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Honorable Robert S. Calvert Opinion No, WW-1141 

Comptroller of Public Accounts 

Capitol Station Re: Exemption from inheritance 

Austin, Texas tax of devise to an Oklahoma charitable trust 

Dear Mr. Calvert: under submitted facts. 

You have requested that we advise you as to whether a devise to an Oklahoma charitable trust is exempt from an inheritance 

tax by virtue of that portion of Article 14.06, 20-A, Tax.-Gen., 

Vernon’s Annotated Texas Statutes, which reads as follows: 

“Provided, further, that if the 

property so passing is to or for the 

use of a religious, educational, or 

charitable organization which conducts its operations on a regional 

basis, one such region of which includes the State of Texas, or any 

part thereof, then a bequest, devise 

or gift to be used within such region shall be deemed to be used 

within this state. 

“For purposes of this paragraph 

a region shall comurise not more 

than flve contiguous states, either 

in whole or in part, one of which 

is the State of Texas. 

“For purposes of this paragraph, 

a religious, educational, or charitable organization shall Include, 

but not be limited to, a youth program of physical fitness, character 

development, and citizenship training or like program.” 

In connection with your request you have advised us of 

the following facts. Charles Mortbn Share, ,hereinafter.:referred 

to as the decedent, died June 13, 1959, a resident of Woods County, 

Oklahoma. By the residuary clause of his will, the decedent devised Texas real property , valued at $596,361.00, to the “Charles 
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Honorable Robert S. Calvert, Page 2 Opinion No. WW-1141 

Morton Share Trust." 

Prior to his death, the decedent had created this charitable trust in the State of Oklahoma. The trust purposes, as 

stated in the Trust Agreement, are for general charitable purposes. The Trust Agreement does not contain any geographical 

limitations on the expenditure of the trust funds; nor does it 

prescribe any particular method of geographical operation. On 

the other hand, there is no limitation in the Trust Agreement 

which would prevent the Trustees from conducting their operations 

on a regional basis. Indeed, in addition to their general powers, 

the Trustees are specifically authorized to engage or employ any 

persons they may desire to engage or employ for the performance 

of any services to the Trust, including an Executive Director. 

The Trustees are also expressly authorized to erect such buildings 

as they may deem advisable on real property in any location. 

Further, ~the Trustees are authorized to execute all instruments 

necessary or proper for the accomplishment of the purposes of 

the Trust. The Trust Agreement does contain the following provision in Section 2 of Article VI: 

"This agreement is executed and 

delivered in the State of Oklahoma; 

the aitus shall be in that State; 

and it shall be governed by, and 

construed and administered in accordance with the laws of that 

State." 

The Board of Trustees is required to file annual reports 

'in the District Court of Woods County, Oklahoma and furnish copies 

of said reports to the Attorney General of 'the State of Oklahoma. 

The Board of Trustees have agreed to execute a Resolution 

for the purpose of complying with the provisions of Article 14.06 ;a 

above quoted and obtaining an exemption from an inheritance tax. 'C,;, 

Specifically then, the question which you have submitted to us 

is whether the Resolution, if executed* will effectuate exemption ; 

from an inheritance tax, The Resolution reads as follows: 

"RESOLUTION OF THE BOARD OF TRUSTTES OF THE 

CHARLES MORTON SHARE TRUST ADOPTED AT 

SPECIAL MEETING HELD AUGUST -, 1961 

"WHEREAS, Charles Morton Share died testate on 3une 13, 1959, and was a resident 

of the City of Alva, County of Woods, State 

of Oklahoma, at the time of his death and 

owned property situated within the State of 
Honorable Robert S. Calvert, Page 3 Opinion No. WW-1141 

Oklahoma and the State of Texas and 

other states; and 

“WHEREAS, the Charles Morton Share 

Trust is the principal beneficiary of 

the estate of Charles Morton Share, deceased, under his last will and testament, 

and is the devisee and legatee of all 

property owned by the deceased stiuated 

in the State of Texas, together with 

other property situated in other states; 

and 

“WHEREAS, the last will and testament 

of Charles Morton Share, deceased, has 

been duly probated in Cause No. 3569 in 

the County Court of Woods County, Oklahoma, the decree of distribution having 

been entered by said Court on June 27, 

1961, and said decree of distribution 

being now a final order; and 

“WHEREAS, the property of the estate 

situated within the State of Texas is 

now subject to temporary administration 

proceedings in the County Court of 

Ochiltree County, Texas, Cause No. 793, 

and has a value of approximately Six 

Hundred Thousand Dollars ($~oo$oo.oo); 

and 

“WHEREAS, the said Charles Morton 

Share Trust is an organization established by the said Charles Morton Share 

solely for charitable purposes, as evidenced by a certain trust indenture dated 

June 12, 1959, and hereinafter referred 

to as the ‘Trust’ and the Board of Trustees 

of which is -hereinafter referred to as 

the ‘Board’ ; and 

“WHEREAS, said Texas property constitutes a substantial portion of the estate 

of Charles Morton Share, deceased, and 

has received and will continue to receive 

the protection of the laws and government 

of the State of Texas and the Board therefore recognizes a moral obligation to expend and use said income exclusively within a geographical area including the Stated 
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Honorable Robert S. Calvert, Page 4 Opinion No. NW-1141 

of Texas to the end that said expenditures will effect a substantial benefit 

to the people of Texas; and 

“WHEREAS, In order to act upon Its 

desire to expend the Income from the 

Texas property within a geographical 

area Including the State of Texas and 

for the additional~purpose of availing 

Itself of a legal exemption from payment of Inheritance taxes to the State 

of Texas under the provisions of Article 14.06, Title 122-A, Revised Civil 

Statutes of Texas, said Board at a 

special meeting held December 28, 1960, 

adopted a resolutation whereby it irrevocably committed funds accruing to 

the Trust from the Texas property for 

charitable use and expenditure within 

the geographical boundariea of a region 

composed of the States of Texas and 

Oklahoma and bound itself to keep books 

and records separately accounting for 

the income derived from said Texas property; and 

“WHEREAS, administration of the Texas 

property in Cause No. 793 in the County 

Court of Ochiltree County, Texas, will 

be closed as soon as practicable after 

determination of the inheritance tax 

liability, if any, of the estate of 

Charles Morton Share, deceased, to the 

State of Texas, and whereas, on termination of said administration proceedings 

the Texas property shall be transferred 

to the Board and operations of the 

charitable trust will then begin on a 

regional basis within the region comprised of the States of Texas and 

Oklahoma; and 

“WHEREAS, prior to the determination 

of the applicabillty~ of the provisions 

of said Article 14.06, above referred 

to, the appropriate officials of the 

State of Texas have requested of the 

Board certain assurances with respect 

to its manner of operation of said 
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Honorable Robert S. Calvert, Page 5 Opinion No. WW-1141 

trust on a regional basis 60 as to 

enable said officials to accurately 

determine whether said estate of 

Charles Morton Share, deceased, is 

in fact exempt from the inheritance 

tax of the State of Texas; and 

“WHEREAS, the Board desires to 

make said assurances to said officials of the State of Texas, 

“NOW, THEREFORE, IT IS HEREBY RESOLVED: 

“That not less than Five Thousand 

Dollars ($5,000.00) in any one flscal year during the period of ten 

fiscal years immediately following 

the commencement of regional operations nor in the aggregate not less 

than One Hundred Thousand Dollars 

($lOO,OOO.OO) during such period 

shall be expended and disbursed by 

the Board for charitable purposes 

within the geographical limits of 

the State of Texas; and 

“BE IT FURTHER RESOLVED that for 

the purpose of providing a convenient 

method for the appropriate authorities 

of the State of Texas to ascertain 

whether compliance with this Irrevocable 

commitment Is in fact being made, a 

copy of each of the annual reports 

required to be filed -in the District 

Court of Woods County, Oklahoma, 

under the provisions of Article V 

of said trust agreement, shall be 

sent by certified or registered 

United States mall to the Attorney 

General of the State of Texas, 

,,,,, ,,. ,,~.4 .nithln. five (5) days after the date 

on which each such report shall be 

filed in the District Court of 

Woods County, Oklahoma; and 

“BE IT FURTHER RESOLVED that as 

soon as practicable after the commencement of regional operations the 

Board shall designate one or more 

persons, residents of Texas, as Its 
Honorable Robent S. Calvert, Page 6 Opinion No. WW-1141 

agent or agents for the purpose 

of according and facilitating 

contact with the Board ) screening 

applications for benefits, making 

recommendations, and locally facilitating the disbursement of funds 

to charitable institutions and 

facilities located within the 

State of Texas; and 

“BE IT FURTHER RESOLVED that 

jurisdiction of said Trust and 

its Board and venue for trial of 

any action at law or suit in equity 

which may be brought by the State 

of Texas through its Attorney 

General or other appropriate official for any alleged violation of 

the letter or spirit of this resolution shall lie, and by agreement is 

hereby vested, in any court of competent jurisdiction situated within the boundaries of Travis County, 

Texas; and 

“BE IT FURTHER RESOLVED that no 

donation or contribution in any 

form whatever shall be made to any 

charitable institution or facility 

nor shall any charitable facility 

be erected from funds created by 

the Texas properties which excludes 

from its benefits, bounty or operation residents or citizens of the 

State of Texas because of such 

residency or citizenship. 

“BE IT FURTHER RESOLVED that 

the appropriate officials of the 

State of Texas and particularly 

its Attorney General and Comptroller shall and may rely upon 

the truth in fact of all recitations of fact hereinabove set 

forth; and 

“BE IT FURTHER RESOLVED that 

all terms of this resolution shall 

remain forever irrevocable; and 
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Honorable Robert S. Calvert, Page 7 Opinion No. WW-1141 

“BE IT FURTHER RESOLVED that 

copies of the Trust Agreement dated 

June 12, 1959, the Resolution of 

the Board of Trustees adopted on 

December 28, 1960, and of this 

Resolution, all duly certified as 

authentic copies, shall forthwith 

be furnished to the Attorney General 

of the State of Texas.” 

At the outset, we are faced with the question of whether 

a charitable organization must be operating on a regional basis 

at the date of the decedent’s death In order to be entitled to 

exemption. Since in that portion of Article 14.06l which immediately precedes the provisions we are here considering, exemption is allowed where there is an irrevocable commitment for 

use exclusively within this State subsequent to the date of decedent’s death and prior to the payment of the tax, we have concluded that it would be inconsistent with the spirit of the statute to require that the charitable beneficiary be operating on 

a regional basis at the date of the decedent’s death if regional 

operations are effectuated prior to the payment of the tax. 

The second question is whether the proposed Resolution 

and the plan of operations set forth therein constitutes “operations on a regional basis” within the meaning of the statute. 

We think that the Legislative history of Article 14.06, formerly~ 

Article 7122, v.c.s., is pertPnent to a determination of this 

question. Prior to its amendment in 1955, Article 7122 had provided an exemption for property passing “to or for the use of 

any religious, educatlonal or charitable organization when such 

bequest, devise or gift is to be used within this State.” 

This provision had been construed by our courts as requiring the limitation to use within this State to be expressed 

in the will, even though the charitable beneficiary Irrevocably 

committed the devise and bequest to use within this State subseuuentto the death’of the decedent and prior to the payment 

of -the tax. Presbyterian Church In the U; S. v. Sheppard, 198 

S.W.2d 282, (Tex.Civ.App., 1946, error ref., n.r.e.). 

In 1955, Article 7l2'Z was amended by providing, in effect, 

that property passing to religious, educational or charitable 

organizations could gain exemption from Inheritance taxes, even 

though the instrument effectuating transfer did not require that 

This portion of the statute is more fully discussed hereafter. 
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Honorable Robert S. Calvert, Page 8 Opinion No. WW-1141 

the charitable gift be used within this 

committing such gift to use2within this 

ment of inheritance taxes. 

State, by irrevocably 

State prior to the payThe decision in the Presbyterian Church case, supra, was .: 

based on the proposition that the tax accrued as of the date of ; 

death of the decedent and that therefore any subsequent limita- Y 

tion as to use within this State could not effectuate exemption. 

The evident purpose of the 1955 amendment was to allow exemption 

for charitable devises, bequests and gifts if this State will 

receive benefit therefrom, even though the instrument effectuating 

the transfer did not itself require that the charitable devise, 

bequest or gift be used within the State. Mr. Justice Norvell 

recognized the “benefits” doctrine as the basis for exemption 

under our statute even prior to the 1955 amendment. In G.A.C. 

Halff Foundation v. Calvert, 281 S.W.2d 178 (Tex.Civ.App. 1955, 

error ref., n.r.e.), he stated at page 181: 

.The Legislature has thus 

decided that the greater good may 

be served by exempting certain property from taxation, considering 

the use to which it is dedicated. 

A use of property which alleviates 

a burden which the State or Its 

political subdivisions would otherwise necessarily bear at public expense, or a use thereof which f’ul: 

fills or accomplishes the generally 

accepted charitable objectives of 

the people of the State, Is recognized as a proper subject of tax 

exemption by specific legislative 

enactments. . a ,‘I 

In 1959, the 56th Legislature further enlarged charitable 

exemptions by extending the geographical limitations on use and 

thereby departed from the former concept that exemption would be 

accorded char&table devises, bequests and gifts only if their 

,;~p~.w limited to this State. Some remnants of the doctrine of 

benefits remain since the State of Texas must constitute a part 

of the region which is the recipient of the charitable bequest, 

devise or gift. The Legislature did not see fit to provide any 

yardstick for measuring the amount of benefits which this State 

should receive from the charitable organization operating on a 

regional basis; yet it is evident that the Legislature did not 

2 Senate Bill 266, Acts 1955, 54th Leg., Chapter 389, p. 1032. 
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Honorable Robert, S. C’alvert, Page 9 Opinion No. WW-1141 

intend to accord an exemption for all charitable bequests, devises or gifts since this regional exemption provision Is limited 

to regions of not more than five contiguous states, either in 

whole or in part, one of which is the State of Texas, Therefore, 

necessarily the statute contemplates that this State receive some 

benefit before exemption will be allowed. Since we have no fixed 

legislative standard to use as a guide, we are of the opinion 

that each particular case must rest upon its own facts, and that 

if the facts show that this State will receive substantial benefit 

as a result of the regional operations of the charitable organlzation, exemption should be accorded. We turn, therefore, to an 

examination of the benefits which will flow to this State if the 

proposed Resolution is adopted. 

The Resolution recites that the Texas property has a 

value of approximately $~OO,OOO.OO. You have advised us that 

if exemption is, not allowed, ~the Trust will owe an inheritance 

tax in an amount of approximately $71,000.00. 

The specific benefits guaranteed by the resolution are 

the following: 

(1) “. . .the Board recognizes 

a moral obligation to expend and 

use said income [from the Texas 

property_7 exclusively within a 

geographical area including the 

State of Texas to the end that 

said expenditures will effect a 

substantial benefit to the people 

of Texas; . . .‘I 

(2) The Board has irrevocably 

committed funds accruing from the 

Texas property for charitable use 

and expenditure within the geographical boundaries of a region 

composed of the State of Texas 

and Oklahoma and has further bound 

itself to keep books and records 

separately accounting for the lncome derived from the Texas property . 

(3) The Board ;as obligated 

itself to expend . . .not less 

than Five Thousand Dollars. . . 

in any one fiscal year during 

the period of ten fiscal years 

immediately following the 
~ Honorable Robert S. Calvert, Page 10 Opinion No. WW-1141 

commencement of regional operations nor in the aggregate not 

less than One Hundred Thousand 

Dollars. . .during such period. . .‘I 

within the State of Texas. 

(4) The Board has guaranteed 

that no charitable facility will 

be erected from funds created by 

the Texas properties nor Will any 

donation or contribution be made 

from such funds to any charity 

which excludes from its benefits 

resident 6 of the State of Texas 

because of such residency.” 

Under the terms of the resolution, the Board plans to 

commence regional operations by designating “one or more persons, residents of Texas, as its agent or agents for the purpose of according and facilitating contact with the Board, . . 

screening applications for benefits, making recommendations, and 

locally facilitating the disbursement of funds to charitable lnstitutions and facilities located within the State of Texas; . . .’ 

As a further evidence of the Board’s good faith in executing the Resolution in question, the Board has agreed to furnish to the Attorney General of the State of Texas a copy of each 

of the annual reports which the Trust Is required under the provisions of the Trust Agreement to file in the District Court of 

Woods County, Oklahoma. The Board further agrees that shouId any 

suit be brought by the State of Texas for any,,vlolation of the 

letter or spirit of the proposed Resolution, . . . jurisdiction 

of said Trust and its Board and venue. . .of any action . . .shall 

lie... .ln any court of competent jurisdiction. . .” In Travis 

County, Texas. The terms of the Resolution are declared to be 

irrevocable. 

In view of these guarantees, we can only conclude that the 

State of Texas will receive substantial benefit from the regional 

operations of the Trust. 

Although the Board in the Resolution adopted in December,~ 

1960, has created three other regions in addition to the region 

consisting of Texas and Oklahoma, no evidence of the Trustla 

operations within these regions has been submltted to us; and 

we will therefore consider whether regional operations within 

the single region of Oklahoma and Texas satisfy the requirements 

of the statute. The statute refers to a charitable organization 

“which conducts its operations on a regional basis, one such region of which .includes the State’:of Texas, or any. part?thereof. . .‘I 
Honorable Robert S. Calvert, Page 11 Opinion No. WW-1141 

Although national organizations operating on a regional basis are 

clearly within this provision, we do not regard the last quoted 

portion of the statute as requiring the existence of more than 

one region as a requisite to coming within statutory meaning of 

“operations on a regional basis”. Here again, the guide to the 

interpretation of the statute should be the teat of benefits to 

this State; and If the phrase “one such region of which includes 

the State of Texas, or.,any part thereof, . . .” be Interpreted 

as requiring the existence of a national organization divided lnto’ regions, or even an organization not national in scope but 

conducting operations In more than one region, the “benefits” 

test becomes meaningless. It can make no differenae whether there 

is more than one region since no benefits would accrue to the 

State by virtue of the existence of other regions. 

SUMMARY 

A charitable organization need not be operating 

on a regional basis at the date of the decedent’s 

death in order to gain exemption from an inheritance 

tax under Article 14.06, 20-A, Tax. -Gen., V.A.T.S., 

if bona fide regional operations are commenced prior 

to the payment of the tax. Operations on a single 

regional basis satisfy the requirements of the statute If the region Includes the State of Texas, or 

any part thereof, and is comprised of not more than 

five contiguous states. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

MMcGP: jp 

APPROVED: 

OPINION COMMITTEE: 

W. V. Geppert, Chairman 

Henry Braswell 

Riley Eugene Fletcher 

John Reeves 

T. B. Wright 

REVIEWED FOR THE ATTORNEY GENERAL 

By: Houghton Brownlee, Jr.