.

HonorableRobert S. Calve&

Comptrollerof Public Accounts Capitol Station

.Austin, Texas

Dear Mr. Calvert: Opinion No. C- 37

Re: Whether shares of stock

are subject to lnherltance taxes upon death of husband where shares had been Issued to husband and wife as joint tenantswith right of survlvorship

and had been purchasedby the husbandwith the separate funds of the wife.

Your letter requestingthe opinion the above captionedmatter reads as 'follows: of this office on

"We desire the opinion of your office regardingthe Inclusionfor ~lnherltance:taxpurposes of stock held in joint tenancy with rights of survivor-, ship, and not as tenants in common, where~~the

st,ock,was

,purchased

by the husband withthe separate funds of his wife.

"W. L. C. Poetter died testate, a resident~ofDeWitt County on December 4, 1961, and his wife, Mrs. Virginia L. Poetter,who quallfledas Independent executrlx,/made

the required reports as provided in the Inheritancetax law to close the estate for Inheritancetax purposes.~Mrs. Poetter's,report was accepted as filed and the tax paid. "Subsequently,

a request was made by Mrs. Poetter and refused by this Department,

for a waiver of consent to transfer 255 shares of San Antonio Drug Company stock standing In her name and the name of her deceased husband adsjoint tenantswith rights of

154.,HonorableRobert S. Calve&, Page 2 Wnlon No. c- 37

We davlt: survivorship and not as tenants in common,because the stock was omitted froni her inherItan& tax report. ((Mrs. Poetterhas now submittedan affidavitto this Departmentsetting out the facts wlth respect to the purchase of this stock and her attorney has submitteda memorandumbrief glvlng his opinion that this was the separate property of Mrs. Poetterand, therefore, no'part of the estate of W. L. C. Poetter for inheritance

tax purposes. Both of these Instruments

are enclosedherewith.

"It appears to us that one-half.the value of this stock Is lncludibleIn the inheritance

tax report and a tax due thereon in view of your Opinion NO. w-1348. Please advisewhether or not our view is correct ln this matter."
quote th6 following.excei@ 'from Mrs. Poetter's ,affi-

"Au‘ing the llfetlmsof my husband, ,'~ Wilb&t C. Poetter,who d&d December 4, 1961, and for many years prior, thereto I maintaineda checkingaccount ln the First NationalBank of Yorktown,Texas, styled 'MOPS. W. C. Poetter?: 1 opened this account ln the early 194Ols,prior to 1946, wh& 011 was begun to be produced from my separate lands In Dewitt County, ,Texas, and I placed my royaltychecks from th& productionof said oil into this account-.I placed no other fQnds in the accountexcept my royalty checks,which were my separatefunds, and I dld ~this

In order to,keepmy separate funds apart from any community property fund& of my husband and myself. No communityproperty furids were ever~placedinto this account, and,:.h.ls,

acccuntwas my sole. 

### aa separateproperty.

.I - I-. ,..a_. .

Honorable Robert S. Calvert, Page 3 Opinion No. C- 37

“From time to time my husband, Wllbert C. Poetter, would select varlous corporations In whS.chI might lnvest my funds as they accumulated in my separate account aforesaid and at his suggestion we would purchase stocks in the corporations for me, he placing the order for same with the various brokerage firms or companies and I would then draw a check on the aforesaid account In the First National Bank In Yorktown, Texas, and thereby use my separate funds to purchase the stock
as part of my separate estate.
"My husband, Wllbert C. Poetter, when he would order the stock for my separate estate and property would have the shares Issued as follows (or similarly) 'Wllbert C. Poetter and Mrs. Virginia L. Poetter, as joint tenants with right of survivorship
ana not as tenants In common'. This
was done by him under the Impression that this would make the stocks easily transferable or sold In the event of my death before him, whereas If the stocks were In my name alone he felt there would be much Inconvenience
ana expense in transferring or selling the stock. There was no understanding between my husband and myself that any part of the stocks In question
were to be anything but my separate property during my llfetlme.and my separate funds were used to purchase these stocks under the understanding that the stocks purchased would be my separa.te

property and would be no part of his property or estate."
The memorandum brief submltted In connection with the taxpayer's posdt.lonin this case contains the following para- .graph:

"It is our feeling that despite the

stocks being lcsued in the joint tenancy manner as above set forth that the actual ownership was still based on the intention. HonorableRobert S. Calvert,Page 4 OpinionNo. C- 1,

of the partiesand the source of the fundsused to purchase same.
. . . .Wlththis ln mlnd we feel that the above sharespald for by Mrs. Poetter's separatefundswere her separateproperty. this." Please adviseus your ruling on

AttorneyGeneral'sOpinionNo. ~-1.348 (Jtie 8, 1962) held that the decedent'sone-half interestIn a bankaccount which the decedentand anotherheld as joint tenantswith rinht of survlvorshlv was sublectto an Inheritance tax when receivedby the survivorat &e decedent'sdeath. The opinion consldered~the

case of Davis v. East Texas SaVineS 6c Loan Aasoclatlon, Tex 354 S.W.2d 926 (1962)which held that a savlruza

and lokiificate Durchased by the husband with his se&rate funds an&issued *'hia name,-butsubsequently reissued to him and his wife as ;lolnt tenantswith right of survivorship,

passed at his death to the wife. At page 931 the Court pointed out that when the"contract was.ma$ewith the savings and loan aasociatlon,the wife became vestedwlth~ a present;though defeaalble,interest ln the deposit. Her interestwould have been defeated If the certificate h&d been changed 3y her husb+nd or the depositwl,thdrawn'before his death, or if she.hqdpredeceased-h&n, but-.slnce.none

of these things happened,at hls death, the.@f‘ebCcsme the sole owner of the entire deppsit.

me Davis case-.,cannot be diatin&lshed from the case we are pr&ay consld&Lng becauae.lt lhvolveda aavlngs and loan certificate and this case lnvo&vesstock. When Mr. _' Poetter,acting as agent for his wife, and with her knowledge

and consent ati

disclosedby Mrs. Poettercsaffidavit, made the contractwith the various corporationsfrom which he pur-' ' chased the stock4 and When then stock was-issued

by the varlous corporatiO;ns

td Wilbert C. Poetter and Mrs. Vlrglnla~L. Poetter,as joint tenantswith I'lght of survlvorshlp

and not as tenants inc&nmon", both joint tenantsbecam vestedwith 'a'present,

though defeasible,lnterest,lnthe stock.

. The fact that Mrs. Poetter an& her husband Intendedto preservethe separate ctiacter of; her propertycannot change the legal effect of their actual transactions. You are thereforeadvised that at Mr. Poetterlsdeath,Mrs. Poetter receivedhis one-half joint Interest in the stocks Involved, and that such amount Is subject to an inheritance tax.

. ,, .

Honorable Robert S. Calvert, Page 5 Opinion No. C- 37

SUMMARY
Where a husband used wife's separate funds, with her knowledge and consent, to purchase stocks Issued In his name and In his wife's name as joint tenants wlth right of SurViVOPShiF md not as tenants in common, the husband's one-half interest became vested at the time of the purchase subject to being divested, and was, at his death, subject to an Inheritance tax upon passing to the survivor under the terms of the contract, despite the fact that the husband and wife had Intended the stock to remain the separate property of the wife.

Yours very truly,

WAGGCNER CARR Attorney General of Texas

By:~~&%/%+&+~"y^c~ 4 Marietta McGregor Payne. Assistant Attorney General

APPROVED:

OPINION COMMITTEE W. V. Geppert, Chairman

Jack Nor-wood Howard Fender Frank Booth

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