OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

Honorable George R. Sbeppatd 

Comptroller of Publla Aooounte 

Austin, Texas 

A 

Dear Sir: 

o the trurter. 

r the puxpo~s or’paying 

0 of lnawenao. Xt a-bald artier the payment of auob 

aefioiariee. Doosdont retained tho right 

trustee at any time. 

You request the o~inlon of thfe Department in 

answer to the following queetlona: 
Honorable G6orge H. Sheppard, page 2 

1. Are the inauranoe pSOOe6d8 on the llfs of the 

deoedent subject to an lnherltanoe tax, less the statutory 

exemption? 

2. Are the seourltlss assigned to the trustee by 

deoedent and his wife, out of the oommunlty property, subject to an inheritance tax on the full value or on only one 

hair7 

to reoeive 

The Texae inheritenoe tax is a tax upon the right 

or aucoesd to the po88eesion or enjoymnt of property transferred in suoh manner ae to oonetitute a traixefer 

made or intended to take eifeot altar the death of the grantor or uonor. BY th6 8pOOifiO tOrIM Of the tIWt in8trUment 

here involved, both,po88es8ion and enjoyment by the benetiOiarie8 Of the oorpU8 Of th8 tlU8t artat wa8 pO8tponed Until 

after the death of the donor (deoedeat). Under thl8 8trte 

or faots we think that the law is 8ettled in.thir State that 

the entire pX'C@Brty, both in8UE~OO pl'OOWd8 8ad 8OOLUit$88 

plaoed in tTU8t, by the donor, eat to the inheritanoo 

tax. B8thee t. Sheppard, 14s S.W. 

In that oaee the court 8aid: 

) 997, error refused. 

I) . It 18 not a queatlon of when the beneflolal 

in;ere8t 18 OreE&8d, iltt the. tax f8 tqnwed Upon 

the right to T8W2JiV8 in po88cl88ion or.enjoyiaent 

after the &oath of grantor or rettldr. In ooa8equenoe, a grantor or 8ettLor nej.oreate an lrrerooablo tTti8t during hi8 lifeth, 8tlll li h,e 

porrtpone8 the right or po8ae88lon or enjoyment 

of the beasfloiary until sitar granbr*8 death, 

the property Or any fntOTO8t therein 18 8UbjeOt 

to the inherltanoe or 8uoos84~ion tax at or after 

hi8 death. Under our statute. where either *~o8806- 

81~' or *enjoyment1 is made oontlmsnt won the 

bath or grantor or sbttlor of ail or ~119 u 

the trust eatate. 8UOh tran8fer la taxable. . .* 

mba81t3 Our8). 

Prior to ths amendment of Art1016 711v, R.C.S., 

1925, themoe8d8 Of life i?lsUranOe pOliOiQ8 War8 8Ubjeot 

to the Inheritance tax lmposod by that artiole. State t. 

Jones, 290 Y.W., 244, rereraed on othsrgrounds, Joner v'. 

Stato,~ 5 S.3. (24) 973. The statute, as amended, now taxes 

*all property withln the jurisdiotlon of,thls State, . . . 

lnoluding the proceeds of llre lnauranoe to.the extent of 

the amount receivable by the executor or administrator 88, 
Honorable Qeorge H. Sheppard, page 3 

lnsuranoe under polioies taken out by the deoedent upon 

his own life, and to the extent of the exoess over Forty 

Thoulrsnd Collars ($40,000) of the amount reoelvable by 

all other benefloiarles as insurance under policies taken 

out by the deoedent upon his own life.* 

It Is olear that proceed8 of the lneuranoe poll- 

.oies here involved were not reoeivablo by the exeoutor or 

adminietrator, but that these amount8 ars amount8 r8aeiyabl8 by *other b6n8fioiari68.n Prior to the amendment of 

the artlole the $40,000 exemption would not have been lnvalved . The beneflclariee are now 8ntitl6d to take advantage oi it. Friar to the amendment of the artiole the 

inheritano8 tax attaahed to all property Which rhall pa88 

abaolutsly or in truet by will or by the law8 of deeoent 

or distribution of this or any other State, or by deed, 

grant, ale, or glft~made or Intended to take effbot in 

possession or enjoyment after the death of the grantor or 

donor, . . . n The 86~16 language Is lnoluded In the 

artiole at the*preeent time. 

At the time of the exeoutlon of the trust lnstrument the b8nefioiarl68 thereunder aoguired no Tight8 

whatever to the oorpur of the trust 68tate. Suoh rightr, 

under the terms of the trust instrument, oould never be, 

end were not aoguired until the death of the d8oedeat. 

At the t&w of hl8 deeth the property peesed--the right6 

of poeeeesion and enjoyment materlall%ed. Those righta, at 

the time of the exeoutlon of the truet Instrument, were 

oontlngent upon the death of the deoedent. Hi8 death war 

a oondltion preoedent to the Yeeting and the exeroise of 

such righta. Upon hi8 death the rl$ht8 of possession and 

enjoyment passed to the benefiola.rles under the trust lnetrument . Thi8 passing or right Of 8uo~6ss~0n, the statute taxerr. 

It followe, from what we have said, that In thi8 

case the prooeedr of the insuraaoe polio%ee whleh were 

taken out by the decedent upon his own life are taxable in 

acoordanoe with the statute. In other ~01-38, all or swh 

prooeeds in 6x0686 of the sum of $40,000 are taxable. We 

do oot have before us sufficient fasts to determine whether 'all or only a part of suck pollolee were taken out by 

the deoedent upon hie own life. In the event that the86 
,iIonorable C8Org8 H. Sheppard, page 4 

policies were paid for by community fuhde, then only half 

of the pTOC88dS repX8s8ut prooeeds Of mlnaurano6 under 

pollcl6e taken out by the d6U6dOnt upon his own life.* 

Blackmon Y. Hansen, (Sup. Ct.), 169 S.W. (2d) 962. 

Only the Interest of the d606d8nt pasres at hi8 

death. Consequently, only the intereet of the deoedent in 

the eecurltlee assigned to the trustee by the d606d6nt and 

his wife, out of oommuulty property,paosed as a result of 

his death. Jones Y. State,,5 S.W. (2d) 973; Blaokmon Y. 

Hanssn, 169 S.W. (ad) 962., Slaoe only one half of 8uoh 

86OUTiti68 were owned by th6 d@O8d@ilt, Only hi8 OllO-half 

interest passed to the ben6fiOiaTl68 a8 a re8tit Of hi8 

death, and, th6r6fOr6, only one half of the raluo Of 8ueh 

seauriti8s becaJa6 subj6ct to the lnh6rltculoe tax. 

Trusting that the above fully amwar your innqulry, we are 

YOU8 YOZ3’ tl’Ull, 

AlTORWEYCl!Z%RALOFT3?3US