OFFICE OFTHE A'l-fORNEYGENERALOFTEXAS

AUSTIN ~:"u-" , pp, \ .il ,l; $y ^r ..' w4

XonorabloWorgo H. Sheppard 

## g-/7’” t/ Comptrollerot Pub110 Aaoount8 **AulrtiIl,** !hXaS

Dear Sir:

1040, in 

### Rhloh a8 to the appl the r0ilowfng lottor of Ootober 11, 

### on of thle departmnt horitanooTax law to

all of ths ooamunlty

death of tim survivor thr propueathed to tke aurvltln5 helm Mm. Thomas, one-half to desoend hire and’the other hali to Pam to his heirs. The question now arises inthe olosing of this eatate for inheritanoe tsx purposes, as to whether or not the property or m. Thoraas, who died Sirat,.

paeeed t0 hle heira at that tinn or rhetlnr or not akl Of the sstate paseed at the death of tb 

### l UrVf*ur, one-half to the heira of Mr. Thomas aob the

## 13

Honorable George A. Sheppard, Page E

other half to tha heirs OS l&a. Thoma8." Artiole 711'7,

Varnonla Annotated Civil Statutes, reads a8 followat

"All property within the jurisdlotlon of this Stata, real or personal,oorporate or lnoorporate,and any Interest therein, lnoludlngpromrty paaalng under a general powar of appointment exerolaedby the deoedentby will, lnoludlngthe prooaeda oi life lnauranoe to tha extant OS tha amount reosloableby the ereoutor or adminlatrator as lnsurenoeunder poliolea taken out by the deoedent upon hla own lite, and to the Wtent of the axoeaa over Forty Thounend Dollar8 ($40,000)or the amount reoelveble by all other banaflolerlea 88 insursnoeunder pollolea taken out by the deoedentupon hla own life,whether belonging to lnbsbitents of this Stete or to paraonawho era not Inhabitanta,regardleaa of whetbrr auoh 

### proprty la looatadwithin or without tibia State, whloh ahallpa88 ebaolutaly or in trust by will or by the law8 of deaoant or >~ 

### dlatrlbutlonof thin or 

### any otherSteto, or by deed, grant, sale, or gift made or 

### lutendeato take efteot Ia possasalonor enjoymant altar the daeth of the grantor or 

### donor,aball, upon paaalng to or for the UEO of any person, oorporatlon, or eraooletlon, be aubjeotto a tax for the bsnetlt of the Statala General RevenueFund in eooordanoewlth the following olaaalS~oatlon. Any tranafarmade by e grantor,vendor, or donor,whether by deed, grant, aale, or gift, shall, unless shown to the oontrary, be deene& to have been msde in oontemplatlon or death end subject to the aam tar as herein provided it euoh transter Is **msda** within two (21 years prior to tha death of the grantor, vendor, or donor, CC a material part of his satate, or if the transfermade within 

### euchpewlodia in the nature ofa flnaldistribution of property end without adrqusta valuable oonaideration. AOt8 1925, 2nd C.B., p. 03;Aots 1929, 41at

## 1

gonorable CaorgeR. Sheppard, Page 3.

Leg., lat c.3.. 9. 108, ch. So h 1; Aota 1839, 46th Leg., Ii. B. # 990, b 1.” Artiole 7123,Vernon’sAnnotated Civil Statutes, readsas follows:

“If the property paeslngaa etorseald ahallbe divided into two ormora estates, aa an estate ior gears or i’orlife and a remainder,the tax ahell be leviad on eaoh eatate or interest separately,eooordlng to the velua of’

the asme at the death of the deoedant

. The value of eatataa for yeera, eetatee 

### for life, remalndaraand annuities, shall be determinedby the *Aotuariss Ooablnad Experlenoe Tables,* et rour per cent oompound intareat.w
Under the above quoted ertiolaa unqueatiohably the lnharltenoetax 1s due on the husbend’a ahre of tha oonmunitya&ate which ha reeves at his daath 

### end is payable by hia heir8 on their raapeotiva intereets or eatatea in such decedent*8praperty. The tax lo due et l uoh fiu end 1s to be paid by the rerious eeteter or lntereata in proportion to the value of eaoh lnteraat in the property. There la no provlalonfor the postponementof the payment o? the tax until the property 1s aotuallyreoeived by the ramindarmen. The Aurtfx Court of~CfvilAppaala, in the oeae of Bethae v. Sheppard, (enyet unreported), stated en followa: Wenifestly tha atatutaado not euthorlze the postponaxantof the tax to await suoh oontlngenoy or oonditlona rubsequent,end these ooaoluaionaaaawer all elternatira oonteatlone of appellant that only portions of the value of the oorgua or prlnolpnlwere taxable. our above oonolualonaalao deny the oontantion of appallant tbst the tax ahouldbo poetpouad to datemine whet eventuallymight happen during tha sightyeer period &tar the daeth 0s grantor or aettlor. Xotblng,In the stetute authorizer such postponaxantof the tax; but to the oontrery it shows that tha Legialature intended that the tax beooma due and

## 116

flonorable

George R. i:heppard, Fag4 4.



### payablel~~d!a~ely after the death of erentor,

. The question in the specificoaaewhich you preaent is whether or not the propertybelonging to the one half cammunltp interest of J. 7:. Thomss which hsa now paesed to his raaalndarman or helm wsead under the terms of hiswill et the time of hi8 death at whioh tlma ltwea taxable or dld It pas upon the death of his wife, the survivor. It 1s our opinion thst the rormer Is the correotanalysis oi the altuation. Under thewill 0. Thorns8left his share of tha community estate to his wife for her life with 

### thepowerto aiapose or the same but provlded that if eny of the mama wna latt et the death of his wire that it shouldgo to his heira. It Is our opinion thatwhen heirs so take the remslnlng propartynt the death of Hr. Thomas* aurvl~lngwife they era taking the same under the will of **Mr.** Thomas and whatever lntarast or eetate~thay had in the propertywan taxable at the tlma of I&r.Thomas* death and would not be taxableet tha time of the death of the **euld.ving** wife.

In Opialon No. 04551 this department construeda rill in which a husband left &la property to hfswlfa for lire with power to dispose of aama but provided that if any of it was left at the time of her death the ramalnder shouldgo to his daughter. :Qe ruled in eeid o,oinioa that upon the hueband's death both the wife and the daughter had an latereet or estete in the propertywhloh interest or estate should be taxed and valued in acoordanoa with the rhlue of the aama et the time of the husband*8death. This sama rule oi law was aMOunOad by the 3uprame Court of Wleconaln in the ease of Statev. Merrill, 

### 24sN. 

### W. 909. The court atatee as follows;

*The statutory provisionaabove atated disolosa a oomplete mhema ror the valuing of interests in eetetea ~ivsn by will and for the imposing oi the tax upon such interests tranaierred a8 of the date of the death of the tsatator, end for the payment of the 

### taxupon its impoeltloa,whether the sotual enjoyment of the interest transferredbe present or future. The tax ie lmpoaed upon the right to reoeive end ie ffZed by the value of that right. State ex rel. Kempsmith v. Wldule, 161Vile. 

### 3@9, 154 N. 6. 695. The state 18 entitled to an lnherltance tax measured by tha market value of the interest.transfarredana the value for texlng

## 1lW

BonorablrGeorge 8. Sheppard, Pago 5.

purporea oannotbe reduoed by dividing it into term ortatesand lnmainders. Estate oi Stephenson, 171 F!ls. 452, 468, 459, 177 A. W. 579. Thus the oereral lntersstfi transferredby the will in suitwere subject tovaluatfog tt the time or the testatar’s death. .” The United States Board of Tax Appeal0 pamad on a questionvery rlmilar to the ona you present in the oam of Carrie L. Jones v. Commlsaioner,deoidedMay 29, 1940. Ln that oaae a testator bequeathed hi4 property to his die ror lifewith remainder to their daughter. By the teama af thewill the widow we8 given the power to dispose of the property including the right to detlm, mortgage or sol1 the
?%d During her liietlme the **widow**made **a** transfer in truer,

aeduritleareoelred under thewill of her husbanddlrecting that nhe should raorire the lnoome therefrom for llia ml that umn her d6ath the entire trust estate should **bo paid**  to her daughter. The **widow** dlod. The daughterwrot@ 

### thetrustm that she alooted to take the seouritire under the ~$11 of her **rather.** Tim oourt hold that the daughter did **take** the fseourlties undrr thewill of her father an6 that theirvalue et the tlmo of the wldow*a death 18 not 

### includedin her State@ Board of 4rots8 estate. 8% believe that theUnited ax Appeal6 bae laid down the oormot ruin to be applied in mxoh a cam.

You **are** thereforeadvised that the huCrband’8 hair of the oonmunlty propertywhiOh now pansea to hlr holrr upon the 6eath of his aurvivlngwife was taxable in aooordanoe wlth itsvalue at the tfnm of the humband’sdeath and is not taxableunder theTexas Inheritanoa Tax laws at the tlaa or the death OS the eurrlvlngwife as part of her eatate.
Tours rery truly ATTORagP GElWIAL CF TBras

BGSRS
APPZ:"'

ATTORNEY GENSRAL OF TEXAS