OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

Honorable George H. Sheppard 

Comptroller of Public Acoounts 

Austin, Texas 

/ 

De8r Sir: 

to time, ana-no complete record was kept of them. 

Several years before his death Edwards made s 

will in which he provided that his wife, Mollie C. Edwards, 

should receive 8 life income of $250.00 a month, and that 

the balance of the property should go to his son. His wife 
Honorable George H. Sheppard, Page 2 

learned about this will and oonrulted with attorneys with 

the objeot of getting the will ohanged or of being prepared for a contest of the will upon the death of Edwards, 

Then Edwards exeauted a gene=1 power of attorney 

to his son, who lmmedlatelp began to dispose of Large amounts 

of the partnership property. It appears that this was contrary to Edwarda vlrher and vlevs, and a suit vas filed by 

him against the son to restrain further disposition of ths 

partnership property and to can041 the power of attorney. 

The son filed a oross-aotlon reeking an accounting of partnernhlp affairs from the date of his mother's death, some 

time prior to 1918. 

At this time, January 194:. Mrs. Edwards made a 

oontraot with a firm of attorneys, to represent me ln all 

matters relating to the interest I ovn ln the oommunlty estate of my.husband, C. 0. Iklvard8, and myself, and any and 

all other properties or right I may have by reason of oontraots, oonveyanoes, villa or othervlae ln the property of 

c. 0. Edv8rds." Thlr oontraot further provIdedI 

"For such servloes to be rendered, I hereby 

transfer and assign unto said attorneys an undlvlded one-fourth interest ln any and all propartier I may obtain, whether by suit, oompromlse 

or oonv4yanas fr0m.C. 0. Edvardr or his estate, 

8nd from our oannrmnity estate." 

With affairs in this oondltlon, ~&Wards deolded to 

revoke his will referred to above, and to distribute his 

prop=rtr. On April 27, 1940, he executed an instrument oonve Lng to his wife, Mollle C. Edwards, property valued at 

&26.91, and oonveylng the balanoe of hlu property to 

The ~onveyanoe reserved to &ivards all rents on 

the reai eatate during his lifetime. Thls oonvey8nee v8s 

ratified by the oourt ln the aooounting suit in August 1940. 

The separate property, and the oommunity property of Edwards 

and Hollle C. Edwards, were so Intermingled that It vs.8 lmpossible to separate them. This was further oompllosted by 

the withdrawals that had been made by gdvards and his son 

from the partnership bualneaa. The final result, the oonveyanoe of Apr:l 27, 1940, seems to have been 811 arbitrary 

L 
Iionorable George Ii. Sheppard, P8g4 3 

dlvlslon of the properties regardless of whether they v4r4 

54parat4 or octmnmlty. 

Edvmds died on April 10, 19'11. Mrs. Edwards 

and her attorneys considered that the work of the attorney8 

had been the oause of her reoeivlng the properties transferred to her, and, after the death of Edwards, she transferred to the attorneys one-fourth of the properties vhloh 

she had reoelved. 

It is oonoeded by representatives of the estate 

tit the transfer of April 1940 was made In oontemplation 

of death, and 1s therefore taxable; and that It may be oonsldered 85 8 trensfer of Edwards' separate property. 

The question presented 1s: 

Should lnherltanoe tax be ocuuputed upon the entire mount of property which 

r 

ssed to Mrs. Edwards under 

the oonv4ynno4 of April 27, 19 0, or should the attorneys* 

fees be deduoted before oomputIng the tax? 

Artlole 7117, V.A.C.S., levies a 5uao45sion tax 

upon property vhloh shall be oonveyed In oontemplatlon of 

death as well as upon property which shall pans by will or 

by the laws of desoent and distribution. 

Art1014 7125, V.A.C.S. defines "the only deduatlons permS.ssibLe under this &vc ass 1 

11 

the debts due 

by est8te; (2) funeral expensesj 3 expenses inoldent to the last llln455 of the deoeased, vhIoh shall be 

unpaid at the time of deathj (4) all taxes due at the time 

of the death of the deoedent; (5) attorneg~a fees and Court 

costs aoorulng ln conneatlon with the rss4~sing and 001144- 

tlon of. lnherlta~e taxes; and (6) an amount equal to the 

value of any property formlng a psrt of the gross 45t4te 

situated in the United States reaelved from any person who 

dies within 5 years prior to the death of the deaedent, etc. 

These deduatlona are quite speolflcally defined, 

and the attorney's fees her&in question do not ~0514 vlthIn the term4 of any of them. The taxpa r, however, Is oontendlng that ah6 did not reoeivs 4186,1 !? 6&S worth of property, but only Three-fourths of this amount; that her sltuatlon 15 analogous to r4041ving property encumbered by a 

mortgage. 
, 

Bonor8ble George xi. Sheppard, Page 4 

We are unable to find any ease authority In 

Tex55 direotly on the question presented, and there 544m 

to be but few suah 45s45 frcm other jurlsdlotlons. These, 

however, appear to establish the rule that amounts expended by heirs or legatees or donees In an attempt to 

establish their alleged rights as.nnot be deduoted in makA.L.R. 626, 61 C.J. 1705 Sea. 2593. So a150, th?%i?int 

lng an a55455m4nt for 5uoc4s5lon tax purpo545. 

paid to attorneys by the done8 of a gift oaus'e aortls, in 

protooting the gift against the claim of the administrator 

that the property belongs to the estate, IS not deductible 

from the amount subject tc lnherltanoe taxes agalnat the 

donee. People v. Estate of R41114 Klein, 359 Ill. 31, 193 

H.E. 460, 96 A.L.R. 622. The oourt there said: 

"t!hs attornay fee ~88 not incurred by the admlnlstwtor and van not a part of the oosts and 

4xp4n545 of admlnl5tratlon. It may have depleted the gift vhioh the done4 vas entitled to 

r4041v4, but did not diminish Its mount et the 

time It van pvpde. The gift was estebllshe& by 

the facts shown to exist et the time It was smde, 

and If Xargaret Miller took iit all she took et 

that time, aad It necessarily follows that ihe 

took the whole amount of the gift. The m455ur4 

of the tax us5 dependent upon the value of the 

interest she reoelved by the gift r4gardl45s of 

whether or not she was subsequently oalled upon 

to inaur an expense in protooting her right to it." 

Llkevlse It has been held that expenses of heirs in 

5uoc455fully ettaoking 8 will may not be deduated in determlnlng the amount subject to lnherlt8nae tax. 28 Am. Jur. 

123, Sec. 247. 

Ca54s of mmpromlse of a will contest are olos4ly 

analogous to the question herein oonsl.dered. Rote the language of the Illlnol5 Suprene Court in Re Qraves Estate, 242 

Ill. 212, 8g R.S. 978, 979: 

"The tax la not upon the estate of the deoedent, 

but upon the right of 5uoo455lon, and It aoorues 

at the ssme time the estate veeta -- that 15, upon 

the daath of the decessed. Queetlone may arl54 

as to the persons In whom the title vests, and 
Honorable tIeorg4 H. sheppsrd, Page 5 

suoh questions may affeot the asmunt of the 

tax and the perron whose estate sball be 

chargeable with it; but when those questiona 

me flnally determIned, their determlnatlon 

relates to the time of the deoedent's death. 

No ohang45 of title, transfers, or agr44~4nt5 

of those who suoceed to the estate, among them841v45 or with strangers, oan affeot the tax. 

All questions oono4rnlng it must be detemLned 

as of the deoedent~s death. 

II The statute r4qu.lr45 all of ths properiy*o; the estate to be appraised at its fair 

market value. 'the V81U4 of the estate vhloh 

pa5545 15 the value 50 ascertained 1455 the lndebtedness of the deoedent and the expenses of 

admin15tratlonr Whatever lltlgatlon may ooour 

between tho54 who suooeed to the estate 85 to 

their respeotlve rights, or between different 

olalmants of interests, oannot affeat suoh 

velue. The fair market value 50 ascertained 

is the ba5i5 upon vhloh the amount of the tax 

must be fixed. Unjust claims may be made agblnst 

those suaoeedlng to the estate, and they may be 

put to great expense in defending their property, 

but the value of the property or of their respeotive interests In the property Is not thereby affeoted." 

~mne v. bnn, 162 S.W. (2) 117 (writ of error refused), is the only a&se ia Texas passing on the deduatlb&lltg o: an smount paid in oompromlse of 8 will oontest. 

refusing the deduotlon, the Court seldr 

I R4gardl45s of ths agreement which brought 

ii ;b&t, the feat resA.ns that the will of the 

decedent was probated and by the term of it the 

appellant reoelved 811 of the estate. Without 

probatlng of the will she would have got no part 

of the estate. By sgreelng for the oontestant 

to take a part of the estate whioh the will gave 

her, she puroh854d her pea04 and t$ereby scoured 

unquestioned title to the bal8nos. 
Honorable Qeorge Ii. Sheppard, Peg8 6 

in ~-4 utmtburn's Eatate, ,152 R.Y. 93, 46 I.E. 

315, ooncerned a alaIm for deduotlon of sttorney’s fees 

lnourred by the 5u4445sful contestants of the will. The 

Court said: 

"It was not e olaim existing against the deaedent or his property. The tax imposed by the 

statute 15 upon the interests transferred by 

will or under the intestate l&v of the state, 

The devolutlon of the property and the right 

of the state have their orl.gia et th4 54514 

moment of time. The asoertalnment of the velue of the taxable interest and the fixing of 

the tax necessarily takes plaoe subsequent to 

the death. But the guide is the value at the 

time of the death, when the interests ver4 aoqulred. The fk3Ot t&t 8~41&l.lt8 VGl’4 DUt t0 

en54 in 8504rt5ln their rlRht5, and ver4 45~ 

iled in 4xp4n5lv4 llt&stlon to obtain thea, 

was their misfortune. It dld not dlmlnleh the 

viQu4 of the laterests vhloh devolved upon them 

on Uestburn’r death. It van 8 1055, but 

The attorneys fees ver4 not lnoumed by the administrator end are not, therefore, allovable es an exp4n54 and oost of admlnlstratlon. The obligation for 

these fees was not ore&ted by the deoedent and 4annot be 

4onsldered 8 oharge agelnst him or his estate. It in true 

thatMrs.ZkWards ~45 put to anexpense, but thstvas an 

43gens43s~ auoert&nlng her rlght to ~404ive 8ny psrt of 

She 

of A rll 2j 1940 

takes, if et all, under the oanveyanoe 

)&166.91: and 

She aotually reaelved property worth 

iltle to that property vested in her upan execution and delivery of the transfer by Edwards. She 

exsrolsed dcminlon and oontrol over that entire amount, 

and disposed of the part of it aonveyed to the sttorneya. 

liad the matter been a will aontest, vhlah ah4 s8em3 to 

hava oontempleted should it have beoome neoessbry, there 

ts PO question that ah4 would not have been sntltled to 

a deduatlon of attorney~s fO45. me fact that the oonteet 

took another form cannot alter the sltuatlon. 
Honorable George IL Sheppard, page 7 

Therefore, it 15 our opinion th8t the attorney~s 

~h;5~ question should not be deduoted before ocnnputlng 

The entire amount reoelved by Mrs. Edwards under 

the oon;eyanoe is the basis of the tax. Any other rule 

would p8mit litig8ting 8kIUGntS t0 oonsume an entire estate, oompletely defeating the State's right to taxes. 

We return herewith your file on this estate. 

Very truly yours 

AImif 

Enol,. 

ATTORNEY B or TEXAS 

BY 

Assistant