Court Opinion

ID: 4138068
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:32:09.932533+00
Date Added: 2024-06-11T14:33:57.410720
License: Public Domain

THEATTORNEY       GENERAL
                           OF TEXAS
                               Aun~l~      1% 33~~~s      .:
PRICE  DANIEL
ATTORNEYGENERAL
                                 October    21, 1948

         Hon. Geo. H. Sheppard                  Opinion        No. V-704
         Comptroller   of Public Accounts
         Austin, Texas                          Re:    Imposition  of inhcri-
                                                       Cance tax where com-
                                                       munity estate completc-
                                                       ly disposed of by joint
                                                       will’and trust tnstru-
                                                       ment at death of hus-
                                                       band

         Dear Sir:

                  You have requested an opinion of this office as to wheth-
         er an inheritance tax is due by reason of the receipt of certain
         funds from the community estate of T. G. Hendrick, deceased,
         and his surviving wife by the Baptist Founda.tion of Texas as
         trustee.  The facts of the case as disclosed by your file and the
         brief submitted by the attorney for the executor,  The Fort Worth
         National Bank of Fort Worth, Texas, are as follows:

                  On January 22, 1929, T. G. Hendrick and Ida Hendrick,
         husband and wife, executed a joint and mutual will in the opening
         paragraph of which they declared that

                  “We, T. G. Hendrick and Ida Hendrick, husband
             and wife, . . . having mutually agreed and contracted
             with each other as to the disposition to be made of all
             of the property owned by us, as hereinafter  .set out
                  do Make, Declare and Publish this as our Joint
             add’Mutua1 Last Will and Testament,    and the last will
             and testament of each of us . . ,

                   “We first state that all of the property of every
              kind and character   now owned as well as any that may
              hereafter   be owned by us, or in which tither of us may
              have an interest,  is community property owned by us
              since our marriage    and owned one-half by each of us,
              whether the apparent title to such property is in the
              one or the other or in both of us, having earned the
              property together we desire to dispose of it by joint
              will in accordance   with the terms hereof, and each of
              us hereby solemnly pledges his and her faith to the
              other that he or she will not alter or change or at-
              tempt to alter or change such disposition     of the prop-
              erty, unless by proper instrument     likewise jointly
                                                                                   ’   .

Ho& Geo. ?I. Sheppard,        Page    2 (v-704)

        signed by us, and particularly that the survivor of
        u6 will not make or attempt to make any change in
        such disposition.”   ’

             In the twelve
                        succeeding pages of the will various spe-
aific btque$ts are’made   and numerous trusts set up. These pro-
visions ara not material to your inquiry since from time to time
various codicils were executed, eleven in all, which resulted in
an almost complete departure from the provisions     of the original
imaumsnt.
           The will provided that if the death of Ida Hendrick oc-
curred before the death of T. G. Hendrick, T. G. Hendrick as
trustee, without necessity      of giving bond, was to remain in pos-
session of all the interests     of Ida Hendrick and the property own-
ed by herself and her husband, except the devises to Ida Hendrick’s
nieces, with full power and authority to dispose of all or any part
of such property; and at his death khe property then on hand, rep-
resenting the corpus of the trust funds, wa$ qftcr the payment of
individual legacies,   inheritance,     estate and othe.r taxes, and 6x-
penses of administration      to pass to and under control of named
trustees for the different uses and pu$po$es provided in the WM.
However, if T. G. Hendrick died before Ida Hendrick, the rights,
powers and duties of the trustees were, to vest immediately           in
them subject alone to the right of Ida Hendrick to receive $l,OOO.OO
or more per month during the remainder             of her life from a trust
of $500,000.00    to be established     as specifically   provided in the
fifth codicil of the will.

             In the sixth codicil    to the will,   Item First   reads   as fol-
lows:

              “Reference    is here made to the fifth codicil to
        our will executed by us on April 19, 1934. In Item
        Firrf thereof we instructed our executor to sell from
        our property a,nd set apart bonds, securities       and/or
        other items of property then of the reasonable         value
        of $500,000.00     before any of the trusts provided      for
        by us art set up and before any of the devises by in-
        dividuals are paid. It is our purpose and intention,
        and we here now so will and direct, that said $500,-
        000,00 of property and securities      shall be appropriat-
        ed from , . . Ida Hendrick’s    one-half interest in our
        properties,    if such one-half interest shall , , . be suf-
        ficient for the purpose, but if not then all of her one-
        half interest shall be appropriated      and a sufficient a-
        mount . , . from T. G. Hendrick%        one-half interest
        shall be added thereto to make up the total of $500,-
        000.00 . * .”
Hon. Gee. H. Sheppard,     Page 3 (V-704)

           In this same codicil Ida Hendrick covenanted and agreed
with T. G. Hendrick and with all of said other deviates,       both the
individuals and the bank trustee, that in the event of the death of
T. G. Hendrick before herself she would Immediately         after his
death execute all instruments    and conveyances     thought by the
trustee to be necessary    or advisable to effectuate the payment
of the devises to other individuals and the delivery and vesting
of such property in the trustee of all property in such trust
created by the will.

           Item Second   of the sixth codicil    provided   that

           “In the event the death of T. G. Hendrick occurs
     before that of Ida Hendrick, the latter shall continue
     during the remainder      of her life to have the free pos-
     session and use of the lot and the improvements           known
     as 802 Orange Street in the city of Abilene, Texas, . . .
     which property is sometimes         occupied and used by us
     for residential   purposes,    and she shall also have such
     free use and possession      of all furniture and fixtures
     and other personal property used by us in connection
     with such premises,     including the family automobile
     so used at the time; and in such event, we direct that
     our executor and thereafter       our bank trustee,    from
     funds belonging to the trust created for the establish-
     ment and maintenance       of the ‘T. G. and Ida Hendrick
     Home’ shall pay all taxes that may accrue against
     said real and personal property,        pay all insurance
     premiums     on policies relating thereto and keep the
     premises    and estate in good care all without charge
     or expense to Ida Handrick.”

         These provisions  covered everything to be retained           by
Ida Hendrick in the event T. G. Hendrick predeceased   her.

          In the seventh codicil Item Second again refers to the
$500,000.00   trust fund to be established  in the event Ida Hen-
drick survived T. G. Hendrick out of her one-half of the com-
munity property (or out of the joint property if her community
one-half was insufficient).   Said item confirmed    the creation of
the trust and devised and bequeathed same to the Fort Worth
National Bank as trustee.    It was provided that at the death of
Ida Hendrick title to the property and assets belonging to such
trust at the time of her death were to remain in the Fort Worth
National Bank as trustee to be used by it in setting up other
trusts provided for in the will.

           In the eleventh and last codicil     to the will the various
trusts   here involved were established.        By its terms $l,OOO,OOO..OO
Hon. Gee. H. Sheppard,    Page 4 (V-704)

was devised to the Baptist Foundation of Texas as trustee to
be held, managed and the income therefrom         disposed    of for
 twenty-one years as specifically     provided:   10% thereof to be
 used for “the aid and assistance     of young men being educated
for the ministry at the Southwest Baptist Theological         Semi-
 nary, of Fort Worth, Texas”;      10% thereof to be used by the
 Relief and Annuity Board of the Southern Bapti$t Convantion
 in the “aid of old worn out Baptist preachers’*;     10% thereof
 to be used by the Baptist General Convention of Texas “in
 its ordinary Foreign MisGions Work”; 40% thereof to be used
 by the Foreign Mission Board of the Southern Baptist Conven-
 tion “for relief work , . . and caring for the medical needs and
 religious  welfrre of needy people anywhere in the world; or,
 at the discretion   of the Executive Board of the Baptist General
 Convention of Texas, part of these funds may be so used by
 other agencies under its jurisdiction”;     30% thereof to be used
 by the Home Mission Board of the Southern Baptist Convention
 “for relief work . . . and ruligiaus welfare of needy people in
 the Homeland; or, at the discretion     d the Executive Board of
 t&o Ba@i$t General Convention of Texas, part of these funds
 may be so used by other agonciea tw,der its jurisdiction.”
 Twenty-one     year0 dter this trust became effective     its corpus
.ig to be paid to the BaptMt General Convention of Texas to brt,
 devoted by it to the five eharitie$ abuve mentioned,      on the game
 pro rata basis above cot out, 80 that the assets of the trust will
 be exhausted ten years after such distribution      begins.

            Following t&e death of T. (P. Hendrick on July 8, 1946,
the will and all of the codicils   thereto, forming a 60-page in-
strument, was admit@8 to probate on July 29, 1946, as the last
will and testament of T. 6. Hendrick, deceased.        On August 10,
1946, Ida Hendrick filed in the coupty court an instrument which
recited the execution by herself and her husband of the will
theretofore     admitted to probate and declared:   “I am satisfied
with the d&positions     of our estate made thereby and do ratify
and confirm such will and each of the eleven codicils.”

          Of the million-dollar     trust fund described     above, the
First Item is clearly exempt from payment of any inheritance
lu under the provisions      of Chapter 5, Title 122, V.C.S., since
it comet3 within the exemption provided by Article 7122 for
“property   passing ,to or for the use of . . . any religious,     edu-
Cation& or charitable     organiaatiopl when such bequest, devise
or gift is to be used within this sbte.”      Pse        risn Church in
U. S. v. Sheppard, Civ, App., 198 S.W. (
me executor tar the estate admit,s that this exsmpbhm aMnot
be claimed for the other four items previously         listed, inasmuch
a$ these items are not to be expended within the state, but con-
tends that only on%-half of said amout%?@ went to the trustue out
Hon. Geo.    H. Sheppard,    Page   5 (V-704)

of the estate of T. G. Hendrick, deceased,       and that the remain-
ing one-half paid over to the Baptist Foundation of Texas,
trustee, was paid over out of the share of Mrs. Ida Hendrick
in the community property of herself and her deceased           hus-
band and was not subject to tax by virtue of Article 7117,
V.C.S.   In effect their contention is that the trustee acquired
one-half of said funds by gift from Mrs. Hendrick rather-than
by the will of Mr. Hendrick.      If their contention is correct,    the
taxes due by reason of the receipt of said funds on the death
of T. G. Hendrick should be computed on the basis of the a-
mount received from his community interest regardless             of
whether or not the transfer of Mrs. Hendrick’s         interest  is
taxable at her death under the provisions       of Article 7117, V.C.S.

            The relevant    provisions   of Article   7117 are the follow-
ing:

             “All property within the jurisdiction    of this
       state . . . which shall pass absolutely    or in trust
       by will . . . or by deed, grant, sale, or gift made
       or intended to take effect in possession     or enjoy-
       ment after the death of the grantor or donor,
       shall, upon passing to or for the use of any per-
       son, corporation,   or association,  be subject to a
       tax for the benefit of the State’s General Revenue
       Fund, . . . . Any transfer made by a grantor, ven-
       dor, or donor, whether by deed, grant, sale, or
       gift, shall, unless shown to the contrary,     be deem-
       ed to have been made in contemplation       of death and
       subject to the same tax as herein provided,       if such
       transfer is made within two (2) years prior to the
       death of the grantor, vendor, or donor, of a material
       part of his estate, or if the transfer made within such
       period is in the nature of a final distribution     of prop-
       erty and without adequate valuable consideration.”

          Three opinions of this office have dealt with similar
problems.    Opinion O-4109 dealt with the following facts.       The
husband by will disposed    of the entire community estate, set-
ting up a trust for the surviving wife who was to have the use
of the homestead    and household furnishings      and an annuity of
$24Og,Og per year for life. At the termination        of the trust the
corpus was to be distributed    to aeven named parties,       The #tar-
viving wife elected to take under the will, and the opinion holds
that although the wife’s interest was not subject to tax by rea-
son of being less than her community interest,        Jones v. State,
5 S.W. (2d) 973, the remainder     interests   in the properties   pass-
ed to the devisees   by the will of the husband; that all property
passing under a win absolutely      or in trust is subject to tax by
Hoa. Geo. H. Sheppard, Page 6 (V-70$)

rmcH0 &     me&g    under a condition tUrned in Article 7117, SUI
pr@; d     tbt *the inheritance tax . . ., weei to be base& uplo
t&6 tehl   wlue eo pcr6ta~ to thsm owl iit E4fied up.on ml vlmu
aU aaly the one-half commutity intetedt of *a tret8tW * *
waste, I3 The writer of Opinion O-4109 reached the conclusian
Wr   %re entire-osrrutieo    interest   pwsed   unrkr the will by re4e    *
*on of authorities ‘tifcb &ol4 WC toJlur tLa detrfae of election
%e who accepts II ban&t under a w@L mudd adopt the whole cm-
tents of the instrument,      so far aa it concerns him. , ,’ Phfll   e
Y, Hollida , 24 Tax. 30; aad that title i9 &rived      from t livdk
g=Fg$&Wg             t;y;;,z1                            -“4;&w&y&
wl@o toek the view 6&$ when                      elsct6 te ww
uader the htisband’d) wok whi                     a&*    cm
muf&ty eetate, the4 inbadi6nce tuceg 4uu by hemwn of the ree*L*
al property by third p~rtias must be computed on the b&811;U#fxlr
WI vbtluwof the property received.

         Opinion O-5557 involved the fallow i*at$,    Ibe &z#-
hand’s will created a testamentary trust disposing   of the entire
community estate.      The surviving wife allowed her share of the
community to pass according        to her husband’s will which pro-
rided that she receive 316 of the trust income for life and Wt
8 gotr cnl daughter er their ehildrelli, on stated contingencies,
xeeeive the balance of the income in fixed amounts and the cor-
pus of the trust ten years after their mother’s       death. The q&n-
ion holds that the wife’s relinquishment      of her share of the cdm-
munity was 4 “deed, grant, sake or gift made or intenakd to i&s#
effect in possession    or enjoyment after the death Oz i&e grentoe
ar donor “; end that therefore at her Ieatb an inheritice          tax WWF
due, “such tax . . . to be based um the full amount ef suCh inn
WWste ariefng from b&cl. Handley’s one-half interest in tbe
cbmsnusity proper@ which forms the corpus of the trust.” Thus
unly one-half of the other deyisees’ ‘interests was regwded as
having passed by the wilt. of the husband, the other one*hrtf p4$$-
ing on the death of the wife-a       result which is clearly contra to
the result reached in Opinions O-4109 and O-191, which held that
as a result of the wife’s eleCtion the whole community estate pass-
ei under the will, Tbnr miter       further strted tkat it ~48 not nM%es-
aary te decide whether the wil:l reguiked an election in the tech-
nical sense of the term since it was certain “that by such relin-
quishment Mrs. Handley divested herself of her share in the corn--
munity and placed such share under the testamentary            trust creat-
eU by her husband’s will to be distributed       in accordance    with the
terms thereof,     Certain also is the fact that the relinquishment
operated to bestow upon the ultimate beneficiaries         of the trust
one-half of whatever they acquire under such trust,          Practically
and legally the result is the same as if Mrs. Handley had at the
time of her relinquishment      created a separate and independent
Hon. Geo. H. Sheppard,       Page   7 (v,-704)

trust with her share of the community,    employing the same pro-
visions that were contained ia the trust sstablished  by her hus-
band and designating  the same beneficiaries,”

           The writer of this opinion reached the conclusion             just
stated by analogy to the decision in Bethea v. Sheppard, 143 S.W.
(2d) 993, error refused.       The facts in the Bethea case clo~oly
parallel the facts presented by your instant request.              In the Bethea
case Mr. and Mrs. Hcnke executed a joint and mutual will (lacking
the express contractual       provision    of the T. G. Hendrick will) which
provided, as did the Hendrick will, for the disposition             of their en-
tire community estate.        As in the material parts of the Hendrick
will, the will constituted the trust instrument and provided for cer-
tain bequests to become effective on the death of the husband, who
was made trustee of the wife’s interest in tbo evemt she predeceas-
ed him; but if the husband predeceased           the wife, the entire commu-
nity estate passed into the trust established         by the will.      Under the
terms of the trust agreement,         after her husband’s death Mrs. Hen-
kc was to receive      $40,000 per year (subject to increase           on stated
contingencies)     for the remainder      of her life. The daughter, Mrs.
Bethea, likewise received an income from the trust during the life
of her mother and for eight years following her death, at which
time, again subject to stated contingencies.          she was to receive the
corpus of the trust.     Mr. Henke did predecease          his wife. and the
will and trust instrument was probated as his will, and inheritance
taxes were paid the State on his one-half of the community estate.
When Mrs. Henke died, Mrs. Bethea contested the payment of in-
heritance taxes on her mother’s          one-half of the community        estite
which had gone into the trust.        The Court held that “the net value
of the corpus of the trust estate in suit was taxable upon the death
of the grantor. . .” on the grounds that by its very terms the trust
instrument     “brings the iastant case squarely within tbo statute,
which . . . imposes     the tax upon the passing of the property or in-
terest therein when ‘made or intended to take effect in possession
or enjoyment after the death of ths grantor.“’            Now if the property
had passed “by the will” of Mr. Herke which’also              established    the
trust, a fortiori, it could not have passed, as the Court held that
it did, by “deed, act, sale or gift” from Mrs. Henke “made or in-
tended to take effect ia posseasioa         or enjoyment after” her death.

          The fact that Mrs. Hendrick received no income from the
trusts here involved can in no way operate to cause the transfer of
her community interest to the trusts to pass by the will of Mr. Hen-
drick.  In her case, no beneficial  interest was reserved,    nor was
the transfer in any way deferred    until her death. So we are of the
opinior that it follows as a necessary    corollary to the Bethea case
that by the terms of the foist and mutual and contractual     will, Mrs.
Hendrick made what was, in effect, a transfer of her community in-
terests to the trusts named therein and that said transfer took ef-
Hon. Geo. H. Sheppard,    Page g (V-704)

fact on the happening of the limiting condWon precedent,     to w&t*
Mr. Hendrick’s   death-not   hers.   So viewed, t&e transfer fails
to come within the provision   of Article 7117 rehting to property
passing by will.

          We think that the foregoing fultp auhlltantiatea this con-
clusion; but in view of the adverse affeat en the atate’s revenue#
which will result from an overruling   3 Opifiicas 04109    Uwt g-1)1,
we think it proper to support our conoIt@ia    by further &&isct.u3rlen
of relevant authorities,

            We think that our holding is consistent  with the holding of
the Commission      of Appeals in Jones v. State, 5 S.W. (2d) 973. In
that case “the testator died leaving a community estate of the to-
tal value of $335,246.00.     The will by its terms devised to the wid-
ow certain specific    property of value approximately    one-half of the
total community property. * The will specifically      requested the
wife to accept the bequests    “in lieu of her community and.dower
interest in all other property.”     The surviving wife accepted the
provisions.    The Court said:

          ‘Much strags has been laid by cotmae $0~ tha
    state upon the doctrine of electirm under wills under
    which rule it is contended the Burviving wife, havi
    eleotsd to take under the will, has done $0, wd wil?
    not be heard to dispute her act&en er to avoid the ef-
    fect thereof: that by a proper application     of the doc-
    trine there has passed by the will the specific devises
    made.     0-1 the other hand, coutlsltl for laintiffs in er*
    ror insist the doctrine does nut a~&&* P this case, be-         ’
    cause she has taken nethiq      un&r ihe will which abs
    would net otherwise     have been entitled te trke, and
    therefore    thoro is ne squity to estop her,

           “It cannot be said broadly that the surviving wid-
     ow ha8 not taken anything under ths will which she
     would not otherwise havs received,      since she has re-
     ceived specific    property under the will, whereas in
     the absence of the will she would have owned an un-
     divided   ene-half interest in all the property.       But
     this is of no moment in the consideration,       for we have
     seen that by the terms of the statute before the tax is
     imposable    the property must have passed by the will.
     We are of the opinion no property passed to the widow
     by the will in any event. It is undisputed that all of the
     Q&ate possessed      by the testator was community prop-
     arty, As mat!& of law, the wife was the equal -02
     in her own right of one-half of that estate..      . .
Hon. Geo. H. Sheppard,    Page   9 (V-704)

          “Now if the surviving w~idow owned in her own
    right an undivided ore-half    interest in the community
    property of herself and husband, then she had title to
    that extent to such property,    and, if the will of deceas-
    ed did not pass any property to her, clearly she is not
    taxable.   The will did not pass any property whatever
    to her, because it operated only as an effective parti-
    tion of the community property after death. A parti-
    tion deed or agreement     does not pass title at all. In-
    deed it is not within the statute of frauds.     It may as
    well be oral as in writing, all because a partition is
    not a conveyance    of land. (Citations omitted)

          “Under the undisputed facte, the surviving widow
    having received no more than her just share of the
    community property fully owned by her prior to the
    death of her husband, or if slightly in excess of her
    one-half, yet not as much as the minimum amount
    taxable under the act, $25,000,       she has received no
    property through the operation of the will. The only
    effect of that instrument was to partition the commu-
    nity property between the surviving widow and the
    other beneficiaries:     in other words, to make definite
    the particular   portion of the community property OWR-
    ed by her, and not in anywise to affect, by increasing
    or diminishing,     her estate.   This is not the passing of
    property contemplated       by the Inheritance   Tax Act. To
    impose the tax under such circumstances           would be to
    visit the tax upon the real owner whose real right to
    the property has not been affected one way or the
    other by the death of a co-owner,        It in undisputed
    that the taxes have been paid upoa that portion of the
    estate received     by the others named as devtsees who
    took the testator’s    one-half of the property.”

          Opinion O-4109 recognized      that under the doctrine of
Jones V. State, supra, no inheritance     tax was due the State from
the surviving wife since the value of the interest received     was
less than the value of her community interest; however, the re-
mainder interests    (partially composed    of the wife’s community)
were regarded as passing under the will. We do not think that
the holding in Jones v. State can be properly limited in its ap-
plication to that part of the wife’s interest which is received     by
the wife. In other words, we are of the opinion that if the hus-
band’s will did not “pass” her interest to her “by will” within
the meaning of that phrase as used in Article 7117, V.C.S., it
likewise does not “pass” her interest to others “by will.”       It is
true that there are authorities    which, in analogous cases deal-
ing with the relinquishment     of dower rights, have regarded prop-
I&n. Geo.   H. Sheppard,   Page    10 (V-704)

erty so passing as subject to tax under similar statutes in
other states.    The opinion of the Court of Civil Appeals in
Jones v. State, 290 S.W. 244, which was overruled by the
Commission      of Appeals,    cited and followed numerous of these
authorities   all holding, in effect, that when the wife accepts
under the husband’s will a bequest in lieu of dower, the proper
so accepted is subject to inheritance        tax. In rejecting  the
Court of Civil Appeals’ opinion, the Commission           of Appeals
affirmatively    rejected   this line of authorities.   Mr. Judson
Falknor praised this decision in an article entitled “Liability
of the Entire Community Estate for the Payment of State In-
heritance Tax When IIusband Undertakes to Dispose of Entire
Community Estate by Will and Wife Elects to Take Under the
Will.”    5 Wash. Law Rev. 55. Mr. Falknor said:
           II
             . . . The language used by . . . the Supreme
     Court of Texas . . . is logical and in conformity
     with our fundame,nwt notions of the community
     property     system /?.e.,   the wife’s    actual ,legal
     ownership of her?ommunity           interest as eontra-
     distinguished     from the common law dower right
     which is generally viewed as an equitable inter-
     est or as an expsctancy       and which was involved
     in the cases relied upon by the Cou f of Civil Ap*
     peals’ opinion which was overrgle 4 and a sirngIe
     application     of the fundamental conceptions       demon-
     Btrates not only that the stat& fi%ferring          to t&i
     State of Washington        under our$resent      Inheritance
     Tax Statute, is not ;I ntitled to e tan upon the wife’s
     share in the community property,           even where she
     elects to take under the will, but that an attempt
     on the part of the state to levy such a tax raises u
     serious constitutional      question as te its right to cl0
     SO.. . .

                              . . 6 6.
                                                            .
           “Before    the state can plausibly make such an
     attempt, a further voluntary arid affirmative        action
     on the part of the wife is required,       In other #clr&,
     she must agree and consent, either by a for-1            writ-
     ten acceptance      of the will and relinquishment    of her
     interest in the community        property,  or by virtue of
     an estoppel,    that her half of the community property
     shall, along with the husband’s half, be turned inta
     the trust.    But ,I$& &mounts to nothing more than a
     conveyance     by the wife to the trustee, after the de@%
     of the husband, of her interest in the community prop-
     erty.    The fact that the entire community        property
Hon. Gee. H. Sheppard,       Page   11 (V-704)

        finds its way into the trust does not mean that the
        trustee or the beneficiaries    under the trust re-
        ceive the property by will or inherftance;     it sim-
        ply means that one-half of the community property
        goes to the trustee for the benefit of the named bene-
        ficiarie.8 by virtue of the will of the hnsbad,    and the
        other half of the community property goes kto the
         trust because of the voluntary and, what clearly
        seems to be, the legally affirmative    act of the wife.”

           Thus, as we view the matter, Opinion O-5557 reaches
the correct   result, and even in cases in which the surviving
spouse takes affirmative    action to relinquish his or her com-
munity share after the death of the spouse who has by will dis-
posed of the em       community estate, the share of the survivor
does not pass by the will of the deceased      spouse within the mean-
ing of Article 7117. Opinions O-4109 and O-191 are therefore
overruled.

           We think that the instant case in which the surviving
wife entered into the trust agreement      prior to the death of the
husband is an even clearer case for the refutation of the view
that her community interest passed “by his will” within the
meaning of Article 7117. To lump the estate of the surviving
spouse with the estate of the deceased      spouse and compute an
inheritance  tax on the combined value is clearly contra to the
obvious purpose of the provision     of the statute which imposes
a tax upon the receipt of property which has parsed “by will,”
since it was obviously designed to tax the privilege      of receiv-
ing property from the dead-not       from the living.

           Even thought we have concurred    with the theory sub-
mitted by the attorney for the e:xecutor, i.,e., that only T. G.
Hendrick’s   one-half interest in the community is subject to tax
as passing by will, we differ as to the amount which passed from
T. G. Hendrick’s    interest to the Baptist Foundation as trustee on
which the taxes due are to be computed.

           Your file shows that at the death of T. G. Hendrick the
value  of Ida Hendrick’s     community was placed at $2,269,289.44.
However, it must be borne in mind that $500,000 of this amount
was specifically    diverted into the trust establi,shed for her ben-
efit, and altimately,    on her death, for the benefit of the Hendrick
Home for Children at Abilene.        To that extent, then, the ratio of
her contribution    to the Baptist Foundation must be deemed to
have beer reduced accordingly,       and the amount passing by the
will to the Baptist Foundation from T. G. Hendrick% community
interest necessarily     exceeds one-half of the sum bequeathed in
the same ratio.     Specifically, the value of the amount which pass-
                                                                              .
                                                      .

        Hen. G#.    If, Bheppud,   Page 12 (V-794)

        el, fran T. 0. Hm&Ack’e estate shQIILs6  MmdS?&m~d       by multi-
        plplali *e, waeuat of the taxable beque w

                  Ljketise,   In this case we thi@ tkalM~!lr. Hendrick’s
        ,*rmatfve    actr, in jotni.ng in and acc,eptfng the previsions of
         T. G. Xisndrkk’s will dis,posin~ of the community es+.ate, follow-
         od by her de&b wi,thin kas than two yews, comb aI@& ,fh9 f&l-
         loWing previdon of Article 7117, V.C.S.r

                         Any treader   made by l grm~tor, vsndr
              at did,:   whether by deed, grant, e8k, vr gtiti, &U,
    .         unless shown to the contrary, be deemed $0 have been
              made in contemplation of death and subject to the
              game far as herein provided, il $wB tr&&~         is
              made withtn two (2) years prior ‘1AVU &a&i& d thr
              grantor, vendor, or doww, ad l ~&S&U         &a!0oi h&a
              @tabs, or if the transfer mada Wit?&8 gpdx period IS
              in the nature of a final distributfon of prlppsrty and
              without adequate valuable coauhloratiion,”

                  Therefore, on her death an inheritance tax beeame due
        and owing the State, and should ba compute8I on the baeis of the
        amount of the gift of her community Sntesreat; spe~cifically, that
        amount should be determined by multiplying the value of the ~tax-
        able bequeets by 1,769,299.44.     Even though the $500,000 trans-
                             930 570 8%
        fer from her prope@rty ;o the trust established for her benefit is
        also clearly within Article 7117 as a transfer “by deed, grant,
         sale, or gift made or intended to. t&e effect in possession or en-
        joyment after the wth of the grantor or donor,” Bethea v. She -
           rd.143 SW. (2d) 997, error rc)fus~II &are is, odx
        %“bY reauoa of the fact that the ult%mate beneficiary, tbb Hen-
        ~dHme          for CWdrea.  is eammpt by virtue of Article 7122,
          l    .

                 We hast thet the foregoing hse answered yeur q#Hoa
        and are returning your file herewith.

                                     S-Y        ‘,’

                   Where aommunfty eetete was canpletely dia-
              pmocl of at death of husband by J&&t wili and kugt
              iaemma&        only the wlw of %s amelgn~ u&g&
.             HUM fran hi$ community one-half shoutd k# wmd
              Y) a tad     for cmnputing the inheritance taxes due
              etsarr duih.     uadem kctu e*bcl, ialicritdlace t&m%
              rWo becune d&e at W w!fob demtb, which occti
              lea@ W     two years after the husband’s death; and
Hon. Ceo. H. Sheppard,   Pago 13 (V-704)

    the Laei~ for computing the taxes dim et &e-r bnrrth
    should be the value of the Am@         *beklr lmd puo*d
    from her OM-half of #c co?rlm@*          *t @A6deba of
    the husband to the beneficierl*s    rluva ta the )sht
    will Ad truet istetrumoat.       brlonr 0493 d     ?4M9
    are overruled to the extent % aq o#liut        W&k&i@
                                     143 $.W.@d) ptl, #4fa

                         ATTORNEY oEaouLobTE%As

bfC/JCP
ENC. (1)

                         APPROVICDI