The Honorable Robert S. Calvert

Comptroller of PublicAccounts State Capitol Austin, Texas 78711 Opinion NO. M-228
Re: Taxation for inheritance tax purposes of devise and bequest to themembers of theOak Hill Cemetery Endowment Fund Committee as a part of theOak Hill Cemetery Endowment Fund under Dear Mr. Calvert: submitted facts.

We quote the following from your letter requesting the opinion of thisOffice on the above captionedmatter:

"flhe decedent7 died testate
. . .May 11, 1956, and allzf the required reports under the Inheritance Tax Law have beenmade and filed with thisDepartment. "Under the terms of the last will and testament of the deceased, a bequest of onefourth of the remainder of the estate was made 'to the thenmembers of theOak Hill Cemetery Endowment Fund Committee as a part of theOak Hill Cemetery Endowment Fund,' of Flatonia, Fayette County, Texas, in the sum of approximately $35,000.00. II

. . .We wish tobe advised whether or not this bequest is exempt as provided under Article 14.015 of Chapter 14, Title 122A, Taxation-General. "We are furnishing you herewith the following pertinent papers for your use in this connection:

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The Hon. Robert S. Calvert,page 2 (M-228)

“1. Copy of the last will and testament of -fihedecedent7. "2
. Articles ofAssociation - Oak Hill Cemetery Endowment Fund Committee.

“3. Trust Indenture - Oak Hill Cemetery Endowment Fund Committee. "Brief - submittedby fihe attorney for the estatz7.
. ." We have been advised of the following facts in thebrief submitted by theattorney for theOak Hill CemeteryEndowment Fund Committee, and further verificationand history have been supplied by theMayor of Flatonia and other interested citizens. The Oak Hill Cemetery is owned by the City of Flatonia, Texas, and is locatedwithin its city limits. Chapter IX of theRevised Ordinances for theGovernment of theCity of Flatonia, Texas, was codified and adopted on October lath, 1907, and provides, among other things, for theappointment of a sexton, sale of lots, burial and keeping of records. Article 137 of theseOrdinances reads as follows:

"Article 137. There shall be kept a separate account of all Moneys received from the sale of cemetery lots; ani the same shall be used only for the improvementand repairing of theCity Cemetery." The funds realized from the sale of lots and local taxes were not sufficient toproperly maintain the Cemetery. In order to assist theCity in operating the Cemetery, the Oak Hill Endowment Fund Committee and theOak Hill CemeteryAssociation were established on July 8, 1949. TheArticles ofAssociation of theOak Hill Cemetery Endowment Fund Committee recites that sevennamed persons have associated themselves to form an Endowment Fund Committee. The purpose of theAssociation is to serve as trusteeof such funds as may be donated or as may otherwise come into its possession in conformitywith thepurposes of any other trust agreementwhich may be entered into by the Committee and any other persons desiring to create a trust fund of not less than $500.00 for purposes pertaining to theOak Hill Cemetery.

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The Hon. Robert S. Calvert,page 3 (M-228)

Provision is made for the filling of vacancies in membership of the Committee of theAssociation in order to provide that the Committee shall be self-perpetuating.

The trust indenture executed by theOak Hill Cemetery Association of Flatonia recites thegranting and delivery of certain properties to thepersons who compose theOak Hill Cemetery Endowment Fund Committee, as trustees, for the purposes previously set out. The totalat the time of axectiition

was the amount of $3,95,0.00. Paragraph V declares thepurpose of the trustwhich may be briefly summarized and quoted as follows:

(1)The principal of theEndowment Fund is tobe kept intact forever. "(2) So much of the income from suchOak Hill Cemetery Endowment Fund as may be necessary for such purpose shall annually be used by the trustees for themaintenance of the lotshereinafter enumerated'and specified, and for the upkeep and maintenance of such other lots as may hereafter be provided for by donations to theOak Hill Cemetery Endowment Fund as hereinafter provided." (3) Any income from theEndowment Fund which isnot expended for thepurposes set out in paragraph (2) shall become a part of the corpus of theOak Hill Cemetery Endowment Fund. "(4) It is contemplated that the trustees may annually pay over the income from theOak Hill Cemetery Endowment Fund to theOak Hill CemeteryAssociation and rely upon such association tomaintain the lots for themaintenance of which this fund is created.” ParagraphVI sets out the specified lots for themaintanance of which the income from theEndowment is to be cxpended and enumerates on the official plat of said Cemetery each specified amount following thedate of the donation, thedonor's name and lot name and theplat number of the lot.

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The Hon. Robert S. Calvert,page 4 (M-228)

Paragraph IX provides thatupon receipt of donations of not less than $100.00 the trustees shall include in the lots tobemaintained out of the income of theEndowment Fund any half lot specified by the donor; and further that,upon receipt of donations in the amount of not less than $200.00, the trustees shall include the lots to be maintained out of the income from the Fund any full lot specified by thedonor.

Paragraph X reads as follows: "The oak Hill CemeteryEndowment Fund Committee, being the trusteesherein, is a voluntary association of individuals for thepurpose of serving as trusteesunder theprovisions of this indenture, as well as to serve as trustees under other agreements relating to theOak Hill Cemetery; and the Articles ofAssociation of such Committee are attached hereto and made a part hereof as fully as though copied herein verbatim." Article 14.015, Ch..14, Title 122A, 20A, Tax.-Gen., V.A.T.S., enumerates the transferswhich are exempt from inheritance taxes. If the devise and bequest here under consideration is to be exempt, itmust come within theprovisions of subdivision (3) ofArticle 14.015. This provision reads as follows: "PublicUse. Property transferred to or

for theuse of this state or any town therein for public purposes." Although under the terms of the trust indenture the income from the trust fund is tobe expended only formaintaining specified graves within the Cemetery rather thanall graves within the Cemetery,we hold that since title to the Cemetery lots is vested in the City of Flatonia, theauthorized expenditures are for a public purpose and do relieve the City of Flatonia of a duty and an obligation imposed byArticle 137 of the City Ordinances.

Subdivision (3),above quoted, has never before been construed since its enactment in 1965. Acts 59th Leg., Ch. 402, p. 830. Clearly, theuse of the income from the trust will be a use for the benefit of the City of Flatonia and

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thereforea use for a public purpose. Thus, we conclude that thedevise and bequest in question is exempt from inheritance taxesand you are accordingly so advised. This opinion is expressly limited to the facts presented and isnot to be construed as applying generally to devises and bequests tononprofit cemetery associations.

SUMMARY
Devise and bequest to themembers of theOak Hill Cemetery Endowment Fund Committee as a part of theOak Hill Cemetery Endowment Fund is exempt from inheritance taxunder the submitted facts.

orney General of Texas
Prepared by Marietta McGregor Payne Assistant Attorney General APPROVED: OPINION COMMITTEE Hawthorne Phillips, Chairman Kerns B. Taylor, Co-Chairman W. V. Geppert 2. T. Fortescue III Richard Chote Jim Swearingen
A. J. Carubbi, Jr. ExecutiveAssistant Attorney General

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