People v. Murphy's Estate, s. 70--543

• Decision Date: 02 February 1971
• Docket Number: Nos. 70--543,24020,s. 70--543
• Parties: The PEOPLE of the State of Colorado, Neil Tasher, Inheritance Tax Commissioner of the State of Colorado, Plaintiff in Error, v. ESTATE of William J. MURPHY, Deceased, and William J. Fischahs, as Executor, Defendants in Error. . I
• Court: Colorado Court of Appeals

Page 420

481 P.2d 420

29 Colo.App. 195

The PEOPLE of the State of Colorado, Neil Tasher,

Inheritance Tax Commissioner of the State of

Colorado, Plaintiff in Error, v. ESTATE of William J. MURPHY, Deceased, and William J.

Fischahs, as Executor, Defendants in Error.

Nos. 70--543, 24020.

Colorado Court of Appeals, Div. I.

Feb. 2, 1971.

Duke W. Dunbar, Atty. Gen., Lon J. Putnam, Asst. Atty. Gen., for plaintiff in error.

Raphael M. Solot, William K. Hickey, Denver, for defendants in error.

COYTE, Judge.

This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.

The basic facts, stipulated to below, are these: In 1948, the decedent, William Murphy, divorced his wife who took custody of their three children by this marriage. She subsequently remarried and her new husband, with the decedent Murphy's consent, adopted the three children. By a will executed in 1964, the decedent left certain property to be divided equally among '* * * the following children of mine * * *,' specifically naming the three children. In 1966, the testator, William Murphy, died and these three children each took slightly in excess of $10,000.

The Commissioner claimed that the three should be classified as 'Class D Beneficiaries' under the Colorado Inheritance Tax Law, C.R.S.1963, 138--3--14(2)(d), which includes: 'All other persons and corporations not exempt from taxation under this article.' The executor has disputed this classification, claiming the three should be classified as 'Class A Beneficiaries' under C.R.S.1963, 138--3--14(2)(a), which includes '(f)ather, mother, husband, wife, child, stepchild, or any child or children legally adopted as such, or to Any lineal descendant of such decedent' (emphasis supplied). The rate of tax is dependent upon which classification the beneficiaries are assigned. Under Class A the maximum rate for these three children would be two percent, whereas if included in Class D the three are subject to an escalating rate of tax rising to ten percent. Also, under Class A the beneficiaries would be entitled to a $10,000 exemption, whereas under Class D they would be entitled to no exemption if the transfer exceeds $500. The trial court found in the executor's favor and the commissioner now appeals.

As framed, the sole issue is whether an adopted child may claim a Class A status when he takes by will from his natural parent, or whether the act of adoption has so severed the ties between them as to make them in effect unrelated, thus subjecting the children to a Class D rate under the inheritance tax law.

The commissioner's basic argument deals with the legislative intent of this statute. It is asserted that if the Adoption Statute, C.R.S.1963, 4--1--11, and Intestate Succession Statute, C.R.S.1963, 153--2--4, are read in...