r -. 

I.. 

186 

OFFICE OF THE ATTORNEY QENERAL OF TRICAR 

AUSTIN 

rboro faotr, kindly 

r the polloior balag payJlamod b*B,tlrlarles md 

a a lng l p lr r olf r the o r ta to 

are taxable undrs thr ,Sbdr 

“W* Y i!u abigo quoetion Is anmom 

.od yor, 18 lb the oonbntioa o? the Dopart- 

~qont that the atetute 10 retro-aotlrcr and 

.a~~1108 ts tha ~oliolor q? fnruranae taken 

one boioro tho pa8rago or tho Aa%?* 
,Ronorable George R. Bhoppar4, pa@ 8 

&Mel* PllT of U8 Ilsvfred aivil 89etuto* w 

rpaoad04 in l#bO roadl, in part, a8 iollowa; 

“All proper&y rlthla tho &rl.sdiotion oi 

this Btato PO81 ox ~orro~tal, * e L lnoludiq 

,tb pro w& or 1 Ko lB8uPa ato oI* k l ilxo tM$ o i 

W~wo unt noolirbh bytk mom&or or ad&a1JtrrSooa aa irmranoo uadm polieiw taken out 

by *ho dqoodonC rpoa hi8 mm life and to chrli$'Oi ChO l UO8B OVW %+rty dOU8Md DOlbU'8 

7% 000) of t&u houat reanlvablo b{ all other 

k&..~.i?iO8 ,a# inrwanoo WltiOr PO1 Ob8 takea 

out by * ioww*~ 

Y 

hirowll1lm,*** 

'~ Whirk $hrfi pa88 db80 UtcIlJ OP h %PU8t by Wilt. 

oi by th0 laW8.Of 4089Ont or dirtrllbutlon Of 

bhi8 OP My ether #t8tO, or br dood, aant, 8aJq, 

ox glit a + + rh411, upon pa88iag to OP for 

tho tM* Of l nyí*oopporatloa, a r 8o Onl T l 88OOiW 

tion, k Subjedt $0 8 $a% ltor th. bmnofit of 

tha Pltrtr*r Gonoral ROIOaw ?udkj in aooordanor 

with the folloufiy olaarlfiortion. l e + .* 

Ia.awwor 64 your tlrrt qtiortloa it 18 rpwront 

that the k@irlature ban tazod i$8ur8noo whloh does not 

bwoma a pati of tho l 8tato of the daoedent bu$ whlob 

t) 

888oI tm aawd bOnOiiO%8riO#. Buoh taf, how8vor, $8 on 

ho wouat of oh, in8uPanoe 3a moo88 oi $40 OOtLOO of 

the amowN rroeivod by all Eanafioiarlor on {ho polioiar 

kbn out by tkwdoordont upon hl8 own liio. 

ah boliote tie Imn&r$a i8 oloar aad wamblgww 

aad ~9 are of th@ opinion tlIat proorodrr 91 brurmoo poliolrr prsring to named knofislarlor u on tho death of l 

domdont ara proppclr rabjootr oi l&or% ? an00 kutlon ad 

tho tax ha8 beea 80 lmporod by tha above quoted l rbiole. 

Tha Lhrgrwno Wart of Uiroqmria in tho oa8a o$ 

XX Rf AS&D* WILL 184 %W9, 981, rtrted a8 fO11OW8l 

* e e + I The nature mad quality o? rueh 

bOMfief~1 fntOSO8t ti tb8. pO1iO108 &IS- 8ho 

fimuo dír lK@ OOB8titllk l g o ed ground for ledlrletlro a&ion to nrbjsot the proooods zoallaod 

thoro&m to iahorltanoo tbaxrtion upan tho ba8i8 

that they '8hrll br, dpemod a paP$ of hi8 88%&O 
Ronorablo tiorg~ Be. Sheppard, pa@8 b 

?OX th0 QtLVQOIO1 Of th0 tPX and Sbii bb taxable 

$0 tb8 PerrOll OP pOr.Oll8 Ontitled thereto,’ It 

18 no t l ssontial that qmh prooeodr eh4ll broom, 

4 gprt of th0 dooomrod hu8b4ndv8 08t4tO upon his 

pt;g ln ardor to rub 

i 

cot tbra to lnheritanoo tar- 

. lt is 8olf-oV dont that by aaans of thorn 

pOliOlO tho hurbrnd tPan8tomd 8 14PgO p4Pt O? 

hi8 08tate 00 hi8 widow, nhioh beoamo l ??00tlv0 

at his death. Thi8 >Ut8 tho tran84Otion within 

tw ?lOld 0r inhqrltanso taxation.* 

,' & JrOUP 8000!ld qUO8tiOu r’ou in U&O 

4pplioab~llIty o? tho aboro atstuto to po p: 16198 

48 t0 thO 

of in8tU’- 

anoo takm out prior to th0 peseapo of the sbatuto by th0 

LoAgirlatup4 in 1939, In awwering this qUestIon HI will 

as8unw that the polioy of innUP4nW you lnqulro.obouO eontainod thm ordinary olouso~@antIng to the inrtcrod tho 

d%; to ohango bonotioiaPis8 ot any tiaa prior to hlr 

tlon, 

, Upon 8UOh 4n assumption wo will an4w4P your quo+ 

The qOxa8 Inh~ritanoo Tax l.8 8 tax bared tapon tho 

right to roooivo propotiy, or, In othor ~0~48, ugon tho 

Pl@h$ or rucoo88ion. The ~OdSS1OIl8 Of Appeal8 Of lb&l8 

ln tho 0.80 of STATE vm HOGQ, ‘PS S.W. (2d) 696, 8tatod a8 

f 0110~8 I 

"An 4X4minltiOn Of tho 4uthOpitfO8 OOnVinOO8 

U8 that tb .b!lO.t MiWi~fJal Pul8 18, the8 inhO?- 

itan tar08 8uOh a8 a?0 lorlsd by PWT 8tatUto8 

go$d to b0 pr~vll4g0 taX48, ,and not property 

fn other WOlFtt8, the tar'i8 upon the right 

Of 8Ug0fi88iOn and DO8 UpOn tho prOpOPty~ * + 8 l * 

Wo 0.11 four attention to the Zaot that tho polioier o? inruranoo taken out In the 0440 of ltn Ro AllI8' 

will, 8uppa, WOPO tskon out prior to tho anendaont bonrtmod in the4 0480 tsring.in8UrMaO paid to 4 Mmfid bOWtlolary. 'Ih that 0.00 tho oourt held that tho tax applied 

to 8!i4h pollelor t&on out prior to tho l naot;nsnt of tho 

rtetuto booauare thr tax wa8 based upon tho penrIn6 to th0 

kno?loiarpwhieh took plaoo at tho timr of dosbh of th@ 

insured 8ub8equOn* to the onaotmon8 of the 8t4tUtO in qUO8- 

t10lh 

trh0 SUITS- COUPE 0r mm8800 in th0 0680 0r 
RowPablo Oeorgo Fkshoppnrd, pago 4 

STATE v* WIN, 36 3.W. (Ed) 88, paseed OA s similar qusstloa and 8tatod aI r0iirmt 

mi8 4ppOOi i8 ??a S dOOPt hOidiII& 8hO 

Qroo..d8, aboto #40,000, of OOPtrin InBUPaaOe 

pOlIOiO8 on the Iif0 0s Miohaol J. OaSn dsooamod 186uOd p?i0? to tho pasrago Of oh&Or 

AOk8 Of TOMO.800, 198) 

to tho lnheritanoo tar 

ErtrS So88ion, 

bh sroby morodr 

dlod Mbruary 14, lOSO, loarln# by hi8 will hi8 

l b iP@ l 8thO inOiUdin(l ~DIUFUIOO, t0 hi8 WsfO, 

A8 hi8 dO6bh b0 h6a $90,000 Of in8UPOnOO in 

r0P00, all 0s whloh wa8 parable to hi8 wit0 un00n81010nall 

tr0 r0r $6 

$80,000 and 

that tho in- 

%0X08$ on 

liio, the 

botwson hi8 Ohhlldnll, 

aaoh polloy oontrlnod l olauso’ giving Orin 

tho rl#tt 00 ohan@ tho bonotiolary whioh right 

ho did not aarolre, th0 doprtmn$ 0s r*nm 

8nd taxabioa held 81% Thor prooood8 of Mr.. Gain’8 

liio lnruranoo sbovo #40 000 liable 00 the *ax 

imposed by said ohaptor h and thi8 rulfna hating beon mutalnrd by the h:. board, %hO qw8tion 

m8 8ubmittod to tha ahanoellor 48 a n l grood oaeo* 

*Wo era oowtrafmcrd to OO~PT with tho 

loerned ohanoollor. Tho 'fOMO88.0 fnhOrit.lrOO 

tax beIn& lovlod~ upon th8 to l oquIpo and 

not upon tho right to 48 undo? tb 

fsdoral law (Hmmon vr 

88d 8.1. 104f&) and tb 

148 Tona, UB, 

in‘thi8~Oa8. belng 'all BaynbSo to 8h0 wlio or the WKO l d ohil- 

&on of tho IMUPOa, but with the .mrO8. POlOcI 

vatlon 0s tho right. to ohange th0 bmotioIr 

an& thr wit0 OT ohirdrrn bsrln(l ne rorto4 in T orb8t iA 8uOh fOPA% Of POliOr UndOP OUP dOOl8iOW, 

thlr right ta naqulro did not booomo l iio o tiro 

until attor oh6ptor 80 A088 Prr 80s~~ 1919, h6a 

80nO lat0 Orr00t, ft iOuOW8 that 110 ~OtZO.OtiVO 

l pplloation 18 glton to tho 8tatutO.* 

A rePy Peoont QaSo on ohi8 question i8 th0 OS80 
of MaIssRxL vr llxwml, 34a a,$ (Ed) 1sa rr *ho ootu?+ of 

hpppr0lr: OS xintu.LJ, ?he oao\lrc~ fin thil oaael fully dirou6r.d all tho l uBhoritio+ and l )ate& aa iollowaa 

r 9 e l l In the pnren$ odm, howover, ‘I, 

have no. dab% that’ a p3’op.r oonrtnxobion 6t our 

Btatuto, X4mtuaky btatuter, recrtion 4S8C)la-l~6,~tr 

that tho Lm&irlatPn Intonllr& 10 to apply to ‘all 

poliOie@ Uh+hOf 'bOkOa OUs bOfO]M 01 OnOr f$R 

l Sieo tlv* do t.* ml@ h 

r 

p o f *h a mltio u 

plain and tmmbiguoor Wb will no% imply an 

laPen$ on *hi pert ai the kgirlaturo *o rxoopf 

froa ftr oporatlon 0110%08 Mo*tofom Ukn 

OUt b&t% Will QrO989 1 (Is 69t8nnin4 d34thrr 61 lid 

i* is unoonati~utionel wbn 00 apglled~ It ir 

trw thed’atatpkr,‘an not to b* iton a r9ItOI 

aotlro erreat, ema where 9ho teg f rl.stuN bar 

s 

orwir to maa* alloh a atitut*, anle8r ruoh aa 

atantlon oltiarl a~pearm fmn:ph~9;4a~tu8%;- 

l olt (Bunlap v# z itOoll, ZOO 

880) but a ~$roeotire eff691) “ii I obthnad o& 

whan a rta&ute Is applied to r 

%! 

a aequlr94 

f 

rfar to it8 ennobient. I8 npp l d to t&O 010 

oies in question no *sate4 ryltr are irpsM 4 red 

or will M later pointed outr 

* 9 ,+ c l 

ìIn o o na i4or lng the ooM tlwtio na ~ity o f tllo 

ICentuolq Stetutb In its applioation to the poll0208 inrolre4 we nest, detozalne whether or no8 any 

ve8tod PI 88 wora obtained by t&e ~benoilafarler 

Of tha po pb ioler by ,Win# daol#natad aI‘boueiioiario with the right zbaened In tb irhure(L $0 

ohnmg thb b6aetiagnr 

1 

Wa find that the almoat 

oalreraal ru30 ia 8ha whbn a rl(ihB to ahan@ 

tb) bonei 1010 

7 

hes been rtmrrveb to tha inrured 

Js tha polloy ha kne$ioiOxy nansd has a se* 1)xp99tuio~ and a0 re8to& rQht Or interosti dud&g 

the llfsbilpr of tha ln~re4, thfa rule king maI+ 

Jeo) W the que3iiioalrlon, of oou?U that Bhr .’ 

benofioiary may aoquira a voWI ri& 

0f 0~ by+ 0r~0pb0i03 90ntrqot. 87 da 

14 R.&L. l3fMB Laadrarr vm IandmWr 

Xy. 778, 818 9.1, a741 ULrgtri6n tr Xiller, 96 n$* 
ru?M naenrd the right to ohan@ the b@ne?iolary, mold (870 IL8 ttt, 49 8.011 lm, 78 In Ed, 

405 58 A*L.B* Jesjt 'Rut until aha mo!xont of 

dea&b tht (Loowlanl ratmine a lagal intereat la 

tba polioie8 wbiab gme.bim the power of bi8pe81- 

*loa of them l nd that? rooeedm a0 o@nplotal~ or 

IS b wora hlemelf the & noflol6r~ of them,' Tha 

oourt in that @am, in Irpeakfng oi the powor of 

sentrsl over auoh pollolea retain& b 

raid the8 auoh power *ia by no moan@ I 

an Snsured, 

ha leart 

aubrt8ntlal of tha lo al 

Ond lb0 te?mloatloa a t 

fnoident ot ammrahlp, 

hi8 death 80 a0 Bo tree 

tha bmmilolarl6r of the polioy from the poem& 

blllby of its oxeroler would aeom to b no le8r 

a tranrfsr within the riaah of the Caxinng pawor 

*ban a tramfer offeotecl in oth8r way8 through 

drath,* sinoe the bensSlaiery kr the poll0148 

in quratlon him aoquira no teatied right but only 

a aero 9xp9otansr br being dealgnatad a# beoetiolary wa fell to mea wherein the otatute in qurrtlon whn appllcsd to the pOliOi in oontrorerrrj, 

inpair the Obll&8tlOn of a OOntra9t or reOult8 

in a violation of the duo p?ooraa olauso of tha 

14th amonduumt to tha Federal Oonstltutfon o? any 

prorlalon bi ou? atate oonatltutlon.* 

Xxtb&li.th@ Tennaisoe and Xentuoky oa8eB the 

oourt held that the *$.nherltanoe tax war 8 tax upon tho ?l&ht 

of auooeaalon and that a tar imposed upon the prooeedr or 

inrurrnor polfoie# br a 8batuta whioh wa8 pQ88ed prior ta 

the doahh of the lnsu?ad l ubjeoted the prooeeda of insanoe polloiea takaa out 

to the 8ax impoee6 then s 

rior to thq pssarge of the tax mot 

II* We a011 pour attention, however, to th trot that in bo$h of those oa8ea the lnrured 

had a ridht uuber the terma of the lnruranoe oontaot to 

ohenga bb no&d beneflolar 

2hla beihg l o the oourta x 

at any timr pPfO? to hi8 death, 

ha d that the right0 in the pro-. 
- -. 

. . 

- .,, 192 j 

&onoreblo (Horgo X1 Shappord, Page 7 

oeeda ai& no4 aoortm TV the b8n8flOiadO8 uutil the hatb 

of the luawed a& therefore tha proper$v pesaad al oi 

8Ueb tins, wbloh woo auba~quent to thi tirm of tb pesaage ai the tar sot, 

We are of the opLaion that under the authnrf4106 the probeebr oi lnsu?anae polloloa payable to named 

baneilalarlsr are’aubjrot to the Tex.aa Inherlbanoo Tax 

doeplU tbo ho4 $ba$ 4ba pollolea of lmu?eaoe wera taken 

ou4 prior 40 the ammdaont of lVS@ taxing ln8uraaoe proowla, wbon thr pol~oiea in queablon~?eaerted to $h& lnawed the r3@ to’ ohange the nanad bextMlela~ in tho 

polloy at any ttma prior to hi0 beathi 

Tour0 very truly 

Bt?cab 

A!mOltxaT al?mAL OfTxA8 

By‘ t+i$wi 

A08104an4 ,