Hon. Robert S. Calvert OPINION NO. W-343 

Comptroller of Public Accounts 

Capitol Station Re: Mstributlon of the Estate 

Austin, Texas of Jesse H. Jones for 

Inheritance Tax parposes. 

Dear Mr. Calvert: 

opinion 

We quote the following from your letter requesting our 

on the above captioned matter. 

"Jesse H. Jones died testate on June 1, 1956, 

a resident of Harris County, Texaa, seized and 

possessed of a community estate that had a gross 

value of $10,007,506.36. The undivided one-half 

6 

l/2) community interest of the deceased is 

5,003,753.18, and accordingly, an Inheritance 

tax report was filed with this department on this 

basis. 

"An examination of the will of the deceased 

reveals that after numerous special bequests the 

testator disposes of his entire community estate 

of himself and surviving wife. The residuary estate Is devised in trust to four trustees and from 

the income of said trust, the trustees must pay 

the surviving wife an annuity of $75,000.00 for 

life. If there is any income left after the payment 

of the annuity of '$75,000.00 to the surviving wife, 

the balance of the income must be paid to 'Houston 

Endowment, Inc.', a charttable, educational or 

religious foundation, for 

Texas. 

use within the State of 

"The first paragraph of the last will and 

testament of the deceased reads as follows: 

"'The terms 'my estate", 'my residuary estate"', "my property" and other lfke expressions 

in this ,will which designate, dispose of or refer 

to any estate or property or interest or share 

therein ahall (except where otherwise expressly 

indicated) be deemed to fnclude and affect my 
i 

Hon. Robert S. Calvert, page 2, Opinion No. (WW-343) 

wife's interest or share (as well as my own) 

in our community property and estate, and all 

of any separate property which I may die 

possessed of or entitled to, It being my purpose and intent by provisions of this will 

(except where otherwise expressly indicated) 

to devise, bequeath, dispose of, and, as 

directed, to affect not only any separate 

property of my own, but also all (including 

my wife's share and interest therein as well 

as my own) of the community property and 

estate of my wife and myself. This inclusion 

and disposition of my wife's share of our 

community property and estate is made with 

her knowl;edge and approval, and because of 

my belief that better provision for my wife 

will result. And if my wife shall, after 

my death, elect to claim and receive her 

legal share of any of our community property 

otherwise disposed of by this will, then 

the provisions of this will for benefit of 

my wife shall lapse and become null and 

void, and at my death all of my property 

and estate (not including my wife's share 

of our community property and estate) shall 

pass and vest as hereinafter in this will 

expressly provided for such contingency.' 

"The surviving wife by this clause was 

put to her election, either to take this 

property under the will or to repudiate ssme 

and claim her one-half (l/2) interest in the 

community property. She elected to take under 

the will, and the question arises over the 

correct method of distribution thereunder and 

the computation of the inheritance tax thereon. 

"The executors of this estate reported 

only the decedent's one-half (l/2 undivided 

community interest ($5,003,753.18 j as being 

taxable, only one-half (l/2) of each special 

bequest as being taxable, and only one-half 

(l/2) of the annuity ($37,500.00) as being 

taxable to the surviving wife. The residue 

of the decedent's undivided one-half (l/2) 

community interest was distributed to the 

'Houston Endowment, inc,' as exempt. 
Hon. Robert S. Calvert, Page No. 3 Opinion No. (Ww-343) 

"We believe that the entire community estate 

($10,007,506.36) is taxable and should be distributed for inheritance tax purposes. Certainly, 

the full amount of each special bequest is taxable 

as well as the $75,000.00 annuity to the surviving 

wife instead of the $37,500.00 reported by the 

executors. Of course, if the value of the annuity 

to the wife does not exceed the value of her 

community Interest in the estate plus a $25,000 

exemption, she would owe no tax. The residue of 

the estate is exempt because the will states that 

the money must be used In Texas that goes to the 

'Houston Endowment Inc.' There seems no doubt 

in our minds that each special legatee receives 

the full amount under the terms of the last will 

and testament of Mr. Jones, and, therefore, the 

full amount is taxable to each special legatee." 

Article 7117, Vernons Civil Statutes, provides in 

part as follows: 

"All property within the jurisdiction of 

this State, real or personal, corporate or incorporate, . . . which shall pass absolutely or 

in trust by will or by the laws of descent or 

distribution of this or any other State, or by 

deed, grant, sale, or gift made or intended to 

take effect In possession or enjoyment after 

the death of the grantor or donor, shall, upon 

passing to or for the use of any person, corporation, or association, be subject to a tax for 

the benefit of the State's General Revenue Fund, 

in accordance with the following classification. 

. * . I' (Underscorlng ours) 

By virtue of the above statute if upon the wife's 

election to take under the will, the community property of 

the wife passed to the devisees by the will of the husband 

then it is subject to the inheritance tax. The Texas inheritance tax is a privilege tax levied on the privilege of receiving or succeeding to property which passes under the 

conditions named in Article 711 . 

Kelly, 294 S.W. 518 g Comm. App. 3; 

Our courts in Kelly v. 

Kerena National Bank v. 

Stockton 281 S.W. 5 0 (Tex. Civ. App.). and Grange v. 

Kayser, 80 S.W. 2d 1007 (Tex. Civ. App.) held that where 

the husband by will disposed of the community estate and 

the wife elected to take under the will that the devlsees 

named in the will took title to the property under the 

husband's will. 
Hon. Robert S. Calvert, Page 4, Opinion No. (WW-343) 

The court in Jones v. State, 5 S.W. 26 973 (Corm. 

App.), was confronted with a fact situation where an individual had died leaving a will disposing of the community 

estate of himself and his surviving spouse. In that case 

the surviving spouse had received under the will of the 

decedent an estate equal in value to her one-half share 

of the total community estate. The surviving spouse 

elected to take under the will and the State assessed an 

inheritance tax'against her based on the amount given her 

under the will. The court held that since the amount so 

received by herunder the will was not in excess of the 

amount that she owned as a one-half owner of the community 

estate that no inheritance tax was due. The court held 

that the tax was not due because the will passed no property 

to the surviving spouse. The court stated as follows in 

this connection: 

"Now if the surviving widow owned in her 

own right an undivided one-half interest in the 

community property of herself and husband, then 

she had title to that extent to such property, 

and if the will of deceased did not pass any 

property to her, clearly she is not taxable. 

The will did not pass any property whatever 

to her, because it operated only as an effective partition of the community property 

after death. . . .'I 

It follows from the Jones case, in that the annuity 

provided for the surviving wife is less than the community 

share of the wife no tax is due from the surviving spouse, 

The other devisees, unlike the surviving~ spouse did 

not own an undivided one-half interest (or other interest) 

in the community property of Mr. & Mrs. Jones. Mr. Jones' 

will did not operate as to these other devisees as a 

partition of the community property, and we hold that such 

other devlsees succeeded to the property by virtue of the 

will and received title thereunder. Attorney General's 

Opinions V-704, andVq146, written in 1948 and 1951 held 

to the contrary on the theory that upon the wifess 

election to take under the will, that the third party 

devisees did not take under the will-- but received the 

property as a gift from the surviving wife. The Kelly, 

Stockton, Kaiser and Jones cases, supra, refutes this 

theory. As stated above, the court in the Jones case 

stated that the wife's election to take under the will 

"operated only as an effective partition of the community 
Hon. Robert S. Calvert, Page 5, Opinion No. (WW-343) 

property after death. . . .' It seems clear to us that this 

partition of the comm;lnity estate was between the surviving 

wife and the husband. The wife received full titie to the 

property devised to her and the husband's estate acquired 

complete title to the balance of the community property and 

as stated In the Stockton case, supra, "such ownership 

dated back to the date of his death." 

We therefore hold that the third party devisees 

take under the will and are subject to the inheritance 

tax levied b Article 7117, V.C.S. 

Opinion V-70 5; 

Prior Attorney GeneralIs 

over-ruled two prior opinions of this office, 

same being Opinion Numbers 191 and O-4109. These two 

opinions are re-instated and Attorney General's Opinions 

V-704 and v-1146 are over-ruled, 

SUMMARY 

Where surviving spouse elects to let her share 

in the community property pass under deceased 

spouse"s will which disposed of the entire community estate the third party devisees are subject to the tax levied under Article 7117, V.C.S., 

according to the value of the entire community 

estate received by them. The community property 

received by the surviving spouse is not taxable 

if the property received is not more than the 

value of her community share plus the $25,000 

exemption. Attorney Oeneral's Opinions V-704 

and v-1146 are over-ruled and Attorney General's 

Opinions 191 and O-4109 are reinstated. 

Yours very truly 

WILL WILSON 

Attorney General 

By &-7$.yf”-“7pW. V. Geppert 

Assistant Attorney General 

WVG/vk 

APPROVED: 

OPINION COMMITTEE 

George P. Blackburn, Chairman 

John Reeves 

John Webster 

Mary K. Wall 

REVIEWED FOR THE ATTORNEY GENERAL 

By: James N. Ludlum