## 480

OFFICE OF THE AmORNEY GENERAL OF TEXAS AUSTIN

Ronorable Georga ii. Sheppard Comptroller 

### 0r Public :i.oooutlts Austin, Texas Dear Mr. Sheppard: Opinion No. O-5294

aeeigned by him aotment **or** the the rstention or oontrol by deoedent.
1943, are them: our letter 

### 0r Iday 4,

upon his own 

### lirevarious eoedent transferred all poliolen to his tire and t to the cash surrseder e oaiw for a loan, to surrender beaaiioiarfea or to obtain a

. All prwuma on suoh polloles he ooamaity 

### runds 0r himsalr**and**
oontsntion that swh polioies 6re 8Ubnoe tax is predioated upon two proposltions: "1. The 1&6aauz'eor taxability is ths payment or premiuma by the insured and not the possession or legal ineidente of' ownsrahlp at death.

"2. The bsnefiolarles ot the proceeds of these policies **did** not cone into posaeaeion or enjoyment or said prooaeds until the death or the lnaurea.*- 

## 481

IIonorabls George B. Sheppard, page 2

You request the opinion ot thlm depudlsnt 

### l dri6illg you whether you should inolude the prooee48,;of ruoh poliaierr in the final inherltaaos tar rrport and oom~ute the **tax** thereon. Artiole 7117, **V. A.**  C. S., laaofar (18it **undertakes to**  tax the prooeeds of inruranoo polloler pqablo to nand bonofloiarlea, wa8 enacted in X939. It reada, in part, as follows: *All property within the jPrf8dlotlon of thl8 State, real or perronrl, **oorperato** or lnoorponto, and 8ny interest thoroin, inoluding proport~ paa8lng under a general 

### p ower of l ppolntmont eurollred br the deoedont by will, inoludlng the **proo*ods** of 

### iir0 inmmanoe **to** the rxtuat **or** the mount rooairable br the exeoutor or adminlstrator..~ **iuaroao6** taken **out by**  the beambat upon hla owa lit*,

the laws of **doeoent and**  or any other State, or by dead, g?ant, rale or gift aado or iatendod to take 

### em0t in pomau8ion or **enjoyment after**  **the** death of the grantor 

### or **donor,** #hall, upon par&&g 80 or for the **wo of**  **any** L)(L~SOII, **, .**  **.,** bo **subjaot to**  **a** tax

**. .**  **.*** **(Ergheilr ouris)** 

Artas pointing **out that**  the prorlalona of Artiole 7117, rhioh levies an inherltanoo tax upon the prooeeds or lnsuranor ~polfoie8, ir praotloelly identloal wltih the 

### protledonof the Federal ostate tax atatutm whloh wae la roreo at the time of the pasrage or the 1939 aaendnent to Artiole 7117, the Texas Supreme Court, in the oaaa of 

### BPI6km.mY. Emaoa, 169 8. W. (26) 962, oaidc

“

. . . The sontrolling temm or the Fedora1 **atatute** are identical with the Texarasstatute. The **Toxa8 statute**  having **been** literally taken rrom the Federal **statute,**Honorable George E. Sheppard, 

### pega

## 3

In 

### thatea8e the Supmmo **Court** 

### l dbpted the oonstruatlon or this statute given to the FedWal Statute **by** the United State6 Supreme Oourt **in l&a&** **f,** Oommie~loner **of** Int. **Rev.,** 

### 304 !I.

9. 264. 58 8. Ct. 880, 82 L. Ed. 

### 1331,118 A, L. R. 319, where the Oourt held that only that portion of the life inauranoe paid iOr by the deoedant was *taken **out** by the deoedwt upon his own liie” within the terma of the statute. pewever, at the time or the pnaraga of the 

### 1939 am#adaent to the Texan Statute end at ths time of tha Supreme **Court ’** **i~** droirion of the Blaokmon base, numerous other oaaea aon8fruing the Federal Statute haa been deoided by the Federal aourtta. In the oa6e of Lawellfn T, Frlok, 

### 268 0. 9. 2)8,45 s. at. 487, 69 L. Ed. 934, t)n 

### laitoa States 

### summa Oourt had berore it the ldantloal taot8 and-the ldentioel qu8tion hare under oonaldarat1on. In thet oaa#athe oourt, 

### l ttar rtatlng th8t there was &rave doubt of the mar of Qoagera to anaot a law that would rtteotuall~ tax a trnrrar ron8ummated batora ltr 

### l naotment, and in koldlng suah tntWat not taxable mde thll, rtetementr

*blot 0al.y are suoh **doubts** avOida **by oon**  atruin& the statute en referrlag only to txanrartlon# taking plaoo after it we8 peamad, **but** the goneral prinolpla

‘that law8 are not to be **oonaldrre6** aa applyling **to** @asa whloh 

### aroI)e

betore their pa88a@* 18 preaervad, when to 

### disregardit would be to impose an unexpeated llablllty that, if known, might **hare** induoed those ooaoarned to avoid it, and to use their 

### moneyin other way@.*

&gain, in the oaee of Bin&am t. United States, 296 u. S. 211, 80 I,. JH. 160, 

## )68. Ot. 180, the Supreme 

### aourt Xtat emphatioally deoluttd that the Federal St8tUta 6&d **not** raaeh the 

### prooeadsOS inauranoe pollolw where awh pollolm~ had been **aerlgnad** prior to lte anaotmant, eryingr “The principles **BO** raoently announoed by this ‘, oourt in Helrering **Y.** St. Louis U&ion Trust Co., ante, p. 

### 39, ana Beaker **Y.** St. Louis Union Trust Co., **ante,** p. 

### 48; are **dsol8lte** of the ease In 

### razor of the taxpayers. Those prinolples establlah that the title ana porrsas8ion of the benerlolary were fixed by the tarma of the poliofe~! and aeeignmenta thereor, beyond the power of the lnoured to afroot, many years be&ore the clot in question here wa8 **p4SPSd.** No interest paseed to the benerioiary aa tha result o? the **death of**  the innurad.* ~pharii~ OurI))Honorable George 

### H. Sheppard,page 4

Under the 

### Texaslaw in forceat the time La
. this statute was waoted 

### tha sseignagncor ah ~rmuranoe polioy (absentthe 

### rasenation of therighttq @hangsthe beneficiary)ia a oompletadtraneaotion whloh**?estm** 

### in the rrsigneeoompleteandperfeattitla**and**

### rest8 **in muoh** **rs8ignae** 

### the titleto theprooeadeof suoh inaumhoe. Burg68v. Rew YorkLife Ina.Co., 53 S. u. 602. Oanneequantly, aiaoetit10 ma alroadytested In theassignob&at the timeof the parsage 

### OS the 1939 amendment, nothlagpamed to 

### the as&mm thereafter,eitherby aotsor the deosdentor by his do&h. See yriokand B3ingham oaaer, ouprs. Under 

### theruli115

of the SupremaOourt in Blaolmm 1. **&snBOn, SUplW,**  our **etatut** must **ba** 

### oonotruedin the camemannerthat the Fedsral~Statute fromwhioh itwa8 adoptedwas oonrrtruad at the timeor **ita** 

### pamage. The **Friek** 

### antI Binghamoasesrepresmt the ooswfruofion of 

### the **Fe&oral** 

### Statuteat the timeof the anaotmentof the 1939 mwm6mant to Article 

### 7u7. We, therefore, adviseyou that the prooaedm of ineuranoepolidleewhlohwore aaelgned,withoutrwervatlon, priorto the anaotmmt of the 1939amndmnt to Artlola7U7, and inrhloh deoebent 

### neverthereafteraoquiredan 

### lntarest, arenot taxableunder theprovisions OS Artiole 

### 7117,V. A. C. 5. Truatlngthat the above 

### fullyanswer your inquiry,

we am **tours very**  **truly ATVCWEY** **ORNERAL**



### OF TEXAS

FowlerRoberto Aesietant