### F 9 OFFICE OF THE **ATTORNEY** GENERAL OF ‘TEXAS 1 P AUSTiN



### iioaorablo 000. H. Sheppard 

### a~Dt?Oller OfPublio AoOOUata .i -. . 

## 22

Dear Sir:

septembar 7, 1943 the Bouaton Land op$nioa or this

re~soldin order ebta of an estate, ad suaoesaioa taxes, is blo othar than on the 011. with ths sale? In ax payable by vlrt!m or the
e !Viill

to benefiolsrles, althou&

under a Sill. Is a transfer tax
a able 5f (1) on the trenstsr under the WI11 and 2 in oonneotionwith the *alo trh’ieh isneoeesarp to erieat division 

### of the estate?

n *

. . . , ::Honorable Gee. R. Sheppard, pagv 2



### In our 

### Opinion No. 

### O-G34 (Conference 

### C-pinicn No. jZO?l ‘19

### held that VmumZers by operation of 

### lawa are, by nsoerr8ery implioatlan, exempt from the tax imposed by t!e Texas Stoak Transrer Tax Aat (A&isle 

### 7047111,V. A. 0. S.). Proaeeding from this pr6o1se, m also ruled 13.said oplnica that a 

### tmnsrer rr0man lntsstata to his heirs 

### or next 

### or kin in a tranafrr wholly eireoted by operation or law and 

### hanae io tax sxompt, bat that a transfer imm a

### tertator to hi8 legatcer 38 taxable aa e transfer etrected at leaart 

### in part 

### bFthe rat 

### Of the parties thereto.

The Tmaa Stook !kawier Tax Aot follows almost verbatim the XewYork TraMi6r Tar Aot, **and it**  18

### oomnly known that oar rtatoteua8 **adopted**

### frola and

### modeled after Ohm 

### Xew York Aot. 

### Likewise, our aat la ldantloal in no& .nspeots-iriththa Federal. Stook Transfer Tax Act and

### with the rotlr-via

btbar,etater. .~

Coossquently, in interpreting oa.atatute vm.

have -beelr

iooustomed tehollow the 

### dealsions and adminisitmtf~ 

### Suzingo: or 

### these other

### jurfadiotionr, and pmtiarilsrly thoal) of ~XerYork, sinoe, as is aaid In 39 Tex. Jar. 

### 264-2651

,*‘Aphrase, provisign or statute adopted rroa ths.Laua GS another state or ootantry will ordi- ,muril be iron 21108wimi 

### oonstnt8ttism~in Teraa ,:...~~ ~. that t 

### ha ruceltod 

### fxths farisdiation 

### from I 3 uhiah it 

### uar borroued. If it had been gi+t~ a tixed and 

### defiaite meanlag by the aoarts of that jurisdiotlon, it will be given the acme meaning In Texas. The rule rests upon the presumption that the Legislature was aware oi the judioial interpretationgiven in Me jurisdiotion

### rrca rhioh the atatuts am tak%, and that ia adoptina auah sfetute it intended also to aooept suoh oon5traotlon.

*

Under the HerrYork and federal acts, only one treneSer tax aocruee Men stook psseiw by ~13.1 to 6 legate6 but 

### la sold by the exsoutor to satisfydebts and expense8 of the e&ate. Axtiole 

### 15(16) of the Be* York Rolsaand m3gulations~ brtlole 34(n) 

### 0r Treasury Regulations Ho. 71; reprinted in Christy and 230L8an,Tb6 %h~Sre? Or t%OOk, pp. 

### 683 sad 

### 602, mapeatively. This is oocaaioned by the Paot thet tbsee Jurisdictions adhere to the aomnoa law rule whemby title to perronclty paesce frown a test&or to his executor and thence from.suahsxeuutor to legatesa, to areditore 

### 0r the estete, or to posslbls vendees. Consequently, these;

- 

## 24

’
i

Bonorebla C&o.R. Sheppard, 

### page 3

juriadiotionahold that the transfer m the teatstor to hla itxeontor is tax exempt 8138 trensfer by op&etion of law and that the Odly tax8b.laevent ooaura when the 8XeCiutop mkaa a further tmmrer 81th~ to a legates, to a Or8ditOr Of the

## estett, or to a vendee towhoa th8 stook is sold ior the ~ur>oa8 Or securingiunda to diaaharga the debts or exenaea oi the estate. Weloh t. **Kerokhoif, 84**  F(2d) 2QS* 106 A. 1. R. 

### l434; Christy and XoLean, op. oit. SUVM, 164. Obvloaalywhen the atook la a01d **by** the exsautor to aatiaiy dobta end **expenses**oi the estate, no tax ever arlaea on **a** trenaier to a lagateebeoauae au& tranarar is nevermsde by **t& exaouter.**  0-+3-jf Rower, as maa pointed out in our OpinionNo. ~Artlela 

### 3314 Y. A. C. 3. abrogatea the a~amon law rule inthis State by prorIddiag,thattitle

### to peraoaalty Teats 

### in the lagataes iarss4bit8l.y 

### upon the death of the **t88tatQr, rubJ8ot**  **to** 

### the power of~tha exaoutor,fo **sell** 

### or otherwlab appl aaehperaonaltp to aatlaS .debtsof 

### thb estate, funera

3 lxpenaaa,

iunily ellowanoaa; **and** other expenses oi administration. 

### 531 tiOrr811T. Hamhtt, 24 S.W.(2d) Rlaherda0n t. Vaughan, 23 S.V. 640 (Sup.Ct.); Leal T. Isai 291 

### 8.3. 340; 1) Ter. **Jur.~S%;** 

### 15 Tex. Jw. 172-173. Reoa$e oi t&i8

## fe8tareoi our deaedants'~estets 

### law, mmosivably itwould 

### be poasibla to aar thet~trro:frana$er.., tares aoarue In the situation above deaoribad--onewhen tha titlevests immediately in the lagatsaa~,8nd anothar when the **executor a8lla~tha**  **atook in**  ths uoura8 ot adidniatration. Traotiaally apeaiclng,suah a oonatruotioa of our **trenafer tax**  **eot would**  result **in taxing**  **a tranarer**  **in** whloh the tranaiaraenever raosivea the us8 and enjoyment of th8 atook 8ndnever reosivea an urknouzbered legal or equitabl8 title thereto. !uereel that such 8 resultwas Iwfer within the oontaahplatlon or intention oi the legislature at the time of the passage oi our stock transfer tax eot. Rather,
wa real, when OUF lagialatura adopted the New York set, it must also be deeasdto heve adopted the oonstruotionplaoed
on auoh **ect** whereby but one tar **accrues in**  tha **altuatics** under diaousslon. This aonolualoa results both irom the 

### prinoipla of statutory ooonatruoticxn above set forth and from the rollowIng sdditional oonalderationr **Upon**the death oi
a te&atOr, clayint%r8St aoqulred by a legstee ia **SUbhOt** to a peer of sale in the **executor** whloh may be srerciaed under presorlbed oonditioas. Until suoh the a9 it la known
**ðer 07**  **not the**  **executor lnust**  **exeralse this**  **peer, alI**  **rights of**  **a** legatee 8r6 contl.ngsnt. 11'the pcmr la ersrolsed,

### i-

. X@lOrable 000. H. Shapprrd,

### pegs 4

ell rights OS a legates are extin&ulshsd. Consequently, w&en stockpessas by will and it Iswocssarr for the 

### es8outor to diapoae 

### Of ths atook 

### in order to eatiafy the debta and expenaoaOS the estate, wa feel that the atook trenaier tax aocruea only when auoh diaposltloa Ismade, fOF 

### the OOQtfn~enoyMilch prevents th8 ogaplatioo of tbe tFsnaSerto the 1ag8tSaa has ooouxred and
no oomplett

### transfer to them la ever aoooorpliahad. Convera81f,whaa 

### no auohdiagoritian 

### is neoeaaary and &en **the powtr**  **of** 

### ash ‘porraeased by **8n txtoutor**  **is artin.&ahed**  b0osua0 no neaesabty ror 

### its txarois0 has d~isen, 

### we itO1 that the tranaier**iroa** the testator to his lsgatata is omplet0 and thst auoh.tranaSeF la then taxable underthe pFinOipl88 snuaoiated in our OpiaiOQNO.w. o-+//y

These vrinoiplsaare ala0 applioablsto instsnoes of intes@'o y. r ahen it is n0o0aaarg SOPS8n administrator of the estate Of 'any inteatclta.,,tO,~la~oae OS: 

### &oak to aatiaSy:~the debts.arni**txpenses~.of,**t&0 qatats, 8.taX 6OOFUeS U~U,SU4h'~S8bB~'f4~th4 lJ4~6~~U8BZl+,;bt aeld tO be one In which the transstr is **eSS,eotail by**  **op** 

### eratlon of lsw. Contrarides, 

### however, uhen no auoh sale is neotiaaarJ, and when the pa;lrer OS sale in theadainlatretor~ia 

### axtirrguiahs~, -thetranattr to ,thehalra
or nert'oi kin~,is theo'awplttt **Bad,,88** waa:~:crsLd.in our wholly by o&!%%%!& .', " afadb adoh tzanaler:**lti ’** **...affoeted ;** **:,** OQinioBRo. of la,w, no tsx **aosruea** 

### thiwetinP~~‘-~

Your aaaond question relates to a situation ia whiah a trensisr OS atoOk is ntadato etieot or to faoilitate 

### the dlvlaion ot an estate among the various legatees. Ytaltiple18gat888hold prO@rty i138 fOra Of OO-OwIleMhip olossly 8kZn to, it not identioalwith, oo-tenehoy. Any divisicn efi6ctSd Smong suah tenants or eny salemade by thea Sor the purgoa0 ot dividing the- prooeeda therm3 neosssorily is a transfer efseoted by the 

### aot ot the parties thereto rather than a transfer affsoted 

### by operation of law. Such **tranaiera** are tarable under the NearYork and fed

### 8rd a0t8, **Artioh3-15(19-22)** 

### or the tawYorkRulesand **3eg** aatlcoa; Christy and YoLeSn, op. ait. auprs, **56.b565, and** 
**tvtn without**  the **aid** aiiorded by the ooostruoti0m3 in these Jurisdlotlona,xe would feel aonatrainad to hold **auob** trtlnsiera taxSUe sin08 thay tell Within **neith0F** the express erenptione aontained in our atetuteAOS the tiplied SXSZP

### tfofi eoeorded **transisr8** by oparttion of &5ii?. COnSo~U~tlY, you are respectfullyadvised that in auoh 9 Situ&ion two. -

7 -. 

## 26

Xonoreble Gea. A. Sheppard,psge 

### 5

tren3fer terse eoorue--on6when the trensiar to themaltiple’lagatees becmies aoinglete,shd another when swh leg&sea effect 6 division emong themelves by Ale or otherwise. Xotioe, hovmer, What if the division ie being eifected by fiultl?le heirs or next of ;tin who have taken by fnteetscy, 6 tax aocrues ohly upon the diviaicn eaong thtunaelvea einoe suoh hotis or next oi kin receive the stock initielly

### bg operation of la**. ,

Moreover, should an axeeator or admMstr&or uell stookfor the purpose

### or effectingor 

### recllit8ting Q diV;aiOtl



### aPlOti6

th6 lQg@Xi#b, htiir8OF IieXtOf kin, and not 

### r0r the purpose of paying the debts and sxpensas

### or the estate, the 88~~ 

### prinalples are a?plfoable. Tha parer of sale poeaessed by an

### exaoutor or admlnistrstor extendr,
aa has been said above, only to axleswhich are necessary .topay the debts and expenses of 

### the estate. Unless tho atook is aold for this purpoea, the transfer to the lagstess, hsira or next of kin beoomes oomplete. If the ~stook8hould **be** soEd for any gurpoae other than thla, the aituaticu is tha Bane as lf the trensfer to *thelegatees, heirs or next of kin had first Boone oca$ete, and euoh persons had then aoted to effeot a division emong themselves. Inmating auoh
a aale. an **ereoutor** or adviinistratoracts as a reprssenteitiva or the legatees,heirs or ,aextof kin ratherthan aa ,a represantative of the estate, **and,** for purposes of the atook transfer tax, hia aets bo this~respeot ere to be treated ae if they wore **the** acte of the prties x%osnhe repreeents. Consequently, in auoh a aituatim stook transfer taxes would

**aoorue fn**  acoordanoe with 

### th8priaoipl~e dieaueaed in the last preoeding paragraph.

~Trustlngthat ths foregoingdisoussion sstisfaotorfly 

### bnawersyour Icquiries,ae are
Your3 very truly