need not construe the
original statutory language upon finding that subse-
quent legislation is clarifying in nature. See id., 517 and
n.8; see also Raftopol v. Ramey, 299 Conn. 681, 685–86
n.7, 12 A.3d 783 (2011).
‘‘To determine whether the legislature enacted a stat-
utory amendment with the intent to clarify existing
legislation, we look to various factors, including, but
not limited to (1) the amendatory language . . . (2) the
declaration of intent, if any, contained in the public act
. . . (3) the legislative history . . . and (4) the circum-
stances surrounding the enactment of the amendment,
such as, whether it was enacted in direct response to
a judicial decision that the legislature deemed incorrect
. . . or passed to resolve a controversy engendered by
statutory ambiguity . . . .’’ (Citations omitted; internal
quotation marks omitted.) Middlebury v. Dept. of Envi-
ronmental Protection, 283 Conn. 156, 174, 927 A.2d 793
(2007). Not each factor is given equal weight. We have
previously observed that the legislature ‘‘simplifie[s]
our task of determining its intention in adopting [amen-
datory legislation] by incorporating into the text of the
act an explicit statement of the legislature’s intention.’’
Greenwich Hospital v. Gavin, supra, 265 Conn. 519.
First and foremost, the legislature enacted express
language manifesting its intention to clarify its original
intent with respect to the relevant provision. Section
12 of P.A. 14-155 provides in relevant part: ‘‘It is the
intent of the General Assembly that the amendments
made by section 120 of public act 13-247 to subsections
(d) and (e) of section 12-391 of the general statutes, as
amended by this act, are clarifying in nature and apply
to all open estates.’’ The plaintiffs concede that such
expressions of legislative intent are often taken as con-
clusive evidence of original legislative intent.
Nevertheless, the plaintiffs rightfully point out that,
when the legislature enacted P.A. 13-247, § 120, it made
the provision applicable to the estates of decedents
dying after January 1, 2013.16 The plaintiffs argue that
the express declaration of intent to clarify should not
be given effect because it directly conflicts with the
effective date of P.A. 13-247, § 120, and there is no other
evidence that the legislature intended that amendment
to be clarifying. Contrary to the plaintiffs’ claim, the
legislative history of P.A. 13-247, § 120, does support
the conclusion that the amendatory language was, in
fact, clarifying in nature. To be sure, the legislative
history is scant, but it points in favor of the defendant.
Senator John W. Fonfara, in response to a question
from Senator L. Scott Frantz, remarked that the revision
to the estate tax statute is ‘‘technical and is consistent
with how we’ve always implemented this procedure so
it doesn’t change the way Connecticut has implemented
this provision previously.’’ 56 S. Proc., Pt. 17, 2013 Sess.,
p. 5459.17 We have previously recognized that testimony
in which amendatory language is described as technical
tends to support the conclusion that the legislature
intended the language to be clarifying. See Greenwich
Hospital v. Gavin, supra, 265 Conn. 523. Additionally,
it is not disputed that the claims made by the plaintiffs
in the present case, as well as other taxpayers, were the
impetus behind P.A. 13-247, § 120. Thus, the amendment
‘‘invokes the principle of statutory construction that [i]f
the amendment was enacted soon after controversies
arose as to the interpretation of the original act, it is
logical to regard the amendment as a legislative inter-
pretation of the original act . . . .’’ (Internal quotation
marks omitted.) State v. Blasko, 202 Conn. 541, 558, 522
A.2d 753 (1987); see also Caron v. Inland Wetlands &
Watercourses Commission, 222 Conn. 269, 279, 610
A.2d 584 (1992).
Finally, the plaintiffs claim that the plain meaning of
the term ‘‘owned by’’ in General Statutes (Rev. to 2009)
§ 12-391 operated as a substantive limitation on the
state’s authority to levy the estate tax on certain prop-
erty included in the gross estate. Thus, according to
the plaintiffs, notwithstanding the legislature’s declara-
tion of intent in P.A. 14-155, § 12, the amendatory lan-
guage in P.A. 13-247, § 120, broadened the class of
intangible personal property subject to the estate tax
and, thereby, effected a substantive change to the law
that must be applied prospectively. We acknowledge
that, at some point, a change in the law is so substantial
that, no matter how forcefully the legislature expresses
its intent to clarify, the change must be regarded as
substantive. See State v. Blasko, supra, 202 Conn. 558
(‘‘[t]he legislature could not, even by extensive protesta-
tions of legislative intent, convert an act that is truly
curative into one that is effectively clarifying’’). Never-
theless, the plaintiffs have failed to persuade us to dis-
count the clear expression of legislative intent in the
present case.18 First, this is not a case in which the
legislature ‘‘attempt[ed] to clothe a retroactive substan-
tive change in clarifying garb by, for example,
attempting to ‘clarify’ the meaning of a statute to mean
something different from a court’s repeated and consis-
tent interpretation of the same statute.’’ Connecticut
National Bank v. Giacomi, 242 Conn. 17, 44 n.33, 699
A.2d 101 (1997). Furthermore, it is far from clear that the
ordinary meaning of ‘‘owned by’’ furnished the proper
statutory construction when that language was opera-
tive. A narrow construction of the phrase ‘‘owned by’’
would arguably operate to prevent the state from ever
levying the estate tax upon any qualifying life interest—
whether the property is included in the gross estate
because the decedent held a federally qualifying life
interest in a trust under § 12-391 (c) (3) or a state qualify-
ing life interest under § 12-391 (f) (2)—because, as the
plaintiffs urge, the surviving spouse did not own the
trust assets in which he or she enjoyed the life interest.
Thus, we reject the plaintiffs’ claim that the amendment
effected such a significant change to the law that the
only conclusion to be drawn, notwithstanding a declara-
tion of express legislative intent to the contrary, is that
the change was substantive. The effective date indi-
cated in P.A. 13-247, § 120, is an outlier among all the
evidence that points to the conclusion that the amenda-
tory language was clarifying in nature. Accordingly, we
conclude that P.A. 13-247, § 120, is clarifying in nature
and, therefore, necessarily applies retroactively to the
decedent’s estate in the present case.
The plaintiffs also claim that retroactive application
of the amended statute to the estate of the decedent
would result in a violation of the due process clause
of the fourteenth amendment to the United States con-
stitution. This claim fails because the amendment was
not a substantive change to the law. Connecticut
National Bank v. Giacomi, supra, 242 Conn. 44. ‘‘The
necessarily retroactive effect of clarifying legislation
is not to be confused with the retroactive effect of
legislation that changes the law. The former clarifies
the substantive provisions to which a person has always
been subject. The latter applies substantive provisions
to a person heretofore not subject to those provisions.’’
Id. To the extent that clarifying legislation must satisfy
the rational basis test set forth in United States v. Carl-
ton, 512 U.S. 26, 30–31, 114 S. Ct. 2018, 129 L. Ed. 2d
22 (1994), because the legislature merely clarified its
intent when enacting the Connecticut estate tax, the
application of P.A. 13-257, § 120, to the present case
clearly satisfies the rational basis test. See Bhinder v.
Sun Co., supra, 263 Conn. 374. Accordingly, we reject
the plaintiffs’ claim that the retroactive application of
the amendment to the decedent’s estate violates due
process.
IV
Lastly, we address the issue of whether, at the death
of the decedent, a transfer of the assets contained within
the QTIP marital deduction trusts occurred such that
it was proper to levy the estate tax based on the value
of those assets. By its terms, the Connecticut estate tax
is a tax ‘‘imposed upon the transfer of the estate of
each person who at the time of death was a resident
of this state.’’ (Emphasis added.) General Statutes § 12-
391 (d) (1) (B). The plaintiffs claim that no transfer
occurs at the death of a life beneficiary of a QTIP marital
deduction trust; rather, a ‘‘deemed’’ or ‘‘fictional’’ trans-
fer occurs in order to collect the tax that was deferred
when the actual taxable transfer was made at the death
of the first to die spouse. In other words, because Con-
necticut did not defer imposition of the estate tax upon
Everett’s actual transfer of assets into the trusts when
he died in Florida, it cannot now properly tax the ‘‘fic-
tional’’ transfer of those assets from the decedent’s
estate. As a result, according to the plaintiffs, the impo-
sition of the estate tax on the decedent’s estate in the
present case results in an impermissible tax upon an
out-of-state transfer in violation of the due process
clause of the fourteenth amendment. The defendant
claims that the Connecticut estate tax is properly levied
upon the transfer of the QTIP trust assets at the dece-
dent’s death. The defendant maintains that a transfer
can be characterized by the shift in legal relationships
to property occasioned by death, and a tax on such
shifts is a proper excise tax within the state’s taxing
authority. In turn, because the decedent was a domicili-
ary of the state at her death, the defendant maintains
that imposing the tax on this transfer comports with
the due process clause. We agree with the defendant.
The underlying basis for the assets of these trusts
being included in the decedent’s gross estate is that
those assets qualified as QTIP under the federal tax
code. See part II of this opinion. But in order to be very
clear, we set aside the fictions of the QTIP provisions.
The defendant seeks to levy the estate tax on certain
assets in which the decedent enjoyed a life interest.
The issue that we must resolve is whether the defendant
may impose the estate tax based on the value of trust
assets in which a decedent enjoyed only a life interest.
As an initial matter, it is clear that the legislature
intended ‘‘transfer’’ to be construed as broadly as possi-
ble. As the discussion in part II of this opinion demon-
strates, the legislature intended for all property in the
federal gross estate to be included in the state gross
estate. See General Statutes § 12-391 (c) (3). Second,
as the discussion in part III of this opinion demon-
strates, § 12-391 (d) (3), as amended, reveals a clear
legislative intent to calculate and levy the estate tax
upon all intangible personal property included in the
gross estate to the greatest extent permitted by the
federal constitution. It would be illogical for the legisla-
ture to have called for the inclusion of QTIP marital
deduction trusts in the gross estate of the decedent,
but also have intended a narrow definition of ‘‘transfer’’
that would operate to prevent the defendant from levy-
ing the tax on the value of such property. Accordingly,
‘‘transfer’’ must be construed to embrace the shifting
in relationships to property attendant to the death of
a life beneficiary.
The crux of the plaintiffs’ statutory claims in the
present case is that the defendant’s construction of
the estate tax statute results in the imposition of an
unconstitutional tax upon the decedent’s estate. The
plaintiffs are correct ‘‘that this court has a duty to con-
strue statutes, whenever possible, to avoid constitu-
tional infirmities . . . .’’ (Internal quotation marks
omitted.) State v. Cook, 287 Conn. 237, 245, 947 A.2d
307, cert. denied, 555 U.S. 970, 129 S. Ct. 464, 172 L.
Ed. 2d 328 (2008). ‘‘[W]hen called [on] to interpret a
statute, we will search for an effective and constitu-
tional construction that reasonably accords with the
legislature’s underlying intent.’’ (Internal quotation
marks omitted.) Id. Accordingly, we turn to the issue
of whether this construction of the estate tax statute
is constitutionally infirm.
We first set forth the appropriate standard of review.
‘‘With respect to a statutory challenge on constitutional
grounds, [a] validly enacted statute carries with it a
strong presumption of constitutionality, [and] those
who challenge its constitutionality must sustain the
heavy burden of proving its unconstitutionality beyond
a reasonable doubt. . . . The court will indulge in
every presumption in favor of the statute’s constitution-
ality . . . . Therefore, [w]hen a question of constitu-
tionality is raised, courts must approach it with caution,
examine it with care, and sustain the legislation unless
its invalidity is clear. . . . In other words, we will
search for an effective and constitutional construction
that reasonably accords with the legislature’s underly-
ing intent.’’ (Citation omitted; internal quotation marks
omitted.) A. Gallo & Co. v. Commissioner of Environ-
mental Protection, 309 Conn. 810, 822, 73 A.3d 693
(2013), cert. denied, U.S. , 134 S. Ct. 1540, 188
L. Ed. 2d 581 (2014).
The state’s right ‘‘to exercise the widest liberty with
respect to the imposition of internal taxes always has
been recognized in the decisions of [the Supreme Court
of the United States].’’ Shaffer v. Carter, 252 U.S. 37,
51, 40 S. Ct. 221, 64 L. Ed. 445 (1920); accord Allen v.
Commissioner of Revenue Services, supra, 324 Conn.
314–15. The imposition of an estate tax falls within the
broad authority of the sovereign to impose an excise
tax. See, e.g., West v. Oklahoma Tax Commission, 334
U.S. 717, 727, 68 S. Ct. 1223, 92 L. Ed. 1676 (1948);
Whitney v. State Tax Commission of New York, 309
U.S. 530, 538, 60 S. Ct. 635, 84 L. Ed. 909 (1940); United
States Trust Co. v. Helvering, 307 U.S. 57, 60, 59 S. Ct.
692, 83 L. Ed. 1104 (1939). ‘‘[T]he estate tax as originally
devised and constitutionally supported was a tax upon
transfers.’’ Fernandez v. Wiener, 326 U.S. 340, 352, 66
S. Ct. 178, 90 L. Ed. 116 (1945); see generally Knowlton
v. Moore, 178 U.S. 41, 20 S. Ct. 747, 44 L. Ed. 969 (1900).
A proper excise or estate tax, however, is levied not only
upon literal transfers at death. Rather, any ‘‘creation,
exercise, acquisition, or relinquishment of any power
or legal privilege which is incident to the ownership of
property’’ at the death of the decedent is subject to tax
as a transfer at death. Fernandez v. Wiener, supra, 352.19
In other words, a sovereign may tax the transmutation
of legal rights in property occasioned by death. See id.,
358 (‘‘[w]e find no basis for the contention that the tax
is arbitrary and capricious because it taxes transfers
at death and also the shifting at death of particular
incidents of property’’); see also United States Trust
Co. v. Helvering, supra, 60 (‘‘[the estate tax] is an excise
imposed upon the transfer of or shifting in relationships
to property at death’’).
In Fernandez, the heirs of the decedent challenged,
on various federal constitutional grounds, the imposi-
tion of the estate tax on the one-half share of marital
community property owned by a surviving spouse at
the death of the decedent. Fernandez v. Wiener, supra,
326 U.S. 346–47. The heirs had argued that, at the dece-
dent’s death, the surviving spouse ‘‘acquire[d] no new
or different interest in the property’’ and the death of
neither spouse ‘‘operate[d] to transfer, relinquish or
enlarge any legal or economic interest in the property
of the other spouse.’’ Id., 346. The court rejected the
heirs’ claims, noting that, notwithstanding the fact that
the surviving spouse’s rights were vested, the surviving
spouse was liberated of the burdens of the decedent’s
rights over the survivor’s share and enjoyed greater
rights in the property. Id., 355–56. The court summa-
rized that, ‘‘[i]t is enough that death brings about
changes in the legal and economic relationships to the
property taxed, and the earlier certainty that those
changes would occur does not impair the legislative
power to recognize them, and to levy a tax on the
happening of the event which was their generating
source.’’ Id., 356–57.
We conclude that taxing the assets contained within
the QTIP marital deduction trusts upon the death of
the decedent in the present case fits comfortably with
the general principles set forth in Fernandez. The termi-
nation of the decedent’s beneficial life interest in those
assets, and the remainder beneficiaries coming into pos-
session and enjoyment of their successive interests, is
a sufficient ‘‘shifting at death of particular incidents of
property’’ to properly impose an excise tax. Id., 358.
The plaintiffs’ claim that the reasoning of Coolidge
v. Long, 282 U.S. 582, 51 S. Ct. 306, 75 L. Ed. 562 (1931),
compels the conclusion that a properly taxable transfer
of property does not occur when, at the death of the
decedent, the decedent’s life interest in the property
terminates. In that case, before the operative state suc-
cession tax law took effect, the decedent executed a
trust declaration reserving for herself and her spouse
life interests in certain property with remainders to take
effect in possession upon the death of the surviving
spouse. Id., 593–94. The operative statute in that case
subjected to a tax ‘‘[a]ll property . . . which shall pass
by . . . deed, grant or gift . . . made or intended to
take effect in possession or enjoyment after [the grant-
or’s] death . . . .’’ (Internal quotation marks omitted.)
Id., 595. The United States Supreme Court rebuffed
the Massachusetts Supreme Judicial Court’s conclusion
that the death of the survivor of the settlors of the trust
was a ‘‘taxable commodity under the statute enacted
after the creation of the trust,’’ and held that the tax
was an unconstitutional retroactive tax under the due
process clause of the fourteenth amendment and the
contract clause. Id., 595–99. The court reasoned that
the grant of the remainder to each of the beneficiaries
was ‘‘a grant in praesenti,’’ to be enjoyed at the death
of the surviving spouse. Id., 597. The court stated that
the provision of income for the life of the settlors ‘‘did
not operate to postpone the vesting in the sons of the
right of possession or enjoyment,’’ and the trustees were
bound to turn over the property at the death of the
survivor. Id. Thus, the decedent’s death was not the
‘‘generating source of any right in the remaindermen.
. . . There was no transmission then.’’ (Citation omit-
ted.) Id., 597–98. ‘‘The succession, when the time came,
did not depend upon any permission or grant of the
[c]ommonwealth.’’ Id., 598. The reasoning of that case
does not, however, alter our conclusion in the pres-
ent case.
First, the United States Supreme Court has sharply
criticized cases that, like Coolidge v. Long, supra, 282
U.S. 598, were ‘‘decided during an era characterized
by exacting review of economic legislation under an
approach that ‘has long since been discarded.’ ’’ United
States v. Carlton, supra, 512 U.S. 34, quoting Ferguson
v. Skrupa, 372 U.S. 726, 730, 83 S. Ct. 1028, 10 L. Ed. 2d
93 (1963). In fact, in Carlton, the United States Supreme
Court specifically referred to Nichols v. Coolidge, 274
U.S. 531, 47 S. Ct. 710, 71 L. Ed. 1184 (1927), in its
criticism of case law from that era. That case involved
application of the federal estate tax to the very same
trust at issue in Coolidge v. Long, supra, 582. The court’s
conclusion in Coolidge v. Long, supra, 597–98, hinged
on the fact that the trust deed was a present grant that
resulted in ‘‘vested’’ rights in the beneficiaries. Vested
rights no longer form the touchstone of the analysis of
economic regulation. See Honeywell, Inc. v. Minnesota
Life & Health Ins. Guaranty Assn., 110 F.3d 547, 554
(8th Cir. 1997) (noting that law had ‘‘drift[ed] away from
the Lochner [v. New York, 198 U.S. 45, 25 S. Ct. 539, 49
L. Ed. 937 (1905)] era’s strict protection of economic
freedom and vested rights’’). The court in Fernandez
clearly subordinated the fact that the surviving spouse’s
rights were vested to the practical legal and economic
shift occasioned by the decedent. Fernandez v. Wiener,
supra, 326 U.S. 356.20
It is clear from the reasoning in Fernandez that the
court embraced a broader concept of transfer than
when the court considered Coolidge v. Long, supra, 282
U.S. 582. The court in Coolidge v. Long, supra, 597,
reasoned that the death of the settlor was not the ‘‘gen-
erating source of any right in the remaindermen.’’ In
Fernandez v. Wiener, supra, 326 U.S. 356–57, the court
took a more practical approach and looked not to
whether death was the generating source of ‘‘rights,’’
but rather whether death was the generating source of
‘‘changes in the legal and economic relationships to the
property taxed . . . .’’ This more encompassing lan-
guage employed by the court reflects its embrace of an
evaluation of the practical economic and legal shifts
occasioned by death rather than a reliance of formalistic
property law distinctions in determining whether a
properly taxable transfer has occurred.
To the extent the reasoning of Coolidge v. Long,
supra, 282 U.S. 582, survives, the case can be distin-
guished by the type of tax at issue. In that case, the
statute imposed a tax on a grant in trust to take effect
at the death of the settlor or the settlor’s surviving
spouse. See id., 595–96. Put more simply, the statute,
by its terms, taxed the transfer in trust of the property.
In the present case, the statute does not purport to tax
the transfer of assets from Everett; rather, the statute
taxes property in which the decedent had a federally
qualifying life interest. See 26 U.S.C. § 2044 (a); General
Statutes § 12-391 (c) (3). The tax in the present case is
directly targeting the changes in legal and economic
relationships to the property, not a prior transfer.
Finally, Coolidge v. Long, supra, 282 U.S. 582, was
decided long before the evolution of state and federal
tax schemes that employ complex fictions designed
to effectuate certain public policy—such as treating a
married couple as a single economic unit—while ensur-
ing that such tax schemes do not form apertures
through which it would be possible to avoid taxation.
In order to effectuate social and economic policy, legis-
lators have crafted ever more complex tax laws than
those that simply tax the transfer of title to property
at death. For example, one court described the concept
of QTIP as one that had been invented by Congress
‘‘[o]ut of thin air and from whole cloth,’’ noting that
‘‘[i]f unlimiting the [m]arital [d]eduction was a flight
into the wild blue yonder, Congress truly slipped the
surly bonds of earth with the advent of QTIP.’’ (Foot-
note omitted; internal quotation marks omitted.) Estate
of Clayton v. Commissioner of Internal Revenue,
supra, 976 F.2d 1493. Connecticut, too, seeks to impose
the estate tax when federally qualified terminable inter-
est property leaves the marital unit, irrespective of
whether this state, another state, or no state deducted
the value of that property from the taxable estate of
the first to die spouse. ‘‘Nothing can be less helpful
than for courts to go beyond the extremely limited
restrictions that the [c]onstitution places upon the
states and to inject themselves in a merely negative
way into the delicate processes of fiscal [policymaking].
We must be on guard against imprisoning the taxing
power of the states within formulas that are not com-
pelled by the [c]onstitution . . . .’’ (Emphasis added.)
Wisconsin v. J. C. Penney Co., 311 U.S. 435, 445, 61 S.
Ct. 246, 85 L. Ed. 267 (1940). ‘‘The [c]onstitution is
not a formulary. It does not demand of states strict
observance of rigid categories nor precision of technical
phrasing in their exercise of the most basic power of
government, that of taxation.’’ Id., 444. In sum, we would
conclude that Coolidge v. Long, supra, 582, does not
foreclose the defendant from taxing the assets within
the QTIP marital deduction trusts at issue in the estate
of the decedent as a transfer.
The plaintiffs’ claim that the tax in the present case
violates the fourteenth amendment as a tax on out-of-
state property is also unavailing. It is well settled that
‘‘[t]he due process clause denies to the state power
to tax or regulate the [entity’s] property and activities
elsewhere.’’ (Internal quotation marks omitted.) Allen
v. Commissioner of Revenue Services, supra, 324 Conn.
315. With respect to the transfer of real and tangible
personal property, the constitutional rule is simple—
namely, the state in which the property has an actual
situs has the exclusive jurisdiction to levy a tax.
Treichler v. Wisconsin, 338 U.S. 251, 256–57, 70 S. Ct.
1, 94 L. Ed. 37 (1949); Frick v. Pennsylvania, 268 U.S.
473, 487–88, 45 S. Ct. 603, 69 L. Ed. 1058 (1925). The
plaintiffs’ claim that the rule in those cases as applied to
the trusts in the present case stretches the rule too far.
Unlike real and personal property, intangible per-
sonal property is characterized by ‘‘legal relationships
between persons and which in fact have no geographi-
cal location . . . .’’ Graves v. Schmidlapp, 315 U.S. 657,
660, 62 S. Ct. 870, 86 L. Ed. 1097 (1942). For this reason,
‘‘intangibles themselves have no real situs . . . .’’
Greenough v. Tax Assessors of Newport, 331 U.S. 486,
493, 67 S. Ct. 1400, 91 L. Ed. 1621 (1947). Accordingly,
the rule of situs is not controlling with respect to the
issue of jurisdiction to levy the estate tax upon intangi-
ble personal property. Curry v. McCanless, 307 U.S.
357, 369–70, 59 S. Ct. 900, 83 L. Ed. 1339 (1939). The
proper inquiry with respect to the jurisdiction to levy
the estate tax on intangibles is whether ‘‘by the practical
operation of a tax the state has exerted its power in
relation to opportunities which it has given, to protec-
tion which it has afforded, to benefits which it has
conferred by the fact of being an orderly, civilized soci-
ety.’’ (Internal quotation marks omitted.) State Tax
Commission of Utah v. Aldrich, 316 U.S. 174, 178–79,
62 S. Ct. 1008, 86 L. Ed. 1358 (1942), quoting Wisconsin
v. J. C. Penney Co., supra, 311 U.S. 444. The state’s
authority to impose a tax is at its apogee with respect to
a domiciliary. ‘‘From the beginning of our constitutional
system control over the person at the place of his domi-
cile and his duty there, common to all citizens, to con-
tribute to the support of government have been deemed
to afford an adequate constitutional basis for imposing
on him a tax on the use and enjoyment of rights in
intangibles measured by their value.’’ Curry v. McCan-
less, supra, 366.
Under these principles, we conclude that Connecticut
did not lack jurisdiction to tax the transfer of the assets
contained within the QTIP marital deduction trust as
part of the decedent’s estate. The decedent was a domi-
ciliary of this state at the time of her death. She enjoyed
all of the benefits of the state attendant to residence
therein. During that time, she enjoyed the economic
benefits of her beneficial life interest in the trusts. This
nexus is sufficient for due process.21 Accordingly, we
conclude that the imposition of the estate tax on the
transfer of the assets contained within relevant trusts
did not violate due process.
To summarize, we conclude that the trial court prop-
erly rendered summary judgment in favor of the defen-
dant because the defendant properly included the value
of the assets contained within the QTIP marital deduc-
tion trusts in the decedent’s gross estate and levied
the estate tax thereupon in accordance with § 12-391
without violating due process.
The judgment is affirmed.
In this opinion the other justices concurred.
1
The coexecutors are Dorothy Newberth, Nancy B. Jackman, and David
S. Brooks. We note that, although the summons lists the named plaintiff as
the estate of Helen B. Brooks, the present action is maintained on its behalf
by the coexecutors. See Estate of Rock v. University of Connecticut, 323
Conn. 26, 32, 144 A.3d 420 (2016). We have, however, retained the caption
of the present case for the sake of consistency with the trial court’s memoran-
dum of decision.
2
The plaintiffs appealed from the judgment of the trial court to the Appel-
late Court, and we transferred the appeal to this court pursuant to General
Statutes § 51-199 (c) and Practice Book § 65-1.
3
Everett’s estate elected to separate the trust set forth in Everett’s will
into two parts in order to allocate a portion of the generation skipping tax
exemption to part of the trust. See 26 U.S.C. § 2652 (a) (3) (2000). Neither
the separation of the trust into two parts nor the generation skipping tax
exemption allocation affects the resolution of this appeal.
4
Specifically, Everett’s will provided in relevant part: ‘‘During the life of
my wife my trustee or trustees other than my wife may encroach upon the
principal of this residuary trust for her benefit from time to time and pay
any portions or all thereof to her or apply the same to her use, if such
trustees in such trustees’ uncontrolled discretion shall deem the same to
be desirable for any reason, and this discretion shall expressly include the
power to terminate this trust by such encroachments. It shall not be neces-
sary for such trustees to inquire as to any other income or property of my
said wife. Any decision of such trustees with respect to the exercise of said
discretionary power, made in good faith, shall fully protect such trustees,
and shall be conclusive and binding upon all interested persons. . . .’’
5
The general marriage deduction provision, which is set forth in 26 U.S.C.
§ 2056 (a), provides: ‘‘For purposes of the tax imposed by section 2001, the
value of the taxable estate shall, except as limited by subsection (b), be
determined by deducting from the value of the gross estate an amount equal
to the value of any interest in property which passes or has passed from
the decedent to his surviving spouse, but only to the extent that such interest
is included in determining the value of the gross estate.’’
6
We note, in particular, that 26 U.S.C. § 2056 (b) (7) (B) provides: ‘‘Quali-
fied terminable interest property defined
‘‘For purposes of this paragraph—
‘‘(i) In general
‘‘The term ‘qualified terminable interest property’ means property—
‘‘(I) which passes from the decedent,
‘‘(II) in which the surviving spouse has a qualifying income interest for
life, and
‘‘(III) to which an election under this paragraph applies.
‘‘(ii) Qualifying income interest for life
‘‘The surviving spouse has a qualifying income interest for life if—
‘‘(I) the surviving spouse is entitled to all the income from the property,
payable annually or at more frequent intervals, or has a usufruct interest
for life in the property, and
‘‘(II) no person has a power to appoint any part of the property to any
person other than the surviving spouse.
‘‘Subclause (II) shall not apply to a power exercisable only at or after the
death of the surviving spouse. To the extent provided in regulations, an
annuity shall be treated in a manner similar to an income interest in property
(regardless of whether the property from which the annuity is payable can
be separately identified).
‘‘(iii) Property includes interest therein
‘‘The term ‘property’ includes an interest in property.
‘‘(iv) Specific portion treated as separate property
‘‘A specific portion of property shall be treated as separate property.
‘‘(v) Election
‘‘An election under this paragraph with respect to any property shall be
made by the executor on the return of tax imposed by section 2001. Such
an election, once made, shall be irrevocable.’’
7
Section 2519 (a) of title 26 of the United States Code provides: ‘‘For
purposes of this chapter and chapter 11, any disposition of all or part of a
qualifying income interest for life in any property to which this section
applies shall be treated as a transfer of all interests in such property other
than the qualifying income interest.’’
8
Section 2044 of title 26 of the United States Code provides in relevant
part as follows: ‘‘(a) General rule
‘‘The value of the gross estate shall include the value of any property to
which this section applies in which the decedent had a qualifying income
interest for life. . . .
‘‘(c) Property treated as having passed from decedent
‘‘For purposes of this chapter and chapter 13, property includible in the
gross estate of the decedent under subsection (a) shall be treated as property
passing from the decedent.’’
9
As discussed in part III of this opinion, the legislature has made certain
amendments to § 12-391 that are relevant to the present appeal. See Public
Acts 2013, No. 13-247, § 120; Public Acts 2014, No. 14-155, § 12. We note,
however, the subdivisions discussed in this section, namely § 12-391 (c) (3)
and (f) (2), have remained unchanged since the death of the decedent. For
the sake of simplicity, all references to § 12-391 in this opinion, unless
otherwise noted, are to the current revision of the statute.
10
The tax benefit rule, 26 U.S.C. § 111 (a), provides: ‘‘Gross income does
not include income attributable to the recovery during the taxable year of
any amount deducted in any prior taxable year to the extent such amount
did not reduce the amount of tax imposed by this chapter.’’
11
In his dissent, Justice Sullivan illustrated the consequence of incorporat-
ing the tax benefit rule as follows: ‘‘A taxpayer, in year one, incurs a loss
and receives a federal tax benefit because his income is reduced by that
loss. For some reason, however, he receives no Connecticut tax benefit
from the loss. In year two, the taxpayer recovers the loss. The taxpayer
must pay federal income tax on the recovered income in year two, pursuant
to the inclusionary aspect of the tax benefit rule. . . . [B]ecause the tax-
payer received no Connecticut tax benefit in year one, he may exclude
the recovered income for Connecticut income tax purposes in year two.
Accordingly, the adjusted gross income reported on the taxpayer’s federal
income tax return in year two would have to be modified on his Connecticut
income tax return to reflect the exclusion of the recovered loss for Connecti-
cut income tax purposes.’’ (Footnote omitted.) Berkley v. Gavin, supra, 253
Conn. 783.
12
The applicable tax statute in New York Trust Co. v. Doubleday, supra,
144 Conn. 144, ‘‘imposed [a tax] upon the transfer of the estate of each
person who at the time of death was a resident of this state, the amount
of which shall be the amount by which [80 percent] of the estate tax payable
to the United States under the provisions of the federal revenue act in force
at the date of such decedent’s death shall exceed the aggregate amount of
all estate, inheritance, legacy, transfer and succession taxes actually paid
to the several states and territories of the United States, including this state,
in respect to any property owned by such decedent or subject to such
taxes as a part of or in connection with his estate.’’ General Statutes (1949
Rev.) § 2065.
13
See Economic Growth and Tax Relief Reconciliation Act of 2001, Pub.
L. No. 107-16, § 532 (a), 115 Stat. 73.
14
General Statutes (Rev. to 2009) § 12-391 (d) (3) provides: ‘‘Property of
a resident estate over which this state has jurisdiction for estate tax purposes
includes real property situated in this state, tangible personal property having
an actual situs in this state and intangible personal property owned by the
decedent, regardless of where it is located.’’
15
The plaintiffs cite General Statutes §§ 1-1 (u) and 55-3 for the proposition
that newly enacted legislation shall not affect pending litigation or be applied
retroactively. These statutes, however, create presumptions against retroac-
tivity and application to pending litigation, not a per se bar. Gil v. Courthouse
One, 239 Conn. 676, 687–89, 687 A.2d 146 (1997); see also Doe v. Hartford
Roman Catholic Diocesan Corp., 317 Conn. 357, 417 n.45, 119 A.3d 462
(2015) (describing § 1-1 [u] as embodying ‘‘rule of presumed legislative
intent’’ [emphasis added]); Andersen Consulting, LLP v. Gavin, 255 Conn.
498, 517, 767 A.2d 692 (2001) (‘‘we have uniformly interpreted § 55-3 as a
rule of presumed legislative intent that statutes affecting substantive rights
shall apply prospectively only’’ [emphasis altered; internal quotation
marks omitted]).
16
In a legislative hearing on the relevant provision, the defendant, in
testimony before the legislature, described P.A. 14-155, § 12, as ‘‘truly techni-
cal. It overturns a drafting error, a really, truly drafting error of last session
and restores the intention that [the legislature] had in—in the applicability
of the estate tax.’’ Conn. Joint Standing Committee Hearings, Finance, Reve-
nue and Bonding, 2014 Sess., p. 153, remarks of Kevin B. Sullivan, Commis-
sioner of Revenue Services. We do not, however, accord this testimony
any weight in our determination of whether the amendments are clarifying
in nature.
17
Whether Senator Fonfara’s testimony pertained to the amendatory lan-
guage at issue in the present case is the source of disagreement between
the parties. The Office of Legislative Research, in its bill analysis, described
P.A. 13-247, § 120, as follows: ‘‘[1] Makes technical changes to how estate
taxes are calculated for Connecticut residents who have estate property in
other states. This conforms to current Department of Revenue Services. [2]
Provides, for both resident and nonresident estates, that the state may
calculate and levy the tax to the fullest extent permitted by the [United
States] [c]onstitution.’’ Office of Legislative Research, Bill Analysis for House
Bill No. 6706, ‘‘An Act Implementing Provisions of the State Budget for the
Biennium Ending June 30, 2015 Concerning General Government,’’ (2013),
§ 120, available at https://www.cga.ct.gov/2013/BA/2013HB-06706-R00-
BA.htm (last visited May 4, 2017). The testimony regarding P.A. 13-247, § 120,
was limited to two questions. The first question, from Senator Kevin C.
Kelly, related to the first point listed in the bill analysis. 56 S. Proc., supra,
pp. 5457–58. Senator Fonfara responded that ‘‘the section makes a correction
that goes back to the decoupling of the state tax from the federal tax and
. . . preserves the current tax treatment of real and tangible property, which
Connecticut has jurisdiction to tax.’’ Id., p. 5458. Next, Senator Frantz
inquired about the second point listed in the bill analysis as follows: ‘‘In the
description of that bill, it says it provides for both residents and nonresident
estates that the state may calculate and levy the tax to the fullest extent
permitted by the [United States] [c]onstitution. May I ask . . . what the
fullest extent . . . permitted by the [United States] [c]onstitution is?’’ Id.,
p. 5459. We understand the second point in the bill analysis as pertaining
to, inter alia, § 12-391 (d) (3). The purpose set forth in the bill analysis was
served by amending (d) (3) by substituting the phrase ‘‘owned by’’ with
‘‘included in the gross estate of,’’ and adding the following language: ‘‘The
state is permitted to calculate the estate tax and levy said tax to the fullest
extent permitted by the [c]onstitution of the United States.’’ P.A. 13-247,
§ 120. The changes ensured that the state could continue to levy the tax to
the greatest extent permitted by the federal constitution, which according
to Senator Fonfara is how the state has always implemented the estate tax;
56 S. Proc., supra, p. 5459; without the risk that a court would strictly
construe the phrase ‘‘owned by’’ thereby statutorily narrowing the class of
intangible personal property in the gross estate upon which the state could
levy the tax. Thus, we understand Senator Fonfara’s response to Senator
Frantz’ question to implicate all changes to § 12-391 (d) (3), including the
amendatory language at issue in the present case.
18
The plaintiffs’ claim that the fact that the trial court did not first construe
the original statutory language before concluding that the amendatory lan-
guage was clarifying in nature amounted to an abdication of judicial responsi-
bility resulting in a violation of the plaintiffs’ right to separation of powers
is wholly without merit. First, we note that the plaintiffs have failed to fully
develop this argument. Specifically, the plaintiffs have failed to cite to a
single separation of powers case or to explain how their claims fit into our
separation of powers doctrine. We briefly observe that, the trial court, in
reaching its conclusion, cited the legislative history of P.A. 13-247, cited the
express statement of legislative intent in P.A. 14-155, and noted that the
amendatory language did not amount to a substantial change in the law.
Resolution of the question of whether amendatory language is clarifying in
nature does not first require full statutory construction of the original lan-
guage or a predicate finding of ambiguity. See Middlebury v. Dept. of Envi-
ronmental Protection, supra, 283 Conn. 174. Rather, courts apply the
multifactor test set forth and applied in this opinion. Indeed, the plaintiffs
essentially concede this point in their reply brief by citing Middlebury.
In short, there was nothing improper about the trial court’s analysis of
this issue.
19
The plaintiffs claim that the fact the decedent had an ownership interest
in the property was integral to the United States Supreme Court’s analysis
in Fernandez. Ownership, in the strict sense, was not integral to the analysis.
See Whitney v. State Tax Commission of New York, supra, 309 U.S. 538
(‘‘the state is not confined to that kind of wealth which was, in colloquial
language, ‘owned’ by a decedent before death’’). As the court in Fernandez
makes clear, it is the transmutation of rights related to property, not owner-
ship itself, that is the touchstone of a properly taxable transfer. Fernandez
v. Wiener, supra, 326 U.S. 352.
20
The relative importance the court in Fernandez placed on the fact that
the surviving spouse’s property rights in that case were vested is revealed
by the fact the court, in a seemingly scoffing manner, placed the word vested
in quotation marks. Fernandez v. Wiener, supra, 326 U.S. 356.
21
We also note that, at her death, the decedent also served as trustee of
the QTIP marital deduction trusts. In addition, as noted previously in this
opinion, she held a limited testamentary power of appointment over the
trust property. She exercised the power in her will, which was probated in
Connecticut, to appoint certain property in one of the trusts.