OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN

Eonor8blo Ooorgr B. Shrppard oomptrollar of Poblio Aooomntr Allatin,‘hxaxar

Dear 8irr O9lnion lo. 0-6&n Ro: mn0r0n nd0

latter J~OPhave rubmittod an prod bj the ax srntatira rr0m your

oodont,1 rorido

l ritrnoo

Tar plrporrl

at 2, thr **doordrut mda**  **artalu and**  oonrirtlng of (1) oath

who had mcsivrd **yrarioua fincn~i~i**  aYclstakco rrom thr deooaant, riimrgatina for tha par lgL2, el,620.OO. ihosdent ~18 In good laoalthst th* **tima** these tmnarers Vera m&de, rhloh fact la rupportrd by his physician’s statdmrnt. .;lthaugtr sarrrri yeera prior toLimornblr Coorga ii.Arppcra, ;P&O 2

lgL2, thr droodsathad dispoard of hi8 lntrrest in s largs oarosntllr oorporatlon, ha oontlnurd his bwinoas, oivfo, md philanthropic aotlvltlrs, golnd to h14 orflcr saoh d4l 306 rrn& 44 ab aotiro 

### aaabsr or thr Board or Dlrrotirs 0r **two** lsrgr oorpolatlon4. 

### During the 

### year 1943, the only rrportoagirt or tranrrrr mda by tho dooodmt war 

### that or **(I ohsptor**  hous **or** tha **spproabate** 

### raluo or ~11,000.00, glran to tha

### Aasrlosn FiodCross. 

### Tho 

### dooodont’m **sroragr** 

### anwal looms duriw thr tsars 

### 194l,1912 4~3 1943 844 rpproxlutoly #26,000.00. 

### Thorr Is l ppondod 

### to tb sbors ststoasnt or rsots 

### 8 girt sohoduls oorrrlag your0 prior to 1942 snd 8 sohoduls in tabular rorm rhowing all tranmrsrr f’rctm 

### 1930 to 1942. %oh sohodulos or8 submlttod as **tandlng** to &on that thegift4 m4ds duriw the yssr 1942 by tho droodont 

### l rldanord a prior 

### snd ooatlnulng prsctios of hslplug hlr **r8lstfrar** 

### in nr0d or **rinsnoisi** 

### s8818to~00.

krtlolo 

### nl7, Borl8rd civu. atrtutor or TOUS, 44 

### smoadod, dororlkr **property** whI4h shsllbe 4ubJsot to **InhsrL tsnoo**  taxal **sncl ln**  **ths** lart ssntsa00 or 

### thlr art1010 **prorl4lon io**  audr 

### ror iaposlng bhsritanoo **ts108** uador **oortsin oondi**  tlona on **property** tmasrarmd **within tvm**  yam8 prior **to** ths death al thr dsasdsnt, Tha 4a41y414 and iatrrprot4tion or thie last srntmor 

### In itr 

### reletion to thr aborr 

### rtatrd **Bats** 

### 1s ths graramsn 0: this opinion, It prorlaoo:

want trsorfsr as44 by 4 amhor, vendor or donor, ah8thar by drod, &k&; ale iir alit. #hall. unlsar rhoan **to** ths OontmrY, br doomed to hsro hem aads 

### In ccntrmrAatlon of drath and aubjrot to thr 81~0 hr 44 hrrrln prorldsd, 

### if ruah trsnrfar la nsda 4Ithln two (2) ysnrs prior to thbrdssth ci the grantor, vwdor, or tionor,of 4 matrrlal yx.rt cf tls e3t4ta, or lf tts transferarrdr althin such parlod le 1~ the mture of a final dlstrlbutlon bt poy:ertp and rlthcut adequate velue3lr ccz:lderstIon.” (.qhs,sl~ 32:rG)
313 ~rovlslon cry::! t06 8 rsbuttazla prrrunytlor tm t :rxnsfsru of 8 a?terlcl ,-ert 0:' tk.5 Saced3nt'l,33tst3 Or tr~!7.$r3Ps ln the Mtlrr.3of a flnS1 <iat: lD~tlcn 0: property z~dawithin tvo yasre prior tohis daatb, warm aadr by the drcsdont in contrzqlatlon of death (oeaU. :. v. +*rllr,lnfr.3)Jo?

### in this orlcion it 1~ nrcaeaary to dotemine whether

### 379

Iionorabla

**COOr88** H. Sheppard, Fe88 )

ulr litI8

and. by 

### the daoodrnt in 

### 1942inthr l imunt 

### or #lL, 

### t 20.00w8r8 (1) 8 mtrrlal part o? hi8 rstatr or 

### In thrnattwo O? a final dlrtrlbutlon, 

### and (2) rhothor tha ractr madr ruifioirntl~ OVoroOm the 

### prarumptlon that th8f wor8 in oontrmplatlon

### ordeath,
Ihst thrrrgift8 

### asd8 durlog 1942 war8 

### not in 

### the naturr o? a ilnal dlrtributlon 

### o? th8 

### drordrnt’r ratate 880~8 too pstrnt to raquln dlrourrion (a88 lnfra), but whrthrr th8J **OOll8titUt8 “** **8** Mtrrial part **O?** 

### his **88t8t8 ”**  **la** 

### not 80 obvlou8. Althou&h thlr **phrarr,** *a rtrrlal part or 

### his88tatai",**18** u88d **in th8**  inh8ritanO8 tal hW8 O? NW #tat88 Oth8r than **TIX88 88**  W811 a8 illth8 &t8l’lUll R8I8nU8 Cod8 Of th8Unitad Stat88 

### (Tit18 

### 26,38OflM 6110, U.S.C.A.) th8r8 **ha8** b88n iitti8 jUdiOiai OOn8id8ratiOn O? th8 e8aIIing **of** th8 **phrrr8,** andno rt8ndrrdr hat8 **brrn rrtsblirhrd**  

### by whioh 8ny p8rtiOUlsr 8a88 Oan b8 68a8UIYdr )'robablyth8 ilrat judiolal COn8ld8ratiOn Of th8 aran- Of thlr phTa88 ~88 by th8 ~&UWM COUrt Of ~18OOll8h illhl R8 **BbrlilL6 ’** **r** EDtat 

### (172 R. W.

### 734,4A.L.R. 

### 1519). h thi8 Oa#8 th8 oourt had 

### undrr ooMld8r8tlon a ~~18oonri.n kth8ritanor 

### Tax Act (Vilroonrln Lawr, 

### 1913,oh, 

### 643)which bar a prorlrion 8ltilarlywrittrn and lno.ludl.ng thle id8ntiOei phWi88. ti conaidrrln&what Om8titUt88 8 tMtrri81 part O? th8 d808d8lit'r **88t23t8, th8**  OOUrt 

### raid:

**“ Th8**  

### nrxt **qU88tiOn** isWh8th8r th888 **giit8, or**  

### any o? thra, constltut8 a a8trrlal part o? th8 **donor*8** 88tat8. Obviously th8 lm would b8 ti818r of 

### administration if it W8M ml’8 **d8?lnit8** in?ilii@ th8 oharaotrr Or 8128 O? **gi?tS t0**  **b8** d88m8d t0 baT8 b88l'I

mad8 ill

COIit8!dplatiOll

O? drath. blheth8r that 1s practicable or pooeibls wn do not su&&8st.

**“ Ph8** UE8 O? the word 'mSteriS1' dOa not mk8 th8 la?: lmpoaslbla of adolnletra tion. i.htither a gi?t ccnstltutes b mtsrisl pert of a acnor’a astaLe in ls?t a judiolal question. As the Legislature has net attaz~tad tc Gefins

..itk exactness wbt shall be ccosldered 3 mstarlal part C? DCestate, neither shall we. ;tiat question must be left to be drterdad In rsch case 88 it arises.

. . .”
And it ~3 hrld that oooasional gifts Of 4500.00 or ;;l,OOO.OO rhould not,

b8 d88m8d a mataria pert O? 81188tat8 ralu8d 8t $330,000.00. It wa8 also hrld that a018 than f75,000.00 giV8n

### 380

Honarabl8 OIorgr H. Sheppard, Pag8 4



### by th8 d808drnt ill Unit8 Of 35.000.00 8Xkd$10,000.00 Within on8 y88r **prior** to hi8 drath did oonltitutr **a** yltrrial part Of th8 88tat8 

### Md 188 %¶X8bi8.

0lJ8y8ar bt,r, this raw OOUrt 

### had thl8 qU88tiOn 8&B Mdrr OOllSid8r8tiOn (bl R8 St8ph8118011c8 ~Stllt8,

### 177 1. vi. 579). citing th8 !Sbrlin&0888, tb8 oourt rrarrir~d thatrh8th8r 8 gift 18 8 mt8ri81 Part Of 8n 88tbt8 18 in 8aOh 0888

### a judlolal qU88tiOIland ?Urthrr Said: 'Wh118 it lllll8t b8 8dmittrd 

### that th8 ratio th8 gift b88rS to th8 Wbo18 88kt8 18 I t8m illlpOrtallt f8OtOr it 18 not p8r 88 th8 d8t8rmining taOtOr in 8aOh 0188. Tba 81S8 Of th8 gift it88u itr88p8OtiT8 Of th0 8128 Of th8 88bt8 h88 8 dir8Ot b88ra UpOIl th8 4llSW8r. , . ." Th8 8bOT8 Oa888 (b R8 ih81iIi@'8 g8tat8 and h Ii8 St8ph8IASOXl'S l!St8ttr) 

### aI Oit8d

### and qaotrd tr= 8t 18Ii&th in Ob888'r Sxroutrir Tr k!mOnWralth 

### (145 & W. 

### (26) 56) in whhh th8 Opinion -8 by th8 Court Of App8818 Of -lltUOe in **&Tam** b8r 

### 19401 In t&la lattrr oa88 

### it is rignlfloant that inhold

### lngthat$JO,O00,00 oonatitutrda l8t8rlal **part** of th8 drord8nt'8 88tat8, OOMid8r8tiOIl WE8 8iT8n t0 th th8 within WhiOh th8 88t8t8 OOUld b8 diSpOS8d Of U8r8 fih8gift8 OOntinU8d. 111this FIgard, th8 OOUrt laid: “At that rat8 h8 would bar8 dl8po88d or all or hle rntlrr 88t.?t8

### wlthln a ?8Wy8ar8."

Wi8th8r th8 gift8 illth8 pr888nt OO88W8r8 8 mt8rilIl p8rt Of th8 d808d8nt'S 88tat8 18, th8r8fOr8 8 

### judlolal QU88- **tion** 

### whloh mU8th8r8 b8 d8t8rmin8d by wrigh& all Of tbr ?8Ot8 end olroumstancrr. It app8arr that 8uoh a d8tarmi.nationShould b8 8OT8rn8d PrinOipally by th8 fOllOWin OOIlSid8Z8tiOnr:

1. Only On8of the gift8 003prl8iEg the tOt¶l was in BXC886 or ;2,CCG,Co.

2. Ttis one Item included in t&a total in axc8as 0r ;~2,O@O,OC

was In fact a czmalletion of a 

### iS,iCO.OO indebtedness orl,:inelly

creeted In 1Fl.C.
One itsa includ8d i::the total in ttz? azount of $1,620.00 ::a in fact conprlsed of nominal ncnttiy rz)nents aads by th8 d8cQdant t0 a ni808.



### 4. Tha total Of the gifta r8pr888nta Ollly 2s Of the valuation of th8 d808d8lIt'S 8stat8 at tha tima Of his d8ath.iionorablr **horgr** H. kih8ppard, Pagr 5

5. Th8 total Of th8gift8 r8pr888nt8 53% 0-ftb d808d8nt'r inO- during th8 yrar In which t&y w8r8 **lPad8**and did not aOtlSluy r8duO8 th8 n8t worth Of hi8 88tat8.

6. AlppTO~i~t8u ?l?tY lr8 rould br r8qulr8d to dIrtribUt8 11188t8t8 Of HOr8 than ~0,000.~ 8t th8 rat8 Of #~,620.00 par year* I:

ui Of th888 OmSid8mtiOnS t8nd t0 th8 8OnOhiSiOn thatith8 al-8 in U88tiOllnn not 8 Mt8ri81 a Part Of th8 d8- 88d8llt’8 88t8t8. oo?tlmaan omprlll~. lM8oPOh a8 tb, d808d8nt'8 inOOIM dUXim th8 mar in 

### *ioh th8 ait8 War8 Md8
was almOSt tWiO8 88 auoh 88 th8 &i?tS, it **oould k**  argurd th8t not Otiy W8r8 th8 gift8 not 8 Mt8rIal p+¶rt Of th8 88t8t8 but 

### that th8y W8r8 mad8 from d808d8tlt'r inOOm 

### during th8 y88r 19&? and W8r8 a0 part Ot th8 %kn 8XiStlw 88t6t8 at all. Th8 d808d8Bt'8 88kt8 -8 

## l OtMlly

InOna88d dPrifUJ t&t t88r. turthrr, bd th8 d808d8Jlt had 110inOOn Wh8t8V8r, 8laOllt 8D. 8T8r888 iif8tiM WOUid b8 ?8qUhd t0 di8pO88 Of hi8 88tSh8 

### wsm gift8 

### in th8 

### amount 

## or thrsr mad8 

### anaualw.

'-&8?818 n8Xt t0 oonsid8r wb8th8r, l-8&3rdl888 Of th8 ClPOUllt

iZlTOlT8d, th888 gift8 VII8 mad8 in "OOflt8~platiOn Of d8ath8 within ths airadB& of Arti018 7117, R8TiMd CiTil St8tUt88 Of ?8Xa8, 88 am8ndrd. The pr8SUqtiOn Or8Ot8d by th18art1018 that Sift8 mad8 within tW0y8arS prior t0 th8 d8t8Of d88th 8tyL11br d88m8d tohav8 b88ll aado in OOlIt8ll!$~8- tiOnOf d88th 18 nbuttsblr. (if388 Unltad stat88 T. vi81b, inin). h illh8ritNlO8t8X 18 8 “8p8Oia1 t8X” and th8 8t8tUt88 lmposiag it should b8 oonetru8d llb8r8lly In favor or th8 taxpay8r (kwls T. O*Harr, 130 9. Fi.(2d) 379). fn th8 8balnOr Of any T8Xa8 OOUrt d8Oi8iOnS inpoint, th8 d8Oi8iOM Of th8 UnIbd Stats8 SUpr828 CoUrt should b8 ?OllOW8d in COnStrUing provI8lons of th8 Tsxss Inheritance Tax Law8mhich v.erC, prior to thair adoption In Texas, included In the Federal law. (53s Blaoknon v. Hanson, 169 5. b. (26) 962.)

A 18adIng case ir; *whichthe LnIted ZtRtSS >U;I‘E?B Court considrrsd the question of rifts or transfers ylda 1:~ cont8mpletIon of death aa provId8d In the kt8ru81 &venue tid8 (888Titlr 26, SgctIon 8110, V.S.C.X.) Is United Ltatez ve r:‘8lls, (283 U. S. 102), fn which an extended dISOuszIon Of the m8aning of thlr phrase was vmlttrn by the lot8 ChI8f 

### Just108tipgh88, Th8 ?OllOWine 8XO8rptll from this Opinion a18 drrmrd to hav8 a dirrot braring on thr instant Oa88:Honorable OIorge b, Sheppard, Psga 

### 6

orrtain fundaarntal oonrid~rrtlonr. 

### It is raoag**Bitad** that the referonce ia

### not to tha ganaral l xpaotatlon of daath whloh all l 

### ntartaln. It aunt ba a partlouhr aonoarn, giving 

### rlra to a datlnlta 

### motirr
. maneerr **in Oontuputioa**  or 

### bath ora’l&dad within tha 8am oatagory, ror tha par~ora of taratlon, rlth trrnriarr lntandad to **take** 

### 8rr809

## at or 

## 8rt8r th8 daath or th8 tMB8-

‘Iaaa, **brtr88B tha**  **tnnrfar** and 

### darth,18 raao&- nlnd by tbr 

### 8tatdory prOvl8lOn Onat@ 8 pra

### 8U8ptiOB in thr 0888 Orgirt8 Wit&¶ tU0 J88r8 prior to daath. &It **thi8** 

### p?88U8ptiOB, by t& 

### rtatPta 

### b@fOMU6, 

### 18 OXpr888)J l tatad 

### t0 ba 

### 8 nbuttab18 ona, **and** tha aara faot that drrth **8MU88** avan 

### 8hOrtl.f **8it.r** tha gift 

### dOa not datarnlna 

### l baolataly that lt 

### 18 in oontamplation ot daath.

. . ."A8 thr 

### te8t. d88rdta V8WiIlR 

## OirOM8teBO88 18 **alwar to**  **br found**  **in** 

### 8Otlv8, It o86uot ba mid th8t the datamlnatlta mtlrr f8 laokin srr@ly 

### baOau8e 0r tha absrnos of a consolousn~is thatdeath le iaminent. 

### monltlonr and 

### ua age 

### msy girrpmpro~pti&s*inarpandant 0r mortalBonorebla Oaorga H. Shrppard, Fags 7

**SfiOrd8** tha **tart, It**  **fOllOW8 the**  **t** tha l **tatuta** doss not l nb raor

girt8 intar ~1~08 nhloh 

### l prlng rrom a dlrrannt aotlra.rkia~a~ A8 **ilhStrt%tiQ& tr8II8-**  **farm round**  to ba to purpoaar l88oolatad with llfa, mthrr th8B rlth tha dlrtrlbotlon of proparty in antlolpatlon of daath, tha **Corarnaant**

BOt OrhrU8tiVS. Thr plWpO888 rhloh B8l b8 rartad

without partloular oon8ldar8tlon 0r tit avant TbSrS My b8 t68 darilr t0 r8006BiZS 8DSOi81 Birds or 

### l xlganola8 or to dlrohar60 moral obll6atloonr. pha gratlilcatlon

## 0r ruoh da8ina nay baa mora ooapalllngaotira th8n **any** thoughts of daatL

l. . . Thora 18 no l8oapa **rrom**thanaoaa8lty or oaretully 8OIWthiZiIU thr olraumtanoa8 **or** 88oh oa88 to dataot tha Qalnant aotlra of tha donor la th light of hl b dlly and manta1 sondltlon, and thar gira

# l

tiao: tt tha manifart purpoar Of tha rtatuta." (Emphnrlraddad) (Forothar oa888 888 Mllllkan v. Unltad Stataa, 283U, S. 15; Nloho18 V. Cool&y, 274U. S. 531; Colorado National Benk v. Commission of Intsrnal **ihrsnue,** 305 u, 8. 23; Eiackar v. St. Louis Trust Company, 296U. 8. 16.) u8inf the above excerpt8 08 fl &da3 ma lnquirin& into the deoadent’s sotlves pro;n,ntiq the gifts In tlia present case, consideration has been piven to the principal itex cozprialng the @iits a8 set forth in tha abov8 agreed Satamsnt **of Facts.** 

Of tha sotal gifts, $8,000.00ms glvan to fire ralatlrrr on Ikosmbsr 19, 1942, and 18 rrti~rnad a0 Christmar prrsrnts. ThlS itaa is madaup of thrurs ElftS in the amountiionorablr Caorga h. Sheppard, Paga 8

of $2,000.00 raoh and two gift8 In thaamount of ~l,OOO.OO l aoh. Four of tha flrr raolplantr tharoof had prarlously raoalrad gift8 or flnanolalasslstanoa fro3 thr dsordant. Gthar 

### ralatlrarhot inoludadhad,

### prior to 1942, bran glvan rarylng amounts by tha daoadant. Although tha rroord 

### doar not 8hOrrthat Chrlrtmarpr888nt8 ln 8IIOUlIt8 88 8Ub8tantial a8 thaaa had prior to 1912 barn glean by tha drordant, it ha8 bran noted that no Chri8tM8 prr88Bt8WhatSvST warm mada in tha

### yaarr0ii0ag. At **tha** tin0 tbrragirt8 wars mada thed4oadant Wa8 in**good**haalth and t& Only oOn8olouma88 or daath whloh 

### might **be** lsputad **to** hia **would**lia 

### in “tha pramonltlon8lBd proaptlngr~ 0r old aga. Itl ppaar8, howl var, th8t thasagift8 

### wars mad8 Uwough hi8 Rda81ro to reoognizr rpaoialBead8 and

### l xiganoiaa or to **dlroharga** moral obllgatlon8.*



### Ortha tot81 (ift8, $5,000.00 

### W88**lrada**to 

### a Baphaw inApril, 1942, throu&h tha mBoall8tion Of an iBdabtadna88 orlginslly oraatad in 1940, **fn** 1936 **tha** 

### daoadant had oanoallad 8 largar indabtadna88 (410,125.00~oratill l aothar naphrw in tha 8801 aarmar. Tha orl(linal loan ot $~,OOO.OO war **prsda**ror thr purpoaa

## 0r halping thanaphaw in'rrtablirhlog a buslnaar

. It 8ssm8 apparaot thrrafOr8 that thl8 

### $5,000.00ltanfall8 proprrly rlthln 

### thadaoadant~a daslrr ‘to hava ohildran, or Othrr8who 

### mayba tha approprlatr objaot8 of tha dOBOr’8 bounty, lndapandantly08tabllshad with oompatanolaa 0r tlm.lrown.*

Or tha total, $1.620.00 wa8 glran in monthly paynant8 to a nlaoa during tha yaar 1942. Tha raoord show8 that thr daoadanthad bran giving thla nlaoa rariour amounts during tha iii8yaerr prroading. Thr noord al80 8hows th8t this nlsos had lived in the asosdsnt’s homead a child snd x8.3loft a 

### widow about 1930 kith two sons to maintain tend 

### 6auoat8. It aesms enparent that the motlvr of this flnanolal assistance llils tha deoedsnt’s desire to ”discharge moral oblipetiona”

. L‘nthe vhole, it ay,paara that thaso *era bona fide gifts inter vlvna i-2 ti;?t they ware asds for purposes “assocletsd ulth lifs”

. The record renals th3t the drcsd*nt recognized moral obll~atlons to all of his relstivrs. In visa of the daosdrnt’s wealth and lnoomr tbar gifts were net unusual. Certainly, they are not in a naturr of “a tsatamsntary d18posltionR, and do not evldsnoe any attampt on thr pert of thedscedant to wads the inheritanoe tez.Honorsblr George H. Shrppard, Fsga 9

Tha ibrogolng consldrrod, lt is conaludrd that (1) tha gifta In qurrtlon mrr not a mattrrlalpart of thr drordrnt*r rstatrwltl.lnthe meaning of Artlolr 7111

## or Revlaad Clvll Statutrr of Toxaa, aa

### aamndad, and (2 that (rrgardlrraof 

### the amount **lnvolvrd)** thr faotr **aub;aittrd am**  ~ufflolrnt to ovarooa the presumption that three gifts mny havr branmadr in oontrmplatlon of drsth a8 prorldrd by eald **Artiolr.** Aooordlngly, **you an**  **a&lard** 

### that it la tha opinion 

### of thlrorflor that tha

## girt8 m&r by thr drordrnt 

## in tha amount of h4,620.00 during theyear 1912 ma not taxabla **under** thr Inhrrltanor Tax Lawr of Taxar.
Your8 varl truly

**ATTCRNJ3T OENICRAL**  **OF TqS/7** 

JL:mp