OFFICE OF THE ATTORNEY GE~~L OF TEXAS
AUSTIN

i-bnoraueGeorge Ef. sheppud 

### Ca@rollar of Pablla4oouda Au&in, %xaO

De8r Slrl

Tour lrttor xoquost. **aubleot** raadr u follow,

tt, Tonr, on t ewrerd of an l



### l od; 8nd the _

lo ouel theî to the DePolohla 

### 1* lnot1tutiea ra u lnhorlt8noo 8 kwm8l 

### B&c ln Erroatorof fho will 

### the olkto. 9%. inoxt ior al8l t8t8 huboo n op8xtrmit urd

ox8mlned.

ëW ha10 r ktr fox lnhe rltanoe

tu pu*



### oat8ta to the twfarlstoro oi tb do00880: 8nd ttio ro!al8l&dr~to the 80Hoaonblo Gooxgo 8. shoppad, z!rgo 8



### %r. EQurQ 5. Boylo8, of IIoustan, who ra resent8 the Flr'atlhtioaal Bank haonrittent iz 

### buik-anopinionin 

### rhlohho holds that tbla mwindor interest ia not taxable for 

### t&o m8aon that it w not be doton&wl at- fhia time whothor or not tbo nophw will 

### etor bon&it in the r+ ulndor or the 86td4, aa hi8 dut&, before 

### the death or

l 

### lther of

the two aiet o rm,

would

ultlmtolf rlaos tho oorptu of this T~uat Eatat in tho hada of the W'slohin 'Faith Ikmo.


### *Youwill finddoha hereto the opinion of 

### l’r. Boyle8 and the oopy oi the last will **and** taatamat of the d@au(LIIed, for your uaa In advii~- ix&g thin daputment whothor or not we have dintrlbutodthe o&ate in a oorrsotmannor 

### ror inheritanor

tax 

### purp6tw."

I2~a prooi& question pntimted by your lotterhaa nblor haul ,B555Od Uson by an apwmto o0ul-t in. Rxaa. Thr p-051~ or 555055bg inme5~00 tu05 intemata, ho, he&mar, and trqenuftyai very nature of tho problem la auah **thct** 110 .parfaot

rolutlan 

### la posriblr. ia etatad by Rotsaror Bagart in 

### hia tmt, *The 

### rAK Of wWt5 urd mlteO8” (1935), 

### vol. 8, IWO 986, ( 879, wha dirfi0titf ht18~OCTI t0 rind 5f3~fi0

mtih0d wbi0h 15 5t th5 aaw tiwe 

### oqultrblo tathollfotoxmstmd~tha porma 

### or : ;eraona to rhoa future lnterosta am llmitsd 5nd 

### yot givoa udequ8t.a

protaotioato 

### the rwenuu of the 

### atate."
'&orethe orentual

### moiplantr oi the taatabor~a bounty am aot 40rinitaiy a5aortainatkat his aoath bsoauw, au in the lmtant 

### oaaa, tbs are nude depmaotttupon ruturv ocntlngenoioa,

the 

### total i

aiorltama tax llabllitamap 

### vary O-~n3id6lrhl say take (2

f dopendingqen 

### (1) tho number or 

### persona who thrlr mlationahip to the featator

### or, 13)- tlw tax examptionor poaalbls t&or8 8uoh a5 oh5rltioa. A5 hflnits rmarbtr

or aimnti adiod8 0r aaaoariae lnhorltmee taxes ugmn thaao unoartsin futura i~ntererta hsvo **bsori**
**ev0lvod** by airierat atutor at 

### difiennt timea.'sow atatma m&a 

### the**tax** on unoarta3.n futun intmosto pysblr **lnuaedi8toly** 

### et the hi&8st wraible r&o (i.e.' UQO~ t&o 

## l

aauaptIoa~th& tha o&tfn~:imat, hmotor lmpm&abl., r1l.l

OOOUT u!zlgh

will m8ult ifi the **gnatsat** tax) with pmf aion for ~run4 ia the weat th0 prop~rtt, aotually mzara to 

### beneflalar&r 6akIng at 

### a lower Mt.. In zw 91.oo*s iiat8te (108.8) 164 klaa. 139, 204 X. k'.84s1 fn Rllrm'8 aad.i5 (1916), 176 A pq 31,lr. l&w, l&2 :I.

Y. t. 458. Ptbor tiatute8d:atingnIahto twwn fsolmioally rented rad **otmtlE.~:ent rwzahdwa**  **m t&**  **tax payable**  **u oa**  **tba a.&21**  0r the teatator in t&o ma0 (ji t awe P !~oatgmlagthe-ynent or the ~tax rider;; but the hrrppd.ag 0r tlu oontln:enopin ,tho oaae o2 a aontln~antxtwiaitraer. canmonwealth v. s'crbr+u'8 Sxaautor (3914),-156;;'y, 877 la 5.~. 9791 In re Rociwrelt, ~(18941 J45 l?.

Ye ~120 Z.Z',i;

x, ~81 ' 25 I ,. 9. A. 4961 Ayore P.~~ch~oago,ntl6 * &t CO.~(Ill*'>-. 19mM) 58 ::.

?s.310 %Illla6a, Omu~llk~loner v. Uallerlurb: (rnonnf 37 9; '3.(i&16.

In other oases, we find the tax,yortpomd, until ?.:'ie ersntual **takers** OGW into poaao8a1on, even upon the taob&mllg vested rovaindora, if the reemlnder,~ though rested ir'a~bjaot~t~ **befouume,** or oponIn&to a&sit o$hard 0r the oha0, ??oorr~-8. cfmlmau*6lth,~

(V~.~l930)lsg s;~

B.'~ 035. .~ .,., : ~~ $~.
?ho history of the cbanglngpmrisiom in tt8" Wmrlturor tarat~tuto of NW York ior the treatment of rutqro oontlngentlntsm*W ( ifew York 0r an estate tax .inl*SO B**rlor** to thd adtigtion b olamrlr illrwtntoa tL rcrlatr of poealblr appromhoa to tha problm. Thlr lo(p islatlve~hlstcry &a traoti lo a moaf intw8af.Ing 

### -r by !',r. cTuotfas~?!ram?oIU

in Zalo&m v* Stale ikx &maIaaIon, (lQZ0) El-5

II. E* 464 at phlgo

467t
"8 , . zinw the enaateon6 et the ‘ Bangor Tax Law in lO(ie(Oh. 483). the ala @f th0 L&a28tuxe **baa boa**  at all 

### times to rPopt a mathod of 1opi.n~

the tax rhlaji

would ba iair to both ,thelife tinant and 

### the fatura interoatand would pmtaot the **revenura~o? fhs**  

### St&e. **Fran** time to tlmo, varlow nethnilm for dobig thin acretriad, 3pcrieaoe revealed tholr defook. Under the orlgi~i 15~ wd ‘tka early 

### omao~n65, the *rerursre to eontfngent rwaindomoa uexe not,taxab~oupon t\io tcatetar*ado&h, PLattor of Cagrs ill N. Y. **m**

. :

:;Hanamble 08orge.H. 8hOpmrb, **Pago** 4

343. ‘l%ey

war. taxable at the t3.n.a what thay veetrtl in porw~r ?a Mtter of Stewart, lS1 II. I, 874. AM tlm z than payable uw om patad upon the value, l8’of **the** testrtti’r death, a? the pmp%rty tMlreIT.d, less ths 1Qlus or tb 

### int8n~n1ng

iii0 l d. 0,. mtt0r 0r CJGCSB, lS4 7:.P. 109. unaor thlr method the xwvt4nio derlvocl rm fh% tax CD the oontin#xttr~s1nd.r wea lesa than it *ould have’bwn hcd the ru6ninaor ” b%eB 8 vetltsa

.eJao*rel-

the stats loat t&e bonofit or the mamy during the porlod intsrvsni~ between the Math af the tcmtator and that OS the ll.rs

tenant. To ovemw this loiia to the state and the di#oriaiPaUarithmroby in 

### favor of 

### the oontin~wt mmdndemon, 

### tha, b&8l.atum pro- I, ,~,,~ vl13al ‘by 

### Cha tar lb84of the Jbtr 

### of 1097 t&at tte tax pye lr on the veatlnfj df tim eontingsnt Ii 1 rezdntler~shoultl

be mu.aumd by the full val?aa of the pro brt aI, of tho testoter*satith, ritllout arauot ng he value oi~tha intervanla&l.iio

f t estate, !:attar

et L%llg4amn, 819 FL Y, 886. Thir statutte,

whlls da Its lkoe eUmirutln8 tM dinorieiaatitmIn favor of **oontlas~ont.ron;eiorxot&** WB iauad t0 fU\rlt i?ll Wioru, ~10@6“Of XOV0BU0, to the Stats. Tax08 ~aroepod oelleotiaor

wha they :

~1~~ : ’ booam duo beoawa lt proved to be ingoasiblo tom tis~srteln

ourmatly whur the ooatt4gonoioe hrrpnea and heneo wtw a tax baoawa paynble.To mn8ay this **doroot** it **ua8** p2cda0a by **Ohapter** 76 of the laws of lt39i that the tax muot be paid u@n the ta&ator*r tlutkt and **t&t** it ehouL4 then bo pdd out **0r** the,

oorpur ‘of

tba srtate at the hlgharr(r a plioabla ‘mt0, With 4 prOVi8iOA tQr patilLs t0 &a rmiaindelrmrm

tbr rycprunwith interort~ if 1t 

### should prove t&t 

### a loeer rata wae **rpsUoabl*** Patter of 7sndmfit 198 X. Y. 69. *IMa prodcion,while iull m#.wiaq the State’6 revSavokod ti

0 nwlndar5ubatthe l xp onao

at 

### E@ho tenant. Mattar of Brw, 178 N. Y. 60% For under thin pat81011 th+ 1lf0 teMnt loat t.h* inow on the full muat deauotad to enaIr@ ptiprpsnt

ar’ths tax on the oontlnwtt 

### romdndrr and the nnalndarrss rooeiro6 rz0m tlw State w th t. intarmt such pa?t:hamof u prqvatl not PO bo ~~~qu.lnd

for tha ultiaato peymosnt of the tax. Themupon 8W rolld to th lifs t*nant *m aiforded by chapter so0 of the Lmaa oi 19U~

. .”RonorableEsorga Hi Shippard, Tags S

. . -MSTINCTIQN

**I** se have **at&ad** tho problem hsre involnd to be t&o esa%asmeat of 1BheritaBoe tax%. upon illt%resta. Ye u80 the term *uncartaln atl~iaeely,

intendlog theroby to InoluQo all interrata when ultlxato l'..ipi.Bt.la poasaraioaoannot be d%flnItc iy **memined at**  the a0dh of tha donor. ma **inma** . not oaly w&t wore teohnioallyknmn to tL0 **otwduo~** law aa ,okntIng%nt

remaInd%re,and 

### l

xoout6ry **tlavlt~es** but also thoao **rw~lnUom,** ah&oh, tbnueh 

### taohnloa:ly V%st%kr ar% 

### l

+bjeot, upon 

### oontIn,~.tmoiea,,to partial or,fmnpl6tsam3tb~0~. so

. far a8 t&O aifliO&iOB~ Of iahOl'ittU%CO tU8. a&?0

0OllQWWd, 

### the tikphydlotal

### di8tin&ioM 6f -01-t prOi!Orty 

### tin botween *nated* and ~0onttiDEttMF retaIn0eraaboulti

heme no ~igniri0~~108~

T%o ArmrIoan Tar fnatltuto, in it% Hemtatoxent of thei law or property ha8 dlaoardsd sntlrelp th% t%zm, noontlnneat

mtdnaar*, uml olaaaIflaaall rexalndwa In

(a) lndof%aalb~yveated; lllwtration: 

### 'to B for llte, m+7alnaer to C anA his heira* - C hae 

### a rsoginder indoteesIbly vested.

~-- (b) v%Stfnl

eubjsot to **&OA** ~rm8twi0nl w0 n for iit0 **ret::clinaer** to the oUl&on ot B' - B has l oil1.d C. C he. i 6~ M!IdRaOr VOStOd 8UbjeOt t0 Open 8ad 1st iB other ohIldr%n born tc D (c) varb~a aubleat to oaimleto~ dereaoane fllustrat~onr It P **r** iir r.shall by will arlpot:t. b:: In :kfii$ lhder 

### ari

of a~- rolntwent~xwnalndet to-Q uul hle heIra* - C has a rmdn4er toot06 t~ ubjeot to ocmpletd, asfemmnoe **by wa**  **sxbroin** cr the ptmer 0r o~~polntmthtoon**fermb on**  **him.**two-oluaas of roma$adorah.va am baca almast

**UQI~C~UUY** ~~~Ulflcdb7 **8tdUta."** - 19 liarvard. Law &3*Iow lee.

“That an 4.t.k In maa1ad.r la V?!.t.d dcea not &up17 a aart.inty that it will **ever** aot\ully take **offset** la persassion,beoauar every rskmIndar oi

. llfo eat&a **or** ice 

### tall la subjaot to uno.rt.lntyla this raapeot, oonsoquanton tha poralbIllt7 that the prao.- ~asnt l kk may o&lot the est~ta In rsfmia

### drr by raason of the drth Oi the r6m.lndefaUJI, or his 

### duth without188~8,ktori~the datsr 

### zdnatloa

or the pprsosdant

satato.* - 31 corpus Wff.E..ugdum 90, S.oe 69, oitjlw oumarou.

T&e modern tmdeno7 to dltsngard the bohalml d1atlnotIon

batwwa "veeto4*md *oont~aPt* rutarc lataraata in ths l

pplloatlan**oi** iabarltuwa or **estats tams**  lo l xa~lIfIad **bf** tha iallawing quetatIoaa~
Yta6alabem arc to bo appraised at tholr pm~ont 

### V.lU.. latter Oft zbormsk1 

### al3 r-Y.

Y. U$l.~;s3. X:44.. T&a7 are sift. ilk. pmsont

In ilxla& fholr telue a0 distlao**tloa** la ti ba drawn tmtwua the o~aasaa U cmaa8rs. **maher** rutad or ooatinmat. (lbhu1. oursj F kntlngsno~ is tha parpoe. of taxation the

%mlmtsd and tha gift in olasaad asl **baoluW.** aratter

o? Tam, W3 Y. Ye 8l.8, lilt IT. H. 9Sl." - Card000 tr in Tn CB ParkarQ Eatata (1919) 886 X. I. 8&O, ieS n. B. 366.
“iv. do not straea the distlnotlon bstwsaa the 

### gift of

. oontl~oat r.mal~d.r **and** 

### the gift of a **vested** ram.ln6.owhioh 

### 1. l ubJaot to dlvastmaat upon 

### the &ppudag of a **matla&6onoy.** 

### %e b4843 ws a40i410n 

### pa5ariiy UPM the 

### mtumUI~ praotloalafiaot of tbr oontlngaaop.~- Lahmm, la 3s Zragan (1939) 873 N. Y. 337, 9 ?L X. fhd, 953, 111)

h. L, R. k430

at p. ZY%
*The inosoapablo ratl0n.l. oi thaa daoisIoa (xl.inv. U. Se, &?@3 0. 8. 8911, randared

### by a 

### ummlmua Court,

wg. that 

### the StbtUta taxatd not x4r.l;~

thou inter.&. whloh ara daamad to pa..Honorable Osorgs i3. Shappsrd,PM. 0

at ,daath

aooordlngto raflaad t*obaloalltIaso? tho laiu

o? propsrtt. It also texea inter viva6 tra.?afara that lra too muoh akin to toatamantary dispositions

not to be **aubjaoted** to **the** cans **es** 01.8. **3y brl.n&ag**  Into the grass aatata at his death tht whloh the settlor gave oontingently upon It. thin Court ?aataaa4 on the vital. feotor. Ji mfuiad to subordln&a the plain I)urpoaa O?

or ancient

st p. ll.01

6Q y. ct. **444. 04**  **t. Ed.**  **604,** 12!3 A.



### . --. 3. 13a&

lhara Is no auggedloa In the Taxaa lnbarltsnss ttu attstuta

to lzdloatea le~lslatIv8Intent to dlf?a~atIata batwiaa taobnIoally*vaat@td* and *oontlwent* future intarasta.
**Cur** Inherlt6noa **tax atatuto**  **aatd?aate** throughout**L** 

### olrar in-
**~teUtiOA** 

### OR the :art Of tho L.~i.l~tU$'a **to** 

### Mk. all th4 er~ty passin& tram tha daoedeat to his baaadDarIss t

### mp

### tutaIa at his bath, whsthar tha latmasta of the savarai benafIoIarIsaba ~0880440ryor futura 1 vastatl



### or oontlngeat.

No- :.‘:.ara (lo we fin4 aup prorlalonwh oh would authorlao tha ~ost~onsmnt of the aaaassmaator oollaotIonof the tax to **aWait happaah3**  **Of OO~i~CMieO**  **Or the**  **X%pCdA& Of**  **?UtWa** lntarsataInto posaaaaoryestataar In hot, th* oontmry Intention Is to ba found throughoutChapter 8 of TIt.1. 122. 3~1s faot was lost iorolbl7pointed out in the opinion of ,;gslatant

Attorney Canaral F. C. Pomrimoy to the Cmptrollar re?tWng to the fFataea of J, ferry muma, dated July 27, 133SJ ?-heroin

it was held 

### that tha **eAtin** artate **O?** ths zcstetorwas his xl11 srsauitlp taxable la aglte of the faot that

;:rov dad for a gl?t to oh&rltp in the **avant** Of th0 ~:aath of his two ohlldren without lssw. ‘i:e quota frcm this o~lnlon:
Vha first quostloa la as to whothar our statute ymvides ?or,the pressat payment a? an inherltaaoetu or whathor, in a oua llka this, pay&At ahou3.d

ba portgonadu&t11 the taksrs oolarr Into poaaeaaionof their **est$a.**"SOL & L. lb wJ4?e, ~tlox.11, mltae thi lam (18

followat



## m*tttr or Itututory ooll88ruaaie& inquiry nu to tha lnu la anf putloulsr State shculd start with an '4mmination c? the ourreat etatuto.'

“!?4farr&~tO the atauto, Article 7117'QroTldU that proputy 'ahall \tpon passing to or ror the ~8. of my paaon * + * bs subjoot to l kx.'

*We sub&t that the pmpwty *panout at the bath oi/tha 

### teat&o r, l ltbmqb hlr fnfontlon bntl

~theetlreof

of thr uQl isthat it t&o 4rf00t ,*b ~OWW~,OII ~83 -Joma* Ofknr~d8. Adwnr aouao81 oaaoqda 

### that th4 tu on tha a01 tate shaulb k lorla6 

### at thla tin., 'buf that paywant **dmald** not **ba -do**  uatll **whsn an4**  **ii** thr 

### oontingsnal4s

prmmed for in the WI11 

### aatual1.y hagwr ~' "By Artlalo 7150 the kxablo values of owh 

### taxable laterad in the **eatato** 

### must**be pnma8-**  **ly datamlaad.** 

*&tia14 Tl?% **prooti6u** ,forl mm4.n 

### ill the proprrty mbjoet to tratlon to tw~uro the paym4lt oi dl taxam, pezbatiw rod 008ta **pro** rl-6.4 tar in th4 ohpkr, This me8as that a lien exbtr not 8lea4 on tlm wtrml Mmtloa8or lutemete to 800~ the tax UW 0x1 tech, bu% tbd tha tu QUO 6n moh hequest or in:rraet is a lien on all the prqmrty of the astate.

**w-ti.014 7154**  pmia08 **that is**  **th4 a~l0wst**  **of** the **t4x du4**  undm tha law~is not pi&cl in tf?mb **eonthe tram**  **the -d&to**  **or said**  **aee4sem4nt, 44m4**  sIxl1~dx-a~

tw per oent penalty, etc., end ii not paid in nine matbm the ootknty or 4ietriot **attorney** shall **ills** 

# l

uld ln-acliately

to So-- close the t8x urn. "Article 7135 proda that no siml aacwnt of any **cxeoutor** ede.inlatmtoror trustee shell be appoled by the oouatp judge **unless** ouoh arcour$t show ‘

, aa the JUl&e finds, **tm** s *I.

‘~I)
L’ "Artiaie 7lZ6 **prorids ‘**  that no notes bands, ,~, **stocks,** eta., **tub** eat to **taxation, shall**  **&I ‘** **? .A_**  tranricrrsdoi aoiliared to lagatee or h&r until the

toz. ptr ollu

has l ea4rteiaad and

c utltied **that** all the **iahcrltaaoo~** taxes: due tha State'harebeen paid, and Irtlole 71Z7 We8 any 0orjxirat1on

who rl@letoe Said proYleio8 llablt for the ~~eid **tue8** and peUlti4s riad aoetr oollootloa. )%Taok I!?UXTUS

is **thirty-dght** am! hie sloter, Tatbryn is forty yruo or rqsg t&r iirb.8x**pact&46** are ~applVA.mtely twnty-nina Urd ttianty-right

y;iare, r0o,potlV0ly.~

Md t0 thW@ tlie twenty-cm yaar trust rrrlod p;covideC **for** etter **thrir ’** **G4ath** l rrd we kam a~prozln~telffifty yaws before **it** omld be daiialtrly aeoertainad rho will cltixatelyhme isto enid raxiaddor @stat&. Tador the oaatrntloeot coull~el, the ~aymnt OS tbs WOS tight be **~~4pt~d4d SOT**  fifty yaars, and during t&et goriod the finel rtport **or** the exscutora coula not bF Br~roPedi**A**

**‘ ,**  **dim**

,Hanorable

George B. ,Sheppard, %ge U.

the l etetcr oould not **be** oloeed, and no dietrlbuGoa. **thanof** could k tie. So au&It that maoh is antirely inoonsletontnith the prarislanaof **our** statute end that th8 Loglelaturamild not have intended say 8uah zwu&t. Xt la, **thoreiora,** our.oonoluel6athet all inheriknoo taxes provided **ior by**  **ths T4bue**  **rtdwtre** ar6 pmsrntly pueblo.

“It .leoonteadml**by** oounerl that the seta& .’
renmlnln~upon the aoath oi Jaok and f:athrfnoaaoat b4 tued until 

### it shall be 40rinimy aemrtalnad rho will ultimeta~yoame **into** oal4 **setak.**

**.** 1 oaanot **agxw** with this oontratloa.

Wur statute pmwidee 

### for **just** iuah a oon**teatiaa. Artlclo**  **7l23** r~~ldee **that ii**  the **prep arty**  puslag spell 'k 4P ri4id~loto~two

or mm0 eetat*e,~

ah an retata ror~~liro 

### or for 11~4 end
a ramlnder, the tu rtuLl be levied oa eaoh estat0 or intereat separately,*ooording to the value of the 6amo et tb do&h of tho dooe4oat. Th4 value of artake r or. yeare oetatee for life, mmnlnder~ and mnultlaa, 8hd ba determlao4.by the Aotuulae Omblaod Zxporlrnoo Tables, at **Sour par**  awt ampound interest. *

la his ~oplaioa

ih Galama vq It ma be ~aoaoedd (u lndioatedby Su4ga Cordoso %Wia ?Bx Comaieelen,~ quoted above) thet to require all lnherltuto~ tuw~ to be mid at the denth or the tmtator ls uafdr (1) in tha8 tlu llrr tenant’s lnqme is **-due** d laeoiu a# the prlnol*t$ 2 trust 18 mduom4 to my tha inhorltutootuee malnder lntsnete, (21 in that 

### higher or 

### lowarT axoa ouy bo raid 

### than the ultismte 418pOritlW ai Urrmmti f’utUn iatsnete would roquirw Unquertlombly urder 

### tk hne statute this ie roquirodto be 4eae. ad suoh a raqulrw mat, la~olvlog this l lom ant of~tborotloal uufalrneeb, 

### does not render 

### the rtatuts invalid. To **quota emin**  **fr4m** Salaam v. **Stat0** Tu Carrirelon (lO281, 876 U. 8. 484 at pe&4 491:
**vhr rsot**  that **a better**  **t axing**  **wstom mlsht**  ba 6o~~lved &me **not raadu**  the 1~ ti~aLi4.Aa me aal4 lrl

Y&rep0118 Thratre Co. ** b%laago 220 u. s. $1, 6940, *Tu bo able In find fed with a law La not to domoaetrut* It8 lnlfalldlty

. . . **Tha** groblsme of gararnmentare praotloaS&m 9d WY 

### ju~tiry, ii they a0,not~ mqu5r0, r ow-> l oocomodation8

--lllogioal,it say be; and uaaoloatiilo.”l ‘.

. IWall ruuh objoo-, tlonr lt may be amwmd that minor ineq~lltl~ and hardships ere incidents of every system of taxntlon~and

do net ?oader the leglrlatlanobnoriou6 to 

### the ~adorel Constitution.*nsral h!!!erioeB

mlk car carp. 1. nay, 278 u. n. 337."
Anndat peco 4V.Ot
‘ibe duo pmoe8a alawe l?l~ae8 ue restrZti0i on a Stat0 a0 to thu t&4 at whi&
on inhorltanootarohall bo lstled or the **pmp** l rtg valuodror purposee’or8uoh tar. Co~pam Cahen ***. ‘**  **~?mvmter,** SOS U.:6. 54%”

AS salb in ZWaOlmabla bw Rariw 160 (lWQ)s

“It has lo@$ boon undi8putsdtbmt the portponsmcmt or l084asrioaor the trueerr43d rn8 doe8 not or taelf prsrsnt the t&l:U iPpo8ftloa 0r an lnherstam* .texl~ sino* io theory the trak8- rertex 18 a tu on tha priilqe 0r.8~000881~~~~ and not,

on the propwtg tranefarmd, It 8eQu quite prOper that the 8weo88ar8 t0 any part O? the **dwmlaut% interest,**  ubthar tho vaetlng in porreealonbe la the preoont or future, ohmld **be** subjeat to the ah@rga.*

Prm the rorogoiag,w have aonoludidrd! (1) That r0r inheriteneetar ptZqO806, ft ir f.lm’trrial whether mum k~~~ertfd~

intsmsta6m teotai0axiy *vmad= or *tioatingezW(8) that thu pxeaetatute requinr the a8oeasment aa paysent or all iahrrit8nor tu*r upon the 

### 'aath or the .aeoedsrst, even thou& (a) it waker the raealndor nan1~1 tues vaymblr out CU the aarpur Of the ecltata (b) it mculree the rate an& tha -t or tax to be barad
on aom *guctw ar to the oltlcmte disposltlonOf fatura intersots, (5) that in rplto 0r auah ralllng8, 8ueh a tar 16 noneth8ls68 cmstltutienal~--

<

Ylth there ooaelu8loaeln mind,':-!8 turn te a oonaidcrationof the 

### propor lBOtbd Oi aeeeeelng the tax upon unoortain hmuu laterester 3 sub@? t that th3 only **alternatiVe** under **,cttr** 8tetutr **is to**  **beao the**  a.p8eoewnt u~aa the **P.08t** robsble **0r** paeefble

### ruw0 oontlnp3noieo. Rsle rule is &weaelg eecpted ky atatute in the Ztnte~of Xeeh,in:t~,and 

### appliedby the co*& in fn re %tr)n*B Zetete (lose) 107 Faeh.

### X60, 15 ::ao. 1I3d) $33.
In'thet oeee the teetatrlxhad left her propert9," to her two ailopted children leged X3 end 16 **rSSpSOdV*lyi** at her de&h with **3~Wi8iO32** 

### that~win the~eveatthat 

### both

**or** 6ty wld **&80d~*iamn** ahall die 

### b9rm ~~~irfngat..;

### .! ~. n;ajoritt

umar.rieQ'lend

~tit-hout

laaue, then (to,1

m;r **aister** ,Julia or her **heirs."~** 

### Under t3o ‘3whlnytonatstcto, tho propertp paeeing to tho ohlldrenme8 texeble at a rate of lf, but lr it went to the eiettrqaheirs, it wao taxable at 10% '=ho

oeurt held that the tax wan te be cuaputed ee thocgh .the

propartywculd otentuallypaos under the eoet probable oont$ngenoy. Fe attoter

"The. DrSOWt tl.oBQ)

'etituts

mnulrta,-th* **paywtnt** of the tax $.m?eiil8toly upon-the,~tr&%. " rsr **cr** the,propOrtyat *Am hi#mt rate~, ~bable; **that 18**  the word ~poeeible @ wee c p$sL ,'~. aged to*probablet end the 00urt **wa8** meted ni.ththe power to abjust the **tax ir**  **fame** ***appear to**  **ba exoeesl~e.**  *****
'%Bile It Is poe~ible thet the two ohj.ldren mep.not reaoh~thelc majorltp, It ie likewlae poesible thet some or the ctl-k3r oant.lik~encioa me9 never he?-l‘en. %-6jualcfellyknow that it le mcre grobeble or mar0 

### likely that the two ohfldrenwill errire attheir rajoritp, reflmr tbon~prsdecoase

the **dao8deqtve** sister 

### or the heire cr the latter. We oan herdly hold as & urttor Gr law thet the probability ie that tho tuo ohllbma or themea ci? f6 end 10 years will not eur?i~s 

### theieir sother's efetor, :-e agrw with the trial oourt thet the pmb&bilitlee are ell in ravor ot the eat&o rootSng& tho lineal heirs, and that tho tu woukl **tWNm]~Utsll** that baela under the pruWdon of tha stat gy;,It Is true that in the **above case**  **the :?eehin~on** 

atztute expreaalydlreoted the computation of the tax baaed upon the happenIn&! ot the moat probeble ecntingenoleaproridod in the ~~111. It lobma **to** ua, **however,** that even ia’ the 

### absenceOS auah axpraas statutoryprovialon,the tar **met of**  nwesalty be ocucputed upon the baala of the moat
!‘Giima robaptle

**ooutlnganoloa,** where the statute requiroa (as in paymeunf

of alLtasea upon the 6eath of the teata**for.** Suoh uas the eonolualonr-r the oourt In In ra Neabitt*s lCatate

(19231 198 n. Y. 0. 451, atid. by Ct. ot APR., 237 ,,_ II. Y. Se7, 145 H. E. 72Q where tbare was no **statutory** ~i~otlon to **eeaesa** the &ax on the unoerfaln future lutereats u9on '*probebilitiaav~, land whore ths will rovidetl for a oharltahlogift upon a remote poueibllity. fh l ~8ea aing the **tax,** the oourt alm9ly looked to the probabilttlea o?' the oase and Ignored entirely the remotelypooafble@it to the tax uempt oharity. Ye **quote, fmm**  **,the oy.lnion**  **of** ~~_~ the dourt in the **ITeab$tt owe,**  **et i-age**  **454: ,,** 



### Vhe oontlngent r&an0eiataxod 

### in the two trues with a atit over to an exempt hospital oorporatlonin tha eventof **the** failure or issue or the 

### orlulndl aeatule 

### que trust cannot be held too remote to be aaesaaeda4 their preeeant

value atthIS ,tine. Yatter~of~ ~YarkerI8

\, Rateto, Eab Vi ‘I.i%O, 123 Ii. 3. 30& the devise IIto then ohlldren OS the tuetator's deceased dau&ter and in default of their taklng by death b&ore vesting, to their **irsue,** an4 in default of Wvuo, to the hospital oorporeticn. lbe oontiwpnoy bare is not rweoto~ It Is llmlted'oulyon two llver,~an6 the rcbablllty of **lonue of**  the grtmd00n8; and t& poaaibilityof their taking is presently tarable:'
Slnoe 

### lnhrltanoo tuor are **baaed** 

### upon the value or 

### pmporty rooel-go4 by the 

### varioua

beneflelariaa,

and the **statutes unually**  preaorlbea graduated 

### tu and l pooiiio **axamptiona ior**  the benefloiarleodopendingan the sire of. their rea9eotivebequests and their degree Of rolatlonahip to the deaeaaed, the problem oi taxing ;mcertain future lnterctoto

la usually more aomplexundsr an lnherltanoa tax,
**than** 

### under

**an estate**  **tax ouoh**  **as** tho **Federal Govermant~a.**  The problem is ldentloal,however unOer the two **typos** of **statutes** where **.thero** is an una~

**I, l-4**  **sin iutUre**  **gift to**  **a tax**  **exempt c**  **rlty.** the federal deoi~lone In suoh oaaoa, areHonorable George 2. Sheppard, Pmgo 15

themfori balp?ul. It la 

### f&pl?loant that la **thaa*** Oaaea the 

### V111tad

Stabs 

### Supreme Courttna adopted 

### the rule of **probability,** as illuatratd **by the**  ?ollouing two dealsions.

In Itheaa Tr3at Co. v. t’.9. (1923 1, &78 U. S. 151, 49 F. Ct. ml 73 L. Ed. 64V tha aourt ooMlaeraa the areoament o? the +odaral estate lax upon or: estata nhlsh had bean ls?t in trust, the laaoma,.and M mob of the rrlinoipel

as *may be neoea8ary **to** suitablyneintain her Itn as aueb oonrort as 8he non en oya* wJaouor the testator for bar 11 t to .bo

j?uiU to tN o, with the ontlre renelnder r:aaolq to a tax-exalt Oharlty. The nldow aotual**ly** died within ‘a

### year **of** the **death** e? the teatator, and barore tha tu had boon **Wooseed,** ~Tbhi gorsrnwnt ur& that that proportionof the lalue of the eatata attributable tom



### the taxakempt oharlt Iishould be reauoed beaaum cr the ri&t given to intaao t 0 of the rida% prlnclpal Sor the support

The eatata o~ntended,on the othar,hand, t&t slnoe the widow aotWly dlod **before** the **aasoramont** or the tax; her life estate should be valued upbn **its** aotual short Curation, nthor than upon the wldow*e llroexpeotanoy at her 

### hurrband~a bath. Both o? theeo~ouatexb t!ona asremjeotad **by th**  OOWt, OA **the** t.~rOWd that the
**tax** muat be **~aaseoaod** u&iontha baa18 &. the **probebilitir8** as of the date of the foatator’a do&h. The ootwt found 

### thattha inoogo frun tho property vma In hot amply auffialtint to’aupportthe ridw rithaut thr naaaaalty o? dipring 

### intothe, 

### prlnol@aL) an& that the uldarr’a lit& rxpeotanoyat her huaba;id*a drth baaed 0 on the a000 to6 mortality tables, murt be thm boat or lva Ustin& her 

### E PI?* oatato ileven though aubaequent aroa$a belied the l oouraoy of au0 pre~lotlw. Said Pr. Tuatloa Fmlmar

Thera was greater than the tends human affairs.* %!iira 9. c. s., ~76 v. 3. 4e7, 40 1::. at. s47, 7E J..Ea. 567, GtenantedB **tax** problsa very similar to tha fnatant oa8a. he teatator left his prworty %ri trust for his nieoa (aged 18 at 

### bla death), slm t(’ t&o the pro~~Q
rrae of the truat at t&e age of 40, but If sha &led witbout issue bsioro attaining thq e&g c& 40, then the propwty
was to go to oertain a!mritiiea, The eatsto aOught to mc’uoe tho taxablevalue a? tbq ertata by the satlsatad pro81 ent velue a? the poeaiblllty that the! oharltfsa m&zht ocmoiBt0 pome88toa. wit the court, again MBouBoing that

the tar asart be bawd vpa the moat probable iutu?a otoatu, ,rejeotedWc contcntlan end held that the poselbillt~ of the aMtie# taking wa8 eo ruwte ae ta be dime&&Ned for kekx

pnrpeou, Branbole, J l, #paking ror the aourt at pa- 4941

TXC Congmar, in providing for the deteminatioa ~ofthe aat eatate taxehle, Intend that a ~dtihotltua

8hould be aade Sor a coatlnasea ay,

the lotuel value or rthiohoannotbr de- - tearained

tron any kaonr data: Neither the taxpayer, aor the revenue offiocr-even if equipped with all the aid mbiob the aotuarlal art oaa aupply-o~tib nort than Ru,W tit t!x va;luoO? this oontingeaof. 3t 16 olear-that Congreso **did aot**  Intend wt a do&a&ion should be medo for a ObBtiB&OBt gift Of ttit Ohar(LOtdJr~"



# 4~1 these padaoi~leato t.hw0rao.e Me it ,ia our ep

# P on tba9'yon hwo oomectly wseaaed t L Betato,

la outllBe4 in your lottar, Aa l tatod in the

b r i*i rub&l by t&e lttonwy for tha bMk wbothrlstere efdooedaatare elderly and rotordl 0#n o&r thn the mphw.* Ruti upa thr.ir

mapootive life mpertanoiu! it 18 prabablo that the JW@VSV will m&live the bibtOP& & porslblo oantiageney thet the alacrity al&ht take rho~ld be dlon$ati~I for purpms or oomputi~$the tax. ,The die out or the oat&e aniljpaafaeat **ooverrd** ageiaet the awOUtOre 3fde **‘ I** * **R** Tex. 668, 70 2. w. (Mial 699‘ on n&adag

Vo do aot 8gree vltb tha03.faioa et the Bank'6 attorney that the a88oMsaoat ea4 0 sot&on 

### 0r the tax upon \ the rwmain&rr intalwt'~to the a.ph.w at&et b. ddW'& Wt%l the death of tha liie twt8. XB support af thicleonfation, he oltea the following pwa6ge.fram Xa ro HollunW'~ E8t&e, ~1% 1T.

3. IQ. 92 198 Atl. $08 vhloh W68 qU?fird

E mith approvalby tba A&.n Oourt eS dvll Apxmlr in %thea
v. Shevpud, J&3 3. We (2&J 9961 ,

*me tw9 or tuability is not the tiae of the omaplets diverting of the 

### treneroror~e I t Interest or ovnerehip, it ie the tim6~ of the

t.

completeauooesal~n by the ttanaieree. 1Qm-e there la 6 tnnaier ol'.a6pulfio interert in property and the auooeaaion 0r the tzularerso doesnot beeoa~emduaderth4 fezma of tie trezuSer is uot to hemono, dcmplote until a tlw at or after t&e duth ct the trencferor, ttrt t-7 fer 3.6 tanble.. '7210 Elatinotio~

. . , rest0 cm G-QAt Aether the doaee is dejdred of an iaof some kind

. . . until the donor's math."

In both the Rollarrdor end :*thscr aa8es the acurts were di6cuaalngthe problem Of vben a6 inter tiro6 tnbafer may be taxed u a teatementarydisposittcmunder the prorlaloaa ot the 6tatutea la the mapeotlre 8tateameklag auoh tranaiera 6ubJeot to en lnheritanoe tax when *rydo or intendedto take etioot la posse6alon or enjoymentl rter the **death of**  **the pmntor**  **or** ,Conor.* It **is** a::parent that tha l **bo~o quoted**  1-r umot eppl~ to the questlen of vhether the aaae66mentand p6yment of a tax upoa a **ruadldor** In; toreatmy be pOatpOBd until the duth of the llie tenant, boamae the words Ctraqferor" ena 

### “doaorw ournot bo applies **to** a life **tenant,** udler# he heve l power of appolntmmnt.



### The o oatentloa

of the Thnk a l tsorney 

### as

to the the when the tu cipoxi the crnslnde~ iatenat oi,the nephew ;;waG;y is refuted **by the**  oaurf in the -thea a~aae, at

"At the 6th a? rantor or aottlor the **rull poaeeaaien**  **an4 0**  **$ oymeat** **of** all **of the**  trurt eatate vested in appellant throwh the

t

one or tho ralur ofEo~orable 

### Oaorge Ii.Sh6pmr4, ParJe18

,

estate, ~ahlohrQht ot 6njaymnt~tho 6tatute taxes.* (bphula mm4 1 l%r are we persuedea **by** the oirort to Qlatlnguiah be~een %a. ?athe6t,6 lBtsr66t and the interest. of the. tiphew Vader the okaeItl~ation of rmainder, made by the ~&&an Law f8atltute. guotad 

### l bwe, the ocphaw has a roatti reaainclor,

aubjeot to ooapl6te befeaaaaoo:
Tbd 13anksr

attorney Brgu68 that If 'tlmahrrity~ shoWI e7imtBally oaw bto possesalon, the enoutor reight b6 llablo to It Sor Inh6rlt6~00 tuea pBId BPOB tho Bephn*s rW6iBd.r interoat. @On thii threry, SVO2?y **ahuity hOliBr:**  6 rwalndrr abaolutaly VeStOd, UWendent upon 6 lit6 eatat., ro~l4 halo a right to mover iron the exooutor for part ot th6 iaherit~oo taxes pal4 on behalf of 

## the llio~ 

## taawt la 

## thaevent the life tuut .4164prior to hIr life 

### lxpootaaoy, upon whloh the tue6 wre 8aueaetY and paid. Such a theory is refuted by It&on Trust Co. v* W. 3. (l.OM), 87
c. s. 151, 49 s. Ctr 891, 73 2. Ea. 647, aited above.

c:e UM retur&ng to you herewith your rile a this Eatat&

Yours vuy **truly**
**ATlwaEY CERW**  **OF TEx&3** 

mlt.er a. Eoeh Aulatmt