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~OP have rubmittod an 

prod bj the ax 

srntatira rr0m your 

oodont, 1 rorido 

l r itr noo Ta r p lrporra l t 

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 laoalth st th* 

tima these tmnarers Vera m&de, rhloh fact la rupportrd by 

his physician’s statdmrnt. .;lthaugtr sarrrri yeera prior to 
Limornblr Coorga ii. Arppcra, ;P&O 2 

lgL2, thr droodsat had 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 

rrportoa girt or tranrrrr mda by tho dooodmt war that or 

(I ohsptor hous or tha spproabate raluo or ~11,000.00, glran to tha Aasrlosn Fiod Cross. 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 

the gift4 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 shsll be 4ubJsot to InhsrLtsnoo taxal sncl ln ths lart ssntsa00 or thlr art1010 prorl4lon 

io audr ror iaposlng bhsritanoo ts108 uador oortsin oonditlona 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, ah8 thar 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 thbr dssth 

ci the grantor, vwdor, or tionor, of 4 matrrlal 

yx.rt cf tls e3t4ta, or lf tts transfer arrdr 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.3 of a flnS1 <iat: lD~tlcn 0: property 

z~da within tvo yasre prior to his daatb, warm aadr by the 

drcsdont in contrzqlatlon of death (oea U. :. 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 1942 in th r l imunt or 

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

thr nattwo O? a final dlrtrlbutlon, and (2) rhothor tha 

ractr 

madr 

ruifioirntl~ OVoroOm the prarumptlon that th8f wor8 

in oontrmplatlon or death, 

Ihst thrrr gift8 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 

his 88tatai", 18 u88d in th8 inh8ritanO8 tal hW8 O? NW 

#tat88 Oth8r than TIX88 88 W811 a8 ill th8 &t8l’lUll R8I8nU8 

Cod8 Of th8 Unitad Stat88 (Tit18 26, 38OflM 6110, U.S.C.A.) 

th8r8 ha8 b88n iitti8 jUdiOiai OOn8id8ratiOn O? th8 e8aIIing 

of th8 phrrr8, and no rt8ndrrdr hat8 brrn rrtsblirhrd by 

whioh 8ny p8rtiOUlsr 8a88 Oan b8 68a8UIYdr )'robably th8 

ilrat judiolal COn8ld8ratiOn Of th8 aran- Of thlr phTa88 

~88 by th8 ~&UWM COUrt Of ~18OOll8h ill hl R8 BbrlilL6’r 

EDtat (172 R. W. 734, 4 A.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 

8ltilarly writtrn 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 is Wh8th8r 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? DC estate, 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? 811 88tat8 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. 

0lJ8 y8ar 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 

that rh8th8r 8 gift 18 8 mt8ri81 Part Of 8n 88tbt8 18 in 

8aOh 0888 a judlolal qU88tiOIl and ?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 &Tamb8r 19401 In t&la lattrr oa88 it is rignlfloant that in holdlng that $JO,O00,00 oonatitutrd a l 8t8rlal part of th8 drord8nt'8 88tat8, OOMid8r8tiOIl WE8 8iT8n t0 th th8 within 

WhiOh th8 88t8t8 OOUld b8 diSpOS8d Of U8r8 fih8 gift8 OOntinU8d. 

111 this FIgard, th8 OOUrt laid: “At that rat8 h8 would bar8 

dl8po88d or all or hle rntlrr 88t.?t8 wlthln a ?8W y8ar8." 

Wi8th8r th8 gift8 ill th8 pr888nt OO88 W8r8 8 mt8rilIl 

p8rt Of th8 d808d8nt'S 88tat8 18, th8r8fOr8 8 judlolal QU88- 

tion whloh mU8t h8r8 b8 d8t8rmin8d by wrigh& all Of tbr ?8Ot8 

end olroumstancrr. It app8arr that 8uoh a d8tarmi.nation Should 

b8 8OT8rn8d PrinOipally by th8 fOllOWin OOIlSid8Z8tiOnr: 

1. Only On8 of 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 th8 gift8 r8pr888nt8 53% 0-f tb 

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 l r8 rould br r8qulr8d to 

dIrtribUt8 111 88t8t8 Of HOr8 than ~0,000.~ 8t th8 rat8 Of 

#~,620.00 par year* 

I: 

ui Of th888 OmSid8mtiOnS t8nd t0 th8 8OnOhiSiOn 

thati th8 al-8 in U88tiOll nn not 8 Mt8ri81 

a P 

art 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 OtM llInOna88d y dPrifUJ t&t t88r. 

turthrr, bd th8 d808d8Jlt had 110 inOOn Wh8t8V8r, 8laOllt 8D. 

8T8r888 iif8tiM WOUid b8 ?8qUhd t0 di8pO88 Of hi8 88tSh8 

wsm gift8 in th8 amount or thrsr mad8 anaualw. 

'-&8?8 18 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 

th18 art1018 that Sift8 mad8 within tW0 y8arS prior t0 th8 

d8t8 Of d88th 8tyL11 br d88m8d to hav8 b88ll aado in OOlIt8ll!$~8- 

tiOn Of d88th 18 nbuttsblr. (if388 Unltad stat88 T. vi81b, inin). h illh8ritNlO8 t8X 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 in point, th8 d8Oi8iOM Of th8 

UnIbd Stats8 SUpr828 CoUrt should b8 ?OllOW8d in COnStrUing 

provI8lons of th8 Tsxss Inheritance Tax Law8 mhich 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; *which the 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 (888 Titlr 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 Just108 tipgh88, 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 raoagBitad 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 pra8U8ptiOB in thr 0888 Or girt8 Wit&¶ tU0 J88r8 

prior to daath. &It thi8 p?88U8ptiOB, by t& rtatPta b@fOM U6, 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 girr pmpro~pti&s*inarpandant 0r mortal 
Bonorebla Oaorga H. Shrppard, Fags 7 

SfiOrd8 tha tart, It fOllOW8 the t tha l tatuta doss 

not l nb r a or girt8 intar ~1~08 nhloh l prlng rrom a 

dlrrannt aotlra. 

rkia~a~ 

A8 ilhStrt%tiQ& tr8II8- 

farm round to ba to purpoaar l 88oolatad 

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 ba a mora 

ooapalllng aotira th8n any thoughts of daa tL 

l . . . Thora 18 no l 8oapa rrom tha naoaa8lty 

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." (Emphnrlr addad) (For othar oa888 888 

Mllllkan v. Unltad Stataa, 283 U, S. 15; Nloho18 

V. Cool&y, 274 U. S. 531; Colorado National Benk 

v. Commission of Intsrnal ihrsnue, 305 u, 8. 23; 

Eiackar v. St. Louis Trust Company, 296 U. 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, $8,000.00 ms glvan to fire 

ralatlrrr on Ikosmbsr 19, 1942, and 18 rrti~rnad a0 Christmar 

prrsrnts. ThlS itaa is mada up of thrurs ElftS in the amount 
iionorablr Caorga h. Sheppard, Paga 8 

of $2,000.00 raoh and two gift8 In tha amount of ~l,OOO.OO 

l aoh. Four of tha flrr raolplantr tharoof had prarlously 

raoalrad gift8 or flnanolal asslstanoa fro3 thr dsordant. 

Gthar ralatlrar hot inoludad had, prior to 1942, bran glvan 

rarylng amounts by tha daoadant. Although tha rroord doar 

not 8hOrr that Chrlrtmar pr888nt8 ln 8IIOUlIt8 88 8Ub8tantial 

a8 thaaa had prior to 1912 barn glean by tha drordant, it 

ha8 bran noted that no Chri8tM8 prr 88Bt8 WhatSvST warm mada 

in tha yaar r0ii0ag. At tha tin0 tbrra girt8 wars mada 

the d4oadant Wa8 in good haalth and t& Only oOn8olouma88 

or daath whloh might be lsputad to hia would lia in “tha 

pramonltlon8 l Bd proaptlngr~ 0r old aga. It l ppaar8, howl var, th8t thasa gift8 wars mad8 Uwough hi8 Rda81ro to reoognizr rpaoial Bead8 and l xiganoiaa or to dlroharga moral obllgatlon8.* 

Or tha tot81 (ift8, $5,000.00 W88 lrada to a Baphaw 

in April, 1942, throu&h tha mBoall8tion Of an iBdabtadna88 

orlginslly oraatad in 1940, fn 1936 tha daoadant had oanoallad 8 largar indabtadna88 (410,125.00~ or a till l aothar 

naphrw in tha 8801 aarmar. Tha orl(linal loan ot $~,OOO.OO 

war prsda ror thr purpoaa 0r halping tha naphaw in'rrtablirhlog a buslnaar . It 8ssm8 apparaot thrrafOr8 that thl8 

$5,000.00 ltan fall8 proprrly rlthln tha daoadant~a daslrr 

‘to hava ohildran, or Othrr8 who may ba tha approprlatr objaot8 of tha dOBOr’8 bounty, lndapandantly 08tabllshad with 

oompatanolaa 0r tlm.lr own.* 

Or tha total, $1.620.00 wa8 glran in monthly paynant8 to a nlaoa during tha yaar 1942. Tha raoord show8 

that thr daoadant had bran giving thla nlaoa rariour amounts 

during tha iii8 yaerr prroading. Thr noord al80 8hows th8t 

this nlsos had lived in the asosdsnt’s home ad a child snd 

x8.3 loft 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‘n the 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 the dscedant 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 mattrrlal part of thr 

drordrnt*r rstatr wltl.ln the meaning of Artlolr 711 

1 

or 

Revlaad Clvll Statutrr of Toxaa, aa aamndad, and (2 that 

(rrgardlrra of the amount lnvolvrd) thr faotr aub;aittrd am 

~ufflolrnt to ovarooa the presumption that three gifts mny 

havr bran madr in oontrmplatlon of drsth a8 prorldrd by eald 

Artiolr. 

Aooordlngly, you an a&lard that it la tha opinion 

of thlr orflor that tha girt8 m&r by thr drordrnt in tha 

amount of h4,620.00 during the year 1912 ma not taxabla 

under thr Inhrrltanor Tax Lawr of Taxar. 

Your8 varl truly 

ATTCRNJ3T OENICRAL OF TqS/7 

JL :mp