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426 

OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

GROVER SELLERS 

ATTOINW GLNCIAL 

lzz-zq 

Eonorablr horgr 8. Shappnrd 

Coaptrollar or Fublio Aoeountr 

Anatln, Taxan 

Dear Sir: opinion Ho. o-6691 

Boa Inolurlon of Srrlor 1, WaIted 

St8t.8 Oorarnunt Bon 

Of thr ao-own8r8hIp tfp8 pay8 

oludabla In Inhrrltanor tax r 

Department rrlatlr 

Inhoritanoo tax ro 

Thr lrttrr atat. t 

8Urd it hb8 b@Il 

tlm Conptrollar’8 

l b o nd8 in the 

oror arr outllnmd. 

bond h8 born 18- 

aa a8 anondad, In that 

such L@ndh are +nparable to a joint bank account of husband 

and Wm. ‘, .‘~ ,~ 

J” 

Xlth, tb.e above lrttrr, tharr 1s sabmlttrd a copy 

of a lrt.t*$-4om thr attornry for thr rrtatr undrr oonsldrration in which it I8 oontrndad that no intrrrst in these bonds 

pa8808 “on aoooant of thr will of thr drrrdrnt or thr law8 

of do8Cont or dlrtrIbutIona. Tha attormy arguoa that in 

ordrr for th.80 bond8 to br tarabla 8o!na Intrrrst must pas8 
Hon0rabla GSorgr H. Sheppard, Papa 2 

on acoourlt cf death; that thr United Statrs Treasury regulations, whloh ware S part Of tb oontraot or purohesa, have the 

OffrOt Of giving the rurvivin& 8pOUS@ ownrrshlp under and by 

vlrtua Of contraoturl right8 and thot no property rights paa8 

on l OOOU.nt of death. The rroant oa8S of Bdds v. Mltohall 

(184 9, W. 2nd 823) In rhloh thr owrt hold that the brnrilolary typa of Unltod Stat.8 Govclrnmsnt Bonds were In rrrrot 

OOntraOt8 for thr banefit of third por8on8, and illU8trCitOd 

euoh holding by drawing an analogy or that typa or bonds to 

an ill8llr6llOr POliOy, 18 oltrd. Thr a ttornry oontrnds that 

thrrr 18 no aatorlal dirrOnn00 botwron thr theory and roaroning therrln and that to br usrd In a drtrrmlnatlon or tho 

qur8tIon prrrankd. TO ovrroomo thr prrsumptlon of the Coaptrollrr*r Department that th.80 bonds are community property 

the attornry suggest8 an hypothe810 that thr Co-ownor named 

was a prraon other than thr rlfo: and another, t&t the husband had a minor 8on. 

Thr aborr lattrrr, prrernt no issur a8 to faot8. Thr’ 

dooodrnt during hi8 1ItrtImS purohasrd SorIr8 qip" 'Onitrd Stat08 

GOvOr~mt Bond8 and had tham made payablr t0 hISI8Slf or Wit@ 

and it I8 agrard t&t the bond8 Wore puroha8rd with oDmnUity 

rtULd8. 

In tho applloetlon or the law, however, the lssurs 

brtnrrn the Comptrollrr’s Department and thr attorney ibr the 

rrtata do not appear dlreotly jolnrd. The Comptrollrr rmpharIze8 that provlalon or Artlolr 7l17 rhloh inoludrs property 

pasriag by *doad, grant, salr or gift oadr or Intrndrd to 

take rrtrot In po8srsaIon or rnjoymrnt arttrr the death of 

thr grantor or donor”. Tha attorney, however, l mphasizor 

that pmvlslon whioh Inoluder proprrty passing by ‘*Ml1 or by 

t& laws or dasornt and dlstrlbutlon or this or any other 

State”. 

Artic1r 7117, !?evised Civil .3t3tutss or Texas as 

amended, under which the questicn herein arises, is quoted: 

“ill croperty within tha ;urisdiction of this 

State. rosl or :3r;onal, corDorate or incorporate, 

and a& interest therein, Inhludinz=~ property _ca3sL 

in@ undrr a eenoral po’.::sr of appointment exercised 

by the dooadont by will, including the proceeds of 

life Ineuranor to the extent or the amount reoolvablr by the rrooutor or administrator as insuranor 
Honorablr Oaorgr B. 3happard, Pago 3 

UJldSr pOliOIa8 tSkon Out by tha daoadant upon hia 

own llfa, and to tha l xtant or tha l x o ~aa ovar 

Forty Thourand Dollara ($40,000) or tha amount 

raoalvabla by all othar banarIoIarIaa aS Inruranoa udar pOlIOia8 takan out by tha daoadant 

upon hi8 0wn llra, whathar balonglng to Inhabltantr or thir Stat0 or to parson8 who ara not InhSbltant8, ragardlasr Or whathar 8SOh prop8rty 

I8 looatad within or without thir Stat., Whioh 

8ball 0~88 l baolutaly or In tra8t by wIllor6r 

&a law8 Oi da8oant Or di8tributiOn Of thi8 Or 

my otha Stats, or by drrd, iwant, 8818. Or gift 

mad0 or Intandad to taka affaot In am88888Ion or 

l njomnant rrkr the daath or t&a m9ntor or donor, 

ahall, upon parrin to or rcr tha PI@ or any parIon, oorporatlon, or l 88ooIation, ba rubjaot to a 

tax ror tha banatlt or tha Stata' Ganaral Ravonua 

Fund, In aooordanor with tha roirtnhg olarri.floatloa. Any trSn8fSr mnda by a grmtor, vandor, 

or donor, whathar by drrd, grant, aala, or ulft, 

rhall, anlarr rhown to tha oontrary, bo daamad to 

hats barn mad8 In oontamplatlon of death and nubjaot to tha 8am tax a8 haraln provldad, It suoh 

tran8iar 18 mad8 wlthln twc (2) yoarr prior to tha 

daath or tha grantor, vandor, or donor, oi a nmtarlal part or his 88tata. or Ii tha tranrrrr aada 

within auoh parlod la In tha nataro or a iinS1 

dirtribution 0r propmty and without adaquata valuw 

bla oonrldara tlon. * (mphS8i8 8ddOd) 

Tho 8OOpS of thi8 Artlola I8 not llmitad by the 

lagal davioa through whloh proprrty pa8888 on daath. It lmpoSa8 a tax on the right to rroelva or sucoaad to the pOSSa8- 

rion or l njoyment of proparty after the death of thr decadent 

and proprrtg comes wlthln the purview of this statute if such 

possaeaion or enjoynnent is mada contingent with or postponed 

until the death of tha grantor or donor. (sar Bethea v. Sheppard, 143 S. 3. 2nd 997). 

Tha primary question In the instant ~986, thererore, 

IS whathar the wlfa raoalved or suooeadad to the possass~on or 

l njoymant or all or any part of these Sarlrs “3” United Ststas 

Govarnmsnt Bonds on the drath of tha husband. Thrra 18 agreament that the bonda ware purchased v.ith omuaity fund8 @d 

that, l lnaa tha dasth of tha husband, tha wita 16 thr aola 
Honors blr korgr H. Shrppard, Pagr L 

wn8r or thorn. It roiiorr8 that at 10mm time thr lntrrrat 0r 

tha hurband parrad bD tbr rlfr and Itmurt br drtrrmlnrd ah8n 

and in what manna? thlr ohangr ooourrrd. 

Thor8 bond8 raprarant a oontrrot with the Oovmiaunt or thr Unltrd Stats8 and thr rrgulationr or thr Troarurr 

Ihpartmmt are mdr a part or ruoh oontraot by rrirranO8. 

Th* rlrrt l pplloablr rrgulatlon provldrr: 

9urIng thr 11~88 or both oo-owa8r8 tha bond 

will ba paid to rlthrr oo-owner upon hi8 rrpratr 

raquo8t, without roquirlag th r+aturr of thr 

other ootwnrri and upon payment to l lther oown8r the othrr parson rhall ooa8e to hara anl 

int8?88t in th@ bondl.* (Treasury Dlp8rtmrnt Raguiationr, gubpart I, 6eotlan 315.32. Departmoat 

Qircolar Iio. 530, 5th R8virion. ha0 1, 1942. (a) ). 

Obrlouriy, thlr rrgulatlon 18 lntrndrd to fix tb, $zbi!Ey 

Or th8 UlIitrd Stator GOTrmunt in the oontmot. 

pO88r8EiOa Of the bonds the inoidrat of th8 right to oarh 

them and, on001 th bond8 ar. Oalhed, 88rT48 to lWii8ta th8 

Unltrd Stat.8 from any iurth8r llablilty. Howaver, it doe8 

IlOt r8gUiRtr th8 right8 Of th8 00-OWUr8 88.ktW88n th8l888lT.8 

t8Et; bond8 or in the prOO@Od8 from thr bond8 if they art 

'Phi8 rrguiatlon is not, thrrrfon, In oonfliot ,wr.th 

fin ookunlty proprrty law or T8xa8. 

It 18 W811 88tthd that property puroharrd with 

oommunlty rundr, or property rxohangrd r0r oommunlty proprrty, 

18 oommuaity property. (Sa8 23 Tex. Jur. p. 142, %O. 114 

and 00888 olkd). Thl8 18 trUS l VSD ii thr pllrOha88 Or l Xchange Is tBn8aCted in thr name or only one epousr end xkare 

the trsnsaotlon IS In the mm8 of both spouses tho prssumptlon in favor of the OCeUUUIlty is diffloult to OYeroome. (Se* 

23 Tex. Jur. pp. 355, 356, 357, Sot. 307). As 8tated, it has 

bean agreed thflt the bonde in question w8re purchaesd with 

comnunlty funds and were made payable to the husband or the 

wire, and it follows that the bonds are c0imunlt.v property 

during the existence of thr ooamucity. it 0180 fol?O*:S thRt, 

had they been Oa8hrd prior t0 the OOUUWlity'8 diSSOhtiOn, 

tha prOO8ed8 would rWOrt t0 CO-it7 fund8. 

It is ham noteworthy that in tha administration 

of tha iaW8 of thr radaral Gorrrnmant (partlouiariy tha tax 
Honorable George H. Sheppard, Pago 5 

law8) full or8dit ha8 boon girrn to the oommunlty property 

law Or Taxa (8M HOpkin 1. BSOOn, 282 U. S. 122) J8 wrll 

88 rlmllar law8 or other rtata8 (In Louirlana: hnd8r T. 

Piart, 282 U. 9. 127). 

u. s. 101.). 

(In Wa8hix&tonl Pool T. Ssaburn, 282 

In Lang T. Coamlrsloarr (304 U. S. 64) ihr oomuunlty proprrtl law 0rthb Stat0 or Wa8haton wf38 reoognizrd 

by thr Su mm@ OOlvt of thr.fJnit8d St8t.8 and it wa8 held that 

only on8- ia ii (l/2) or th8 proorrd8 rr00 lmuzanor p011oi88, 

th8 wir0 bring th8 8018 bonorloiary and all pr8UIb88 ha+- 

bern paid for with oanmunity finds, rhould be lnoludod In thr 

drordent’r grO88 88t8t6J and ?rh18 0888 W88 rOliOwOd in regard 

to the oammunltf property law of T8xar in E8t;atr or Shram 

Moody T. Oomml88loaor, 42 B. 1. A. 967, 

ml8 88OOnd appl1oablr regulation providrrr 

'If 8ith8r OO-owIi8? die8 . . . th8 rurViTiX@ 

oo-wn8r will br noogairrd a8 t& 8010 and abrolute owner or thr bond and payunt will bo mdr 

only to him.' (marurr D8partuat R86ulrt1oa8, 

Subpart K, Sootlon 315.32. Ikpartment Clrouiar lo. 

530, 5th Rovlrlon, June 1, 1942. lb)). 

In th88e 00-Ownarrrhip typo Of bondr, thir regulation arrate8 

i.l~ each OO-ownat thr right Of 8UrViTOr8h1p. ~48 ltatcd, the 

mgulatlon 18 a part 0r thr ooatraot and it mU8t br praruaud 

that th8 psrtir8 t0 tha OOntraOt intrndrd th8 l ffrCt Of th8 

rrgulatlon. It rOiiOW8 that in th8 pZ'888nt 8088, th8 hurband 

and wirr latmdbd to onatr br oontrrot the r-t or aurrlrorrhip in raoh othrr. It 18 not brllrrrd that 8uch a aontraot 

ViOlat th8 OO-ity PrOpOrty law Or Tax88 and it would app88r that it 8hOuld b8 giV.Il 8ff8Ot. '. 

~8 8ugg6st6a, thr rsornt OaeI oi iM63 v. YitOh811 

(supra) in whloh the court draws an enaiogy batxeen ths parties to a benrilolary type of United States Covcrnment Bond 

and an lnsuranoe pollog is not lrrelrvant but, lnasm.uch as 

the bonds there In question are the co-ownership type and particularly since the oo-owkcrs ars hU8baUd and wife and tha 

bonds were purchased with community funds, It must bc considered in oonjunctlon with the ca8a of Blaokmon v. Ilansen 
Eonombla Goorgr Ii. Shrppard, Paga 6 

(169 9. 'U. 2nd 955 and affirmad 169 9. w. 2nd 962; and 8W 

8180 Law Te h8d88iOMr~ 8Upm) & the Blaokmon 1, Canaan 

Co80 thr daordrnt, after marriage took out polioi On hi8 

wn lir8, makin& hi8 Wifa thr bm8fioiary and paid th8 pr8- 

miLm8 with oommuaitf fuadr aad th8 oourt in holding that 

only onr-halr (l/2) or th amount war taXabl8 a8 inruranoa 

“tak8a out by thr deoadont upon hi8 own lii8' under the 

abwr Artlol8 7ll7 raid: 

"&A thi8 0088 th0 Or8OtiT8 ior Or On+half 

or thlr rund wa8 thr fluid8 or apprllant. & t8ki.a6 

Out tbr8@ PO110108 bar hurbaad, tbatOtiT.if at 

18ll8t, g8T8 h.r hi8 OOmIlitlnit~ intW@rt. Thi8 gift 

wa8 noTar rotokod. 9hr did 8njOJ tb priTii8&8 

Or 8UOOWdiw t0 t&18 girt UpOn hi8 drath; but in8Ot8r a8 brr OOMlUlit~ iund8 Orrat8d 8M0, 8hr 

did not, by h8r hurband'r drath, ruoo8od thrrato, 

&r hu8band at all tim88 prior to hi8 death had 

the pwlr, within limitr, to rka a 6lrporltion 

of h8r 8ommunit~ intarrrt In th8 l onay datotrd to 

th8 pamIlt Oi th888 pr8tiUM8 t0 UlOthC. h 

8hOt8d to rxpand ram fc0 h8r b8lwrit. *IA@, if 

thOr8 wB8 S priTil868 ill th@ pO11Oia8 t0 ObasO 

thr brmfioiar~, it8 8X8rOi8. oould haT8 drrratod 

her lntara8t. Rut @To11 if thrra war ruch a power, 

h8 did not ChOO88 to 8X8rOi8. it and i8ft h8r 

8lOMy inT88t.d iOr h8r brnrfit. OM-hair Oi th 

uount or thrra pollolr8 only rmprrrmtrd, within 

tha munbg or our 8t8tUt88, 'pO1101a8 taken out 

by thr daoadmt upOn hi8 own iii@.' Th18 18 What 

apprllant 8uccrrdad to upon thr drath Oi her hnrband. . ..I) 

That the status or tha part108 in these oo-ownrrrhlp 

type bonds is analogous to tblr status in a bank acoount has 

also been s%grsted. Such an analogy is clrar batwern thrso 

bonds and a "joint tSnsncyW typS of bank sooount, vbSrsin 

funds are dSpoSltSd in the name of both spouses each having 

thS right to withdraw any part or all of the funds SOd SsSh 

succeeding to full omrrshlp of the funds on the drath of thr 

other, In faot, it 1s not impossiblr to thaorlzr that thr 

status or m-owners in thrsr bonds is OM Of joint trnanol 

which, although lmpoaaibla by Operation Of law (SOS Art. 2580, 

V.A.C.S.) map ba orestad by oonPrsot (8oS Chamllrr ve KauntzS, 

130 S. vi. 2nd 327). 
Ronorabls G#orgr H. Sheppard, Fags ‘I 

u iatsrsr ths thsory or analogy hsra applioablr, 

substantial ,y thr sams rssults will obtain. In hating thaso 

bonds and. layabls to huskn4 or wlfs, thr dsosdsnt d1vs to 

his wira, ” ;rntatlrrl~ st laast”, his oaemiinlty lntrrsst 

thrrsln. A .thou6h ths girt was ratooabla or ths rl&ht bsstows4 thrr Iby wss asra~slbla through th8 d8084sut'~ oashlng 

of thr bond L prior to his drath, ths bonds wsrs net 80 oashsd 

and the wir I arsssl~sQ or suooradad to ths possra~~lon or anin 

oyMnt”or ;hs dsosdsnt’s nn4irldad OM-half (l/d) intsrrst 

the bon: I* 

A oatsgorloal l nswsr to ths hypp.?+ds Frsssntsd 

(that ths socownar with ths husband WaI a parson other tlnn 

ths rlfs or that thsrs ms a minor son) ooule br mlslsa4 

and to ~lsouss thsm fully would rrqulrs further hypothsslz % 

as to spsslflo fast sltuatlo~s. It would pa iar arlsld fr,cm 

ths oass bare oonsi4srsil and ml&it even load to the lnrolrsd 

subjrots o? frat4 03 th gmrt of tha husband In l soro lsln8 

hi, statutory right ci sontrol and dlsp~sltlon of ths. oommualty proportl and sstopprl on ths Fart oi ths ulfs through 

sllsnoa or fmllun to l et.. This oplnlon should not, thsrsfors, ba snlardrd apon nor appllse anlsss tAs fasts l r s 14s~ 

tloal with thoss hors oonsl4srs4. 

The rorsgoing oonsldrrrd, YOU 8m 8dViI38d that it 

Is tha opinion of this on108 th8t OM-half (l/2) Or the valus 

of thsss S8rl.s “BE” tbikd Stat88 Oorsmr8Ut Beads, payable 

to hnsbane or wit8 and purohassd with oommunlty funds, Is taxl bls \udsr thr Inhsrltanos Tax Lawr of Texas and should br 

bOlUd8d in th8 iUh~ritano8 ta1 r8pOrte 

Yours rrry tr*ly 

AT'T0FiWY GENERAL OF ThXAS ,/-