. ,;~.

-- 

### 426

**OFFICE OF**  **THE ATTORNEY**  **GENERAL OF**  **TEXAS AUSTIN**  GROVER SELLERS ATTOINW GLNCIAL lzz-zq

Eonorablr horgr 8. Shappnrd Coaptrollaror FublioAoeountr Anatln, **Taxan**
Dear 

### Sir: 

### opinion Ho.o-6691 Boa Inolurlon of

### Srrlor 1, WaIted 

### St8t.8**Oorarnunt Bon** 



### Ofthrao-own8r8hIptfp8pay8 oludabla In Inhrrltanor tax

### r

Department rrlatlr Inhoritanoo taxro Thr lrttrr **atat.** t **8Urd** it **hb8 b@Il**  tlm Conptrollar’8
l b ond8 

### in the
oror arr outllnmd. **bond h8**  born 18-

**aa a8**  **anondad,** In that

such L@ndhare +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 pas8Hon0rabla GSorgr H. Sheppard, Papa 2

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

### orpurohesa, have the OffrOt Of giving the rurvivin& 8pOUS@ownrrshlp under and by vlrtua Of contraoturl right8 and thot no property rights paa8 on lOOOU.nt

of death. The rroant oa8S of Bdds v. Mltohall (184 9, **W.** 2nd 823) In rhloh thr owrt hold that the brnrilolary 

### typaof Unltod Stat.8 Govclrnmsnt Bonds were In rrrrot OOntraOt8 for thr banefit of third por8on8, and illU8trCitOd euohholding by drawing an analogy or that typa or bonds to an ill8llr6llOr POliOy, 18 oltrd. Thr a

### ttornryoontrnds that thrrr 18 no aatorlal dirrOnn00 botwron thr theory and roaroning therrln and that to br usrd 

### Ina drtrrmlnatlon or tho qur8tIon prrrankd. TOovrroomo 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 issura8 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 insuranorHonorablr Oaorgr B. 3happard, Pago 3

UJldSr pOliOIa8 

### tSkonOutby tha daoadantupon hia
own llfa, and to tha l xtant or tha lxo~aaovar Forty Thourand Dollara ($40,000)or tha amount raoalvabla by all otharbanarIoIarIaa aS Inruranoa udar pOlIOia8 takan out by tha daoadant upon hi8 0wn llra,whathar balonglng to Inhabl

### tantror thir Stat0 or 

### toparson8who ara not InhSbltant8, ragardlasr Or whathar 8SOhprop8rty I8 looatadwithin or

### withoutthir Stat.,

### Whioh 8ball 0~88

### l

baolutaly 

### or In tra8t by wIllor6r &a 

### law8Oi da8oant Or di8tributiOn Of 

### thi8Or my otha Stats,

### or bydrrd, iwant, 8818.Or 

### gift mad0 

### or Intandad to taka affaot In am88888Ion or 

### l njomnant rrkr the 

### daathor 

### t&am9ntor 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 

### thaStata' 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 rhownto tha oontrary, bo **daamad** to hats barnmad8 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 thagrantor, vandor, or donor, oi a nmtarlal 

### partor his 88tata. or Ii tha tranrrrr **aada** within auoh

### parlodla 

### In tha nataro or a iinS1 dirtribution 0r propmty and without adaquata valuw bla oonrldaratlon.* (mphS8i8 8ddOd)

Tho 8OOpS of 

### thi8Artlola I8not llmitad by the lagal davioa throughwhloh 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, ISwhathar 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 aolaHonorsblr korgr H. Shrppard, Pagr L

wn8r or thorn. It roiiorr8thatat 10mm time thr lntrrrat 0r tha hurband parrad bD tbrrlfr and Itmurt br drtrrmlnrd ah8n and inwhat manna? thlr ohangr ooourrrd.



### Thor8bond8 rapraranta 

### oontrrotwith the 

### Oovmiaunt or thr Unltrd Stats8 and thr rrgulationr or thrTroarurr 

### Ihpartmmt are **mdr a**  part or ruoh oontraotby rrirranO8.

Th* rlrrt 

## l

pplloablr rrgulatlonprovldrr: 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 

### otherootwnrri and upon 

### paymenttol lther 

### oown8r the 

### othrr parson rhall ooa8e to hara anl 

### int8?88tin th@bondl.* (TreasuryDlp8rtmrntRaguiationr, gubpart I, 

### 6eotlan315.32. Departmoat 

### Qircolar Iio. 530, 

### 5thR8virion. ha0 1,

### 1942.(a)).
Obrlouriy, 

### thlrrrgulatlon 18 

### lntrndrd to fix tb, 

### $zbi!Ey Or th8 UlIitrdStator GOTrmunt in the oontmot. pO88r8EiOa Of the bonds the inoidrat of th8 

### rightto oarh themand, on001th bond8 ar. Oalhed, 88rT48 to lWii8ta th8 Unltrd Stat.8 from any iurth8r llablilty. Howaver, it doe8 IlOtr8gUiRtr 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 isnot, 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. (Sa823Tex. 

### Jur.p. 142,%O. 114 and 00888 olkd). Thl8 18 trUS l VSD ii thrpllrOha88 Or lXchange Is tBn8aCted in thr name or only one epousr end xkare the trsnsaotlon IS In themm8 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 thfltthe 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*:SthRt, had they been Oa8hrd prior t0 the OOUUWlity'8 diSSOhtiOn, thaprOO8ed8 would rWOrt t0 CO-it7 fund8.

It is ham noteworthy that in tha administration of tha iaW8 of thr radaral Gorrrnmant (partlouiariytha taxHonorable George H. Sheppard, Pago 5

law8) full or8dit ha8 boon girrn to theoommunlty property law Or Taxa (8M HOpkin 1. BSOOn, 282U. S. 122) J8 wrll 88 rlmllar law8 or other rtata8 (InLouirlana: hnd8r T. Piart, 282 U. 9. 127).
u. s. 101.). (InWa8hix&tonl Pool T. Ssaburn, 282 InLang T. Coamlrsloarr (304U. S. 64) ihr oomuunltyproprrtl law 0rthb Stat0 or Wa8haton wf38reoognizrd **by** thr Su mm@ OOlvt of thr.fJnit8dSt8t.8 and itwa8 held that only on8-ia

## ii (l/2) or th8 **proorrd8** rr00 lmuzanor p011oi88, th8wir0 bring th8 8018 bonorloiaryand all pr8UIb88 ha+- bern paid forwith 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;atror 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, SubpartK, Sootlon 315.32. Ikpartment Clrouiar lo. 530, 5thRovlrlon, June 1, 1942. **lb)).**

In th88e 00-Ownarrrhiptypo Of bondr, thirregulation arrate8 i.l~ each OO-ownat thr right Of 8UrViTOr8h1p. ~48ltatcd, the mgulatlon 18 a part 0r thr ooatraot and it mU8t br praruaud thatth8 psrtir8 **t0** tha OOntraOt intrndrd th8lffrCt Of th8 rrgulatlon. It rOiiOW8 that in th8 pZ'888nt8088, th8 hurband andwirr 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.Il8ff8Ot. '.

~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.uchas the bonds there In question are the co-ownership type and particularly since the oo-owkcrs ars hU8baUd andwife and tha bonds were purchased with community funds, It must bc considered in oonjunctlon with the ca8a of Blaokmon v. IlansenEonombla 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 th8pr8- miLm8 with oommuaitf fuadr aad th8 oourt in holding that only onr-halr (l/2)or th amount war taXabl8 a8 inruranoa

“tak8a 

### outby 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&18girt 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 tohi8 death had the pwlr, within limitr,

# torka 

### 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 wB8S priTil868 ill

### th@pO11Oia8 t0 ObasO thr brmfioiar~, **it8 8X8rOi8.**  oouldhaT8 drrratod her lntara8t. Rut @To11if thrrawar 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, 'pO1101a8taken out **by** thr daoadmt upOn hi8 own iii@.' Th18 18 What apprllant 8uccrrdad toupon thrdrath Oi her hnrband.

. ..I)

That the status or tha part108 in these oo-ownrrrhlp type bonds isanalogous 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 bs**stows4** 

### thrrIbywss asra~slbla through th8 d8084sut'~ oashlng **of** 

### thr bond Lprior to his drath, ths bondswsrs net 80 

### oashsd 

### and **the wir**  

### Iarsssl~sQ or suooradad 

### to ths possra~~lon or an**in** 

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

### intsrrst the **bon:** 

### I*
Aoatsgorloal l

### nswsr to ths hypp.?+ds Frsssntsd (that 

### ths socownarwith ths

### husband WaIa parson other tlnn 

### ths rlfs or that thsrs ms a minorson) ooule br mlslsa4 % 

### and to 

### ~lsouss thsm fully would 

### rrqulrs furtherhypothsslz as 

### to spsslflo fast sltuatlo~s. Itwould 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 sorolsln8 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, thsrs

### fors, ba 

### snlardrd apon nor 

### appllse anlsss tAs fasts lrs 

### 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

OFThXAS ,/-