**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 

## artierthe payment of auob

aefioiariee. Doosdont retained tho right trustee at any time.
You request the o~inlon of thfeDepartment 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 lnherltanoetax, less the **statutory** exemption?

2. Are the seourltlssassigned to the trusteeby deoedent and hiswife, **out** of the oommunltyproperty, **sub** ject to an inheritancetax on the full value or on only one 

## hair7

to reoeive

The Texae inheritenoetax is a tax upon the right or aucoesd to the po88eesion or enjoymnt of prop**erty transferred**  in suohmanner ae to oonetitutea **traixefer** made or intendedto take eifeot altar the death of the grantor or uonor. BY th6 8pOOifiO tOrIM Of the tIWt in8trUment here involved,both,po88es8ionand enjoyment **by** the **beneti** Oiarie8 Of the **oorpU8 Of**  **th8 tlU8t**  **artat wa8**  **pO8tponed Until**  after the death of the donor (deoedeat). Under thl8 8trte or faotswe 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 &oathof grantor

### or rettldr. In ooa**8equenoe, 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 beasfloiaryuntil **sitar** granbr*8 death, the property Or any fntOTO8t therein **18 8UbjeOt**  **to** the inherltanoeor 8uoos84~ion tax at or after hi8 death. Under **our statute.**  where either *~o8806- 81~' or *enjoyment1is 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 lmposodby 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 *allpropertywithln 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 QeorgeH. Sheppard, page 3

lnsuranoeunder polioies taken out by the deoedentupon his own life, and to the extent of the exoess over Forty Thoulrsnd

Collars **($40,000)** of the **amount reoelvable**  **by** all other benefloiarlesas insuranceunder policies taken **out** by the deoedentupon his own life.*

It Is olear that proceed8 of the lneuranoepoll- .oieshere involvedwere not reoeivabloby the exeoutor or adminietrator,but that these amount8 ars amount8 r8aeiyabl8 by *otherb6n8fioiari68.n Prior to the amendment of the artlole the $40,000 exemptionwould not have been lnvalved

. The beneflclarieeare now 8ntitl6d to take ad**vantage oi**  it. **Friar** to the amendment of the artiole the inheritano8 tax attaahed to all property Which rhallpa88 abaolutsly or in truet **by** will or by the law8 of deeoent or distributionof this or any other State, or by deed, grant, ale, or glft~made **or** Intended to take effbot in possession or enjoymentafter the death of the grantoror donor,

. . . n The 86~16 language Is lnoluded In the artiole at the*preeenttime.

At the time of the exeoutlon of the trust lnstrument the b8nefioiarl68thereunder 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 aoguireduntil the death of the d8oedeat. At the t&w of hl8 deeth the property peesed--the right6 of poeeeesion and enjoymentmaterlall%ed. Those righta, at the time of the exeoutlon of the **truet** Instrument,were oontlngent upon the death of the deoedent. Hi8 deathwar a oondltionpreoedent 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, fromwhat we have said, that In thi8 **case** the prooeedr of the insuraaoepolio%eewhleh were taken **out** by the decedent upon his own life are taxable in acoordanoewith 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 'allor only a part of suckpollolee were taken **out by**  the deoedent upon hie own life. In the event that the86,iIonorable C8Org8 H. Sheppard,page 4

policieswere paid for by community fuhde, then only half of the pTOC88dS repX8s8utprooeeds Of mlnaurano6under pollcl6e taken out by the d6U6dOnt upon his own life.* Blackmon Y. Hansen, (Sup.Ct.), 169 S.W. (2d) 962.

Only the Interestof the d606d8nt pasres at hi8 death. Consequently,only the intereet of the deoedent in the eecurltlee assignedto the trustee by the d606d6ntand his wife, out of oommuultyproperty,paosedas a result of his death. Jones Y. State,,5 **S.W. (2d)**  973; BlaokmonY. Hanssn, 169 S.W. **(ad)** 962., Slaoe only **one**half of 8uoh **86OUTiti68 were**  owned by th6 d@O8d@ilt, Only hi8 OllO-half interestpassed to the ben6fiOiaTl68a8 a re8tit Of hi8 death, and, th6r6fOr6, only one half of the raluo Of 8ueh seauriti8sbecaJa6subj6ctto the lnh6rltculoe tax. Trusting that the above fully amwar your innqulry, we are **YOU8 YOZ3** **’ tl** **’ Ull,**  AlTORWEYCl!Z%RALOFT3?3US