Cal. Code Regs. tit. 18 § 15552.2
If income, an annuity, or an estate is given to two persons for their use or enjoyment during their joint lives, the present values of the respective interests of the transferees are computed as follows:
The provisions of subdivision (a) may be illustrated by the following example:
EXAMPLE.
A gives to B and C the annual income from a sum of $10,000 for their joint lives, the survivor to enjoy the entire income until his death, with a remainder over to D. At the time of the gift, B, a male, is 40 years of age and C, a female, is 25 years of age. Table A(1) of Section 15552.8 indicates the life estate factor for a male aged 40 is .78923. The product of this factor multiplied by $10,000 is $7,892, the present value of B's single life estate. One-half of $7,892, or $3,946, is the present value of B's interest in the joint life estate. Table A(2) indicates the life estate factor for the life of a female aged 25 is .92375. The product of this factor multiplied by $10,000 is $9,238, the present value of C's single life estate. The difference between B's and C's single life estate, $1,345, is added to one-half of the present value of B's single life estate ($3,946), resulting in the sum of $5,291, the present value of C's interest in the joint and successive life estate. The value of D's remainder is $762 ($10,000 less the sum of B's and C's joint and successive life interest).
The above computation may be simplified by combining the last two steps, i.e., (4) and (5) of subdivision (a) into one computation in the following manner. After determining the value of B's interest in a joint life estate and the present value of C's single life estate as set forth above (pursuant to steps (1), (2) and (3)), subtract the value of B's interest in the joint life estate ($3,946) from the value of C's single life estate ($9,238). The difference represents C's interest in the joint and successive life estate ($9,238 - $3,946 = $5,292).
If income or an estate is given to three persons for their use or enjoyment until the death of the last to die of the three persons with a remainder over to a fourth person, the present value of the respective interests of the donees are computed as follows:
The provisions of this subdivision (b) may be illustrated by the following example:
EXAMPLE.
A gives to B, a male; C, a male; and D, a female, the annual income from a sum of $100,000 for their joint lives, the survivor to enjoy the entire income until his death, with a remainder over to E. At the time of the gift the ages of B, C, and D are, respectively, 70, 60 and 50. The present value of B's single life interest is $41,294 (.41294 x $100,000). One-third of this sum, or $13,765, is the present value of B's interest in the joint estate. The present value of C's single life interest is $55,052 (.55052 x $100,000). The difference between this sum and $41,294 (the value of B's single life estate) is $13,758. One-half of $13,758, or $6,879, is added to $13,765, resulting in a sum of $20,644, the present value of C's interest in the joint estate. The present value of D's single life interest is $75,476 (.75476 x $100,000). The difference between this sum and $55,052 (the value of C's single life estate) is $20,424. This latter sum is added to $20,644 (the value of C's interest in the joint estate, with a penny adjustment) resulting in a sum of $41,068, the present value of D's interest in the joint estate. The computation may be proven by adding the respective interest of the several joint and successive life tenants. The sum should equal the value of a single life estate for the youngest life tenant ($13,765 + $20,644 + $41,068 = $75,477). The sum varies by $1 due to rounding to the nearest dollar. The value of E's remainder interest is $24,523 ($100,000 less the sum of B's, C's and D's joint and successive life interests).
NOTE: Reference: Section 15552, Revenue and Taxation Code.
Cal. Code Regs. Tit. 18, § 15552.2