**Auamiw .a.**  **‘ l-mx~n** 

January 7, 1960

Honorable Robert S. Calvert OpinionNo. WW-772 Comptroller of PublicAccounts Capitol Station Re: Is a transfer by virtue Austin 11, Texas of an antenuptial agreement, to take effect after the grantor’s death, subject to an inDear Mr. Calvert: her1tante tax?

Your letter requesting our opinion on the above question sets out the following facts:

“Mr. J. B. Cage died testate, a resident of San Patricia County, on April 6, 1958. On **July** 25, 1953, the testator entered into a pre-nuptial agreement with Mrs. Maurine Schultz, a widow, in which he conveyed to Mrs. Schultzhis homestead, retaininghis right to live in saidhomestead until his death, and.also for his daughter to maintain a room in said homestead forso long as she remains single, and $250.00per mdnth to Mrs. Schultz so long as she lives. Shortly thereafterMrs. Schultz and the testator were married. "Subsequent to the date of marriage of Mrs. Schultz and Mr. Cage,Mr. Cage executedhis last will and testament on the 29th day of April, 1954, wherein he recognized all the provisions of the pre-nuptial agreement and devised the balance of his estate to his daughter.
"We are now confrontedwith the question as to the proper inclusion and handling of the value of the annuity as well as the value of the homestead for inheritance tax purposes as provided in the pre-nuptial agreement. Please advise this department whether or not the homestead and the value of the annuityprovided In the pre-nuptial agreement should be deducted from the net value of the estate devised to the daughter, or charged to the wife as a deed, grant, sale, or gift made or intended to take effect In possession or enjoyment after the death of the grantor or donor.”Hon. Robert S. Calvert,Page 2 (OpinionNo. WW-772)

The antenuptialagreement clearly sets out that the property death of 7rant '. shallnot be effectiveuntil after the

the husband).

. ." per month was to begin '.

. and that the annuity of $250 .uponand after the death of (thehusband).

. .'

such Article 

### 4610,Revised Civil Statutes, authorizes pre-marital stipulationsas follows: "Parties intendingto marry'Mayoenter Into such stipulationsas they may desire,provided they be not contraryto good morals or to some rule of law; and in no case shall they enter into an agreement, ormake any renunciation, the object of which would be to alter the legal orders of descent, eitherwith respect to themselves, In what concerns the inheritance of their children or posterity, which eithermay have by any other person, or in respect to their common children; nor shall theymake any agreement to impair the legal rights of thehusband over the persons of their common children. No matrimonial agreement shall be altered after the celebration of the marriage."
The admonitlon,containedtherein as to altering the

_ _ ^

_ _ . 'liegalorders or descent;" 1s somewnatvague and. nas apparently never been satisfactorilydefined. See 23 Tex.Jur., Husband and Wife, Sec. 20. However, we believe that the oresent agreement is not In conflict with that inhibition. Kunge v. Freshman, 

### 216S.W. 254 (Tex.Civ.APP.

### 1919). See also Groesbeckv. Groesbeck,

### 78 Tex. 

### 664, 14 S.W. 792 (1890).

Our Inheritancetax statute,Article 

### 7117,R.C.S., levies a tax not onlyupon property passing by will or by descent and distribution,but also on that whichpasses 3, .by deed, grant, sale, or gift made or intended to tak& effect in possession or enjoyment after the death of the grantor or donor.

. . .' The question of the applicationof inheritance tax to transfersunder antenuptial agreements, which transfers do not become effectiveuntil after the grantor's death,has not been touched upon by any~ Texas cases. A survey of the other jurisdictions reveals that the authorities are in conflict. See 

### 85 C.J.S., Taxation, Sets. 1144 and 1147 

### (3) (b);

### 28Am.Jur., Inheritance,Estate and Gift Taxes, Sets. 1.33 and 

### 185.

The earlierNew York cases held such transfers exempt from taxation, ea) that marriage, on the theory (oftennot clearly~expressor the promise ofmarriage, suppliedHon. Robert S. Calvert, Page 

### 3 (OpinionNo. WW-772)

sufficient consideration for the transfer, and therefore the recipient was entitled to payment as a creditor from the decedent's estate. In re Baker's Estate, 

### 83A p.Div. 

### 82 N.Y. SuPp. 390, aff'd. on opinion below, 

### 17 8 530, N.Y.575,70 N.E. 1094 (1904); In re Vanderbilt'sEstate, 

### 184App.Dlv. 

### 661,172N.Y. sipp.511 

## fffa lth t 123N.E. 893 (1919);Re'S%moli wl~l"~ppo~~v 

### 226N Y 638 435'i8iN'Y. 

### Sum. 542,aff'd.

### without OP., $30N.Y. 559,'130h.E. 893 (1920). But the opposite result was reached following a 1930 amendment of the New York estate tax law, which levied the tax on allproperty In which the decedenthad an Interest at death, Includingproperty which he had transferred In contemplation of or to take effect In possession or enjoyment after death, exceptwhere such transfer was to a bona fide purchaser for full and adequate considerationIn money or money's worth. The court In Re Seltz'Eatate,T3T-.mv. 206 2bOm Supp. 122, 262N.Y 32 ltlb N ti 193 (1933) heli that, because of the addition 0: the u&rllnea reqdrement, a promise to marry in an antenuptial contract

## aid not furnish the required consideration;therefore, the transfer was taxable.

The courtheld in Re Oppenheimer, 

### 75Mont. 

### 186,243 P. 589, 44 A.L.R. 1470 (192b), that such transferswere taxable where the statute taxed gifts or transfers effective in possession or enjoyment at or after the grantor's death, even though not containing the requirementthatthere be adequate consideration "In money 6r money's worth." Under the antenuptial agreement there Involved, decedent'swidow was to receive $150,000 In Installments beginning one year after his death. The court, after quoting that portion of the statute taxing transfers effective Inpossession or enjoyment after grantor's aeath,~

proceeded as follows:

"It is obvious that, had the section quoted above merely provided that personal propertypassing by will or the laws of succession shouldbe subject to the tax, the Intended scheme of taxation would have been a complete failure, for the reason that transfers, made only to take effect after the death of the grantor, would or could be substi; tuted for wills and intestacy in order to escape the tax.

. . . makers, It was never Intended by the lawwhen enacting the inheritance statute, to permit the owner of an estate fallingwithin its provisions to continue in possession and enjoyment of all his property and.the rents and income therefrom during his lifetime, secure In the knowledge that, upon advent of death, the legislative intent would.be effectuallycircumvented. -

Hon. Robert S. Calvert,Page 4, (OpinionNo. WW-772)

by some device such as this. Clearly, a gift or transfer for a valuable considerationmust be in praesenti in order to escape the tax. A deceased person can have but one estate, and all property owned by him at the time ofhis death, Including gifts or transferspreviously made by him which are not to become effectiveuntil after his death, is taxable.”

In Re Koeffler, 

### 218Wis. 

### 560,260N.W. 

### 638,99 A.L. R. 944, reh.aen. 218Wis. 

### 567,261N.W. 711, 99 A.L.R. 949, holding that such a transferunder an antenuptial agreement Is not taxable, the court criticizesthe reasoning in the Oppenheimer case as being too broad, In that a full application OS the theory would tax all bona fide creditors of the decedent upon payment of their claims from the estate. This, however, seems a rather tenuous and unwarranted extension of the above rule.

The transfer under an antenu tial agreement in People v. Estate of Field, 248 111. 

### 17, 99 N.E. 721, 

### 33 L.R. t

. . . 30 (1910) washeld taxable on the theory that it replaced the widow,s’claim for dower. For further authorities see annotations in 4 A.L.R. 

### 461,44A.L.R. 1475, and 167A.L.R. 461.

Comparing the two views, we are convincedthat the conclusion reached in the Oppenheimer case,ispreferable, for the reasons therein expressed. you are therefore advised that the transfer of thehomestead to the decedent’swife and the annuity provision by virtue of the antenuptial agreement should be charged to her as a deed, grant, sale or giftmade or intended to take effect Inpossession or enjoyment after the grantor’s death, andhence subjectto the inheritancetax.

SUMMAiY
Where provision was made for transfer of property and.for an annuity to the wife in an antenuptialagreement,both to become effective after the death of the husband, the transfer is taxable to the wife under Article 7117, R.C.S., as a deed, grant, sale, or giftmade or intended to take” c

Hon. Robert S. Calvert, Page 

### 5

effect in possession or death of the grantor or (OpinionNo. WW-772)

enjoyment after the donor. Very trulyyours,
WILL WILSON Attorney General

JRI:bct
APPROVED:
OPINION COMMITTEE: W. V. Geppert, Chairman y;et;;vT;Gregor Payne
C: Dian Davis Charles Cabaniss

REVIEWED FOR THE ATTORNEY GENERAL: By': Leonard Passmore