WILL WILSON

**A ’** **PIORNEYOENERAL** ‘%USTXN 11. TEXAS

December 

### 13, 1962

HonorableRobert S. Calvert Comptroller of Public Accounts Capitol Station Austin, Texas OpinionNo. 

### WW-1497

Re: Exemption from tance tax of a and bequest to

__.. _- .inheridevise the

. Natlonal r'ounaation for Infantile ParalyDear Mr. Calvert: sis, Inc.

In Attorney General's OpinionNo. NW-1349 the exemption from Inheritancetax of this same devise and bequest was denied. The controllingprovisions of the decedent'swill are paragraphs IX,X and XI which read as follows:

"In the event I shall survivemy wife, then I hereby give, devise and bequeathunto my Trustees hereinabove named allmy property, both real, personal or mixed, of which Imay die seized and possessed, IN TRUST NEYERTHELESS to hold, manage, control, sell and convey the asme In accordancewith the authorityhereinafter conferred upon them.

"Thebeneficiaries of this trust shall be The American Cancer Society, Texas Division, a non-profit corporation, incorporatedunder the laws of the State of Texas and theNational Foundation for InfantileParalysis, Inc., a corporationorganizedunder theMembership CorporationsLaw of the State of New York, having its principal office at 120 Broadway, New York, New York. My estate and the income,rents and revenues therefrom, Including the proceeds of the same, shall be used by said corporations for the purposes and uses herelnafter set out.

"The term of,thls trust shall be for a period not to exceed five years from and after the date ofmy death.

. ..i

HonorableRobert S. Calvert, Page 2 OpinionNo. WW-1497

c

"During the pendency of this trust, after the payment of all expenses thereof, there shallbe paid by my Trustees one-half of the income,rents and revenues from theproperty of my estate to The American Cancer Society, Texas Division,with its office at Houston, Texas, and one-half of the income,rents and revenues from the property of my estate shallbe paid to the National Foundation for Infantile Paralysis, Inc., a New York corporation. Prior to the termination of this trust, I direct thatmy Trustees shall sell all of theproperty of my estate and shall deliver one-half of the proceeds of the same, together with one-half of the net income therefrom after the payment of all expenses of administering this trust, to each of the beneficiaries, to be made at the discretion and in the amounts as may be determinedby the Trustees.

"TheAmerican Cancer Society, Texas Division, shall use all of the funds received by it frommy Trustees for research in themethods of treatment, diagnosis and prevention of cancer, and to aid in the care of indlgent
cancerpatients in securingadequate diagnosisand treatment,and any other activitieswhich may contribute to the control of cancer in suchmanner as may be directed by said corporation;provided however, that all of the funds which may be received by The American Cancer Society shall be used by it and expended for any and all of said purposes within the State of Texas.

"TheNational Foundation for Infantile Paralysis, Inc., shalluse such funds as may be received by it for the purposes forwhich it is incorporated."

Article 14.06, Ch. 14, Tit. 122A, 20-A, Tax.-Gen., Vernon's Annotated Texas Statutes, contains the provisions requisite to exemption from inheritance tax. portions of Article 14.06 are the following: The pertinentHonorableRobert S. Calvert, Page 

### 3 OpinionNo. WW-1497

"Ifpassing to or for the use of.

. .rellglous,educational or charitableorganization or institution,.

. .thetax shallbe:
11

. . . "Provided,however, that this Article shallnot apply on property passing to or for the use of.

. . any religious, educational or charltable organization Incorporated, unincorporated or in the form of a trust,when such bequest, devise or gift is to be used within this State.

"Theexemption from tax under the precedingprovisions of thisArticle shall,without limiting Its appllcation under other appropriate clrcumstances, apply to all or somuch of any ,bequest,

devise or gift to or for the use of.

. .areligious, educational or charitable organization, which is, In writing and prior to the payment of the tax, Irrevocably committed for use exclusivelywithin the State of Texas or transferred to
a religious, educational or charitable organization for use exclusivelywlthin this State,
"Provided,further, that if the property so passing is to or for the
use of a religious, educational,or charitableorganizationwhich conducts its operations on a regional basis,
one such region of which includes the State of Texas, or any part thereof, then a bequest, devise or gift to be used within such region shall be deemed to be used within this state.

"Forpurposes of thisparagraph a region shall comprisenot more than five contiguous states, either in whole or in part, one of which is the State of Texas."

"Forpurposes of this paragraph,
a religious, educational, or charitableHonorable Robert S. Calvert, Page 4 OpinionNo. WW-14%'

organization shall include,but not be limited to, a youth program of physical fitness, characterdevelopment, and citizenship training
or likeprogram."

At the time OpinionNo. WW-1349was written, the attorneys representing the estate took the position that the fact that the beneficiarywas a charitable corporationwas sufficient to effectuate exemption, This office rejected this view and denied exemption since the requisite geographical limitationsas to use had not been met.

Subsequent to the rendition of OpinionNo. WW-1349, the National Foundation elected to commit the funds involved for use in a region of five contiguous states composed of Texas, Arkansas, Louisiana,Missouri and Oklahoma. As evidence of this commitment,we have been furnishedwith a letter addressed to the attorneys representing the estate from John J. O'Connor stating thathe is enclosing a letter from Mr. Joseph F. Nee, SeniorVice-President of the National Foundation "irrevocablycommittingall moneys passing to it under the Last Will and~Testamentof the.

. .decedentfor use exclusivelywithin Region 

### 5 of its organizational structure, which Region includes the five contiguous States of Texas, Arkansas, Louisiana,Missouri and Oklahoma." Attached to the letter is a duly certified copy of a resolution of the Board of Trustees of the National Foundation authorizing the officers thereof to make a commitment of this nature. The National Foundation is a corporationduly organized and existing under the laws of the State of New York. The resolution was unanimously adopted by the Board of Trustees of the corporationat a meeting duly called and held on May 14, 1959. The resolution is still in full force and effect. In substance it authorizes the President orVice-President, together with the Secretary or Treasurer or an Assistant Secretary or an Assistant Treasurer of theNational Foundation to accept, assign, exchange, or consent to a reduction in, or modification of, any share in, or payment, from any estate or other fund if consistentwith the purposes of the National Foundation, and to agree in their discretion to performance of the National Foundation, or any of its chapters, of any condition
or restriction lawfully imposedupon the use of any bequest
or devise, and to execute and deliver any consentwhich the said officersmay deem necessary or desirable for the accomplishment of any of the powers described in the resolution, and In addition to all powers specificallydescribed in the resolution to do any of the acts which the National Foundation
can do through its officerswith respect to the estate of a decedent inwhich theNational Foundation or any of its chapters has an interest.HonorableRobert S. Calvert, Page 5 OpinionNo. WW-1497

We quote the following excerpt from a letter signed by Joseph F. Nee, SeniorVice-President of theNational Foundation:

"In order to avail itself of the

exemption from the payment of these Inheritance taxes in the aforementionedamount provided by Article 14.06 of theVernon's Texas Civil Statutes, The National Foundation hereby irrevocably commits all the monies receivedby It as a beneficiary named In the last Will and Testament of the subject decedent for use exclusivelywithin Region V of its organizational structure, which Region includes the five contiguous States of Texas, Arkansas, Louisiana,Missouri and Oklahoma."

Wewill first considerwhether the proposed commitment is consistentwith the Intentionof the decedent as expressed In the provisions creating the testamentary trust. It is true that the decedent saw fit to limit the expenditure of the trust fundsbequeathed to the American Cancer Society to
use within this State. However, no such limitation, in fact
no geographical limitationof any kind, was placed upon the National Foundation except as such geographical limitations might be Imposedby its charter. The law is settled that
a will may be construedonly In cases inwhich there Is ambiguity. In those cases in which Intention of the testator is clearly and unequivocallyexpressed, there is no room for construinga will. 44 Tex.Jur. 677, Wills, Sec. 131. The National Foundation receives the Income from this trust free of any restrlctlon save that previously referred to and could, consistentlywith this provision of the will, commit the expenditure of the funds as theyhave attempted to do in this case. Further, In this connection, It Is noteworthy that at the terminationof the trust,whichmay exist for a period of not to exceed five years, the National Poundation will receive its share of the trust corpus and will have full and absolute ownership thereof. We therefore conclude that the attempted commitment isnot contrary to the expressed intention of the decedent, and therefore is not in contravention of the terms of the testamentary trust.

We pass now to a considerationof the question of whether the commitment,as submitted,meets the requirement of the statute,and is:sufficient to effectuate exemption.Honorable Robert S. Calvert, Page 

### 6 OpinionNo. WW-1497

We first call your attention to a matter which could, of course, be easily corrected. The letter committing the fund to use within Region V of the organization of theNational Foundation is signed only by the SeniorVice-President..Under the terms of the resolutionpursuant to which theVice-President is authorized tomake such a commitment,he must be joinedwith the Secretary or the Treasurer, or,an Assistant Secretary or the Assistant Treasurer, of theNational Foundation.

No facts have been submitted to us as to themanner in which the National Foundation conducts its regional operations in general nor its specific operations in Region V. However, this office on two different occasionshas construed themeaning of "regionalbasis" as that term is used in the statute. We quote the following excerpt from OpinionNo. 

### ww-1146: (1

. . .It is clear to us, that for
a charitable organization to conduct its operations on a 'regionalbasls3,
as that term is used in the ,statute, that the entire field of its operationswould have to be divided into separateand distinct regions and be of a permanent nature, with each region being subject to localmanagement and control,under proper dlrectlves from the officers or directors of the charitable organization."
Opinion No. WW-1141 held that it was not essential that a charitableorganizationbe oper,ating on a regional basis at the date of the decedent'sdeathnor that there be
more than one reglon in order to be entitled to exemption if such regional operation is effectuatedprior to the payment of the tax. The opinion discusses the history of the enlargement of the charitableexemption,but states that the statute necessarily contemplates that the State of Texas receive some benefit before exemptionwill be allowed.

We quote the following excerpt from page 9 of the opinion:

1, .Sincewe have no fixed legislative'standardto use as a guide, we are of the opinion that each particular
casemust rest upon its own facts, and that if the facts show that this State will receive substantialbenefit as a result of the regional operations of the charitable organization,exemption shouldbe accorded."- .

Honorable Robert S. Calvert, Page 7 Opinion No. WW-1497

If, therefore, facts are submitted to you which cate (1) that therewill be an operation on a "regional inRegion V and (2) that Texas will receive substantial fit from such operatlon, exemption from inheritance tax be accorded.

SUMMARY

The National Foundation for Infantile Paralysis, Inc.may, consistentlywith the provisions of a testamentary trust of which it Is a beneficiary, commit the funds it receives therefrom for use within, Region V of its organizationalstructure,which Region Includes the five'contiguousStates of Texas,Arkansas, Louisiana,Missouri and Oklahoma. If facts are submitted to you which indicate (1) that therewill be an operation on a "regionalbasis" InRegion V and (2) that Texas will receive substantialbenefit from such operation, exemption from Inheritance tax shouldbe accorded.

Yours very truly,

WILL WILSON Attorney General of Texasindibasis"beneshould

APPROVED:

OPINION COMMITTEE W. V. Geppert, Chairman

IolaWilcox John Reeves Robert Rowland Bob Shannon

REVIEWED FOR THE ATTORNEY GENERAL By: Leonard Passmore