. .

E 

## ATTORNEY GENERAI.

OF TEXAS

September 7, 1961

Honorable Robert S. Calvert OpinionNo. WW-1134 Comptrollerof PublicAccounts Capitol Station Re: Deductibility for inheriAustin, Texas tance tax purposes of administrationexpenses incurred in connection with the administration of the entire general Dear Mr. Calvert: community estate.

You have requested, that we advise you as to whether fees of the executor,administrator,accountant, appraiser and probate court costs shouldbe allowed in full as a deduction for inheritance tax purposesupon the death of the first spouse in those
cases in which there is an administrationof all of the general community estate.

All of the fees enumeratedbyyou and the probate court costsmay properly ‘be referred to as expenses of administration and, except in certain circumstanceswhich we will specifically note, the same rules as to deductibility for inheritancetax purposes will apply.

In many instances, with certain exceptionsnot pertinent to your question,lthe entire community estate, and net merely the decedent’s interest therein, is subject to administration upon the death of eithermember of the community. 14-B Tex.Jur. 185, Decedent’sEstates, Sec. 1126. It ,so happens that the cases we will hereafter discusswere concernedwith fact situations in which thehusband predeceased the wife; however, the conclusions
we draw from these cases would be same if the wife dies first and if the entire community estate is subjected to administration at her death.

It has been held that the community oronertv 1~s generally regarded as belonging to the estate of the deceasedhusband, subject to administrationby his executor and tne payment of his or the community debts. Therefore, there can be nq,dismembermentof the

::, ’ For a discussion of various types of administrationunder the Probate Code see "Community Property in the Administration of Estates", 33 T.L.R. 1012 and "Probate Code Changes in Administration of Community Property", 34 T.L.R. 1012.Honorable Robert S. Calvert, Page 2 OpinionNo. WW-1134

estate for administrationpurposes. Lovejoy v. Cockrell, 63 S.W.2d 1009 (Comm.App.,1933); Tracy v. Lion Oil Co., 312 S.W.2d 562, (Civ.App. 1958,no writ history); Goggans v. Simmons, 319 S.W.2d 442 (Civ.App. 1959, error ref., n.r.e.).

Under Article 3630,V.C.S., as that article stoodprior to the adoption of the Probate Code, it was provided that until partition of communityproperty is applied for by the surviving spouse and made, "the executor or administratorof the deceased shall recover possession of all such commonproperty and hold the same in trust2for the benefit of the creditors and others entitled thereto."

It has been stated that the fact that the communityproperty is subjectto the debts of the deceasedhusband and to administrationby his executormay be regarded as an elementary principleunder the laws of Texas. Nesbitt v. First National Bank of San Angelo, 108 S.W.2d 318, 320 (Civ.App.,1937, no writ history). See also Speer'sLaw of Marital Rights in Texas, 3rd Ed. 820, Sec. 657. Under the decision in Jenkins v. First National Bank of Coleman, 101 S.W.2d 845 (Civ.App.1937, no writ history), the rule would be applicablenot only to estates administeredunder the jurisdictionof probate courts but also to estates administered by independent executors.

In view of these principles, it has been held that where the entire communityestate has been subjected to administration by the executor of a deceasedhusband, only one-half of the administration expenseswas attributable to the decedent'sportion of the estate and that, therefore, only one-half could be deducted in computing the Federal estate tax. Lang's Estate v. Commissioner of InternalRevenue, 97 F.2d 867, 872 (C.C.A.gth, 1938); Estate of Oscar Leavy, 42 B.T.A. 991 (1940); Schumacherv. Commissioner, 8 T.Ct. 453 (1947). In the case last cited, only one-half of the attorney's feespaid for assistance in probate work were allowed
as a deduction in determiningthe estate tax on his portion of the communityproperty. Also allowed as a deduction were one-half of the payments for accounting servicesand one-half of the executor's fees.

We are in accord with the results reached in these decisions and think them applicable in determiningallowable deductions for Texas inheritancetaxes. However, in certain instances, even though the entire community estate is subject to administration, with the result that only one-half of the general expenses of the

2 Article 3630 was omitted in the Probate Code, but partitionmay still be had. See 33 T.L.R. 1012, 1025.. . .

Honorable Robert S. Calvert, Page 

### 3

administrationare deductible from the decedent's one-half of the communityproperty for inheritance tax purposes, where an attorney's fee is paid by the estate for services in connectionwith Federal and State3 death taxes, we are of the opinion that such amount OpinionNo. 

### W-1134

shouldbe deductible in full since it is attributable entirely to the decedent's share of the communityproperty. This was the result reached in Lang's Estate, supra.

Our holding on this point as to the ded,Actibility of only onehalf of the expenses of administrationis limited to those instances in which the administrationof both shareswas necessary for the settlementof the affairs of the entire community,as for example where it was necessary to determine the amounts of communitydebts and liquidateassets to pay them. If the administrationof the community is totally unnecessary except for the purpose of facilitating the computationand payment of Federal and State death taxes due by the estate of the decedent,we are of the opinion that the entire expenses of the administration shouldbe allowed as a deduction. Successionof Helis, 

### 75 So.2d 221 (La.Sup., 19%).

_

In those instances in which the decedentpossessed separate property as well as communityproperty, the expenses of administration shouldbe apportionedbetween the separate and communityproperty in accordancewith the value of the decedent's estate in computing inheritance taxes. Re Coffee'sEstate, 120 P.2d 

### 661 (Cal.Sup.

### 1.941).The Goggans case, supra, is a Texas case which has reached the same result as to apportioningadministration expenses. We quote the following excerpt frompage 

### 446:

"The otherpoints relate to charging the community estate with the funeral expenses of the testator, and to charging the expenses of administrationproportionately to the separate estate of the testator and community estate.

"It seems to be the law that funeral expenses of a deceased spouse in a reasonable amount are primarily chargeable to the community estate. Goldbergv. Zellner, Tex.Com.App., 235 S.W. 870; Norwood v. Farmers& MerchantsNat. Bank of Abilene, Tex.Civ.App., 

### 145 S.W.2d 1100, error refused;Richardsonv. McCloskey, Tex. Com.App., 

### 276 S.W. 680; Hacker v. Piper, Tex.Civ.App., 2 S.W.2d 997.

3 Article 14.10, Ch. 14, Title 122A, 20-A Tax.-Gen ,V.A.T.S.; expressly provides that "attorney's fees and Court costs accruing in connectionwith the assessing and collecting of taxes provided for under this chapter.

. ." shall be deductible.- -.

Honorable Robert S. Calvert, Page 4 Opinion No. 

### WW-1134

"Nor do we perceive any error in the action of the court in charging expenses of administrationproportionately to the separate estate of the deceased and the community estate. Appellant inveighs against the practice of administeringon the estates of livingpersons and charging them with administration expenses. The decisions,however,
seem to authorizewhat was done in this case. 14-B Tex.Jur.,p. 

### 185,
sec. 

### 11~6;Huth v. Huth, Tex.Civ. APP., 

### 187 S.W.523;Norwood v. Farmers & MerchantsNat. Bank of Abilene, supra;Lovejoy v. Cockrell, Tex.Com.App.,

### 63 S.W.2d 1009."
Article 14.10, supra, allows the full deduction of funeral expenses. Other than this, the above stated rules of apportioning expenses of administrationwould be determiniativeof the amount of allowable deductions for inheritancetax purposes.

SUMMARY

Where the entire communityestate is subjectedto administration,only one-half of the general administrationexpenses are attributableto the decedent'sportion of the estate. Therefore only one-half of such expenses are deductible for inheritance tax purposes. However, if administration of the community is unnecessary except for the purpose of facilitating the computationand payment of Federal and State death taxes, the entire expenses of administrationare deductible. Attorney's feepaid by the estate for services solely in connectionwith Federal and State taxes are deductible in full. If the decedent's estate is composed of both separateand community property, the expenses of administration should be apportionedbetween the decedent's separateand communitypropertyHonorable Robert S. Calvert, Page 

### 5 OpinionNo. 

### WW-1134

in accordancewith thevalue thereof and the allowable deduction for inheritance tax purposes computed In accordance with such apportionment. a
Very truly yours,

WILL WILSON Attorney General of Texas

MMcGP:jp

APPROVED:

OPINION COMMITTEE: W. V. Geppert, Chairman

W. E. Allen Gordon C. Cass Robert T. Lewis F. C. Jack Goodman

REVIEWED FOR THE ATTORNEY GENERAL By: Howard W. Mays