Untitled Texas Attorney General Opinion ( 1951 )

.
Hon. Robert S. Calvert Opinion No. V-l 146.
Comptroller of Public Accounts
Austin, Texas Re: Imposition of inheritance
taxes where surviving
spouse elects to take less
than community share un-
der deceased spouse’s will
disposing of entire com-
Dear Mr. Calvert: munity estate.
We quote the following excerpt from your letter of No-
vember 20, 1950:
“This department has under consideration the
correct inheritance tax due by the Estate of Enos Ray
Hart.
“Since there is a substantial difference in the
wills and the trusts set up under the wills in the T.G.
Hendrick’s case covered by your Opinion No. V-704,
the Albert Handly case covered by your Opinion No.
O-5557, and the will made by Enos Ray Hart, I am re-
questing that you review the will of Enos Ray Hart and
advise this department whether the entire estate of
Enos Ray Hart, less the portion taken by the wife un-
der the will, is subject to the inheritance tax levied
by Article 7117 Rawle C. S.”
By the terms of his last will and testament, Enos Ray
Hart undertook to dispose of the entire community estate of himself
and his surviving wife, Mary Elizabeth Hart; and Mrs. Hart was ex-
pressly required to elect whether she would take under the terms
of the will or claim her interest in the community estate. Mrs.
Hart has elected to take under the terms of the will, which makes
certain specific bequests and provides for the establishment of four
equal trust funds for the benefit respectively of Mrs. Hart and of
Mr. Hart’s three children by a prior marriage. The trusts are to
terminate within a maximum period of five years from decedent’s
death, at which time the beneficiaries wit1 receive such corpus as
remaioe in the respective trusts. As a result of her election, Mrs.
I-&at will receive less property than she wou1.d have received had
she chosen to claim her share in the community estate of herself
and Enos Ray Hart.
Hon. Robert S. Cabvert, Page 2 (V-1146)
We quote again from your letter of November 20th:
‘It is andlhas been the constructionof this de-
partment that the,entire emtate of Enos,Ray Hart, in-
cluding the community pooperty less the portion taken
by the widow under the will, Ls subject to the inlaerit-
ancc tax Levied ur&r Agtkle 7117. It ir the conten-
tion of the attorneys repsrenting the estate of Enos
Ray Hart. deceased, that only one-babf of the commu-
nity portion of the eatate of Enos Ray Hart is taxable,
That the tax Ls determined by the 8ule established in
your Opinion No. V-704. T&s attorneya, however, ad-
mit that there is a suktant6ab difference between the
wlbb made and left ky Enos Ray Hart, deceased, and the
community and mutual bst caili of T. G. Hendrick and
wife. We &all, therefore, tlaank you to advise in the
premises.’ :
Artbcb 7117, V.C.S., declares that *All property wtth-
in the jurlsdfctlon of tl&s State . e o whfcb ohall pass absolutely or
in trust by wbbb me e skabb, upon pasing ~ e . be subject to a tax for
the bmmflt d the State’n General Revenlae Fund. , , .? If any part
of Mrs. HartOr one-half fnterert in the fommunhty estate passed to
third patties ‘%y will* within tbe meaning 06 the above quoted por-
tion of Article 7117,,your construction Ls correct, Otherwise, no
part of her one-half interest bn tlue community estate is subject to
tax.
The prov&aicpns of Mr. ,Hast’a will do, of COUPSB,differ
from the pi~ovis8ons of Mr. Handby’s w$bband from the provisions
of MP, HendrickOs wall but the on&y conslusfon consistent with the
holding of Att’y Gene Op. O-5557 (1943) and Att@y Germ.Op. V-704
(1748) is that no part of Mrs. Hartb Pnterest in the community es-
tate can be regarded aa having pasred by the wlbl of Mr. Hart in
the sease that it is subjest to tax under Artbcbe 7117. In Opinion
O-5557, the nurvlvlng wife abAowed her &are of the community to
pass into th testamentary trust created by Mr. Handly’s wlbl. Un-
der the provisions of the trust, Mrs. Handdayreceived a portion of
tke trust income’for bbfe, After her death, otbr ~neficbarios were
to receive the enttre income and, &lmately, the corpus of the trust.
Mrs. Handly’s relllnqutshment of her community interest was viewed
as a Wan&e or gfft by ksr to take affect after her death. There-
fore, the twnder cot&~ have been taxable affir hurband’s deatb
as pamring by his wllb.
In Opinicm V-704, the rurv&vAn~ wlb bad mecotod with
Mr. Hendrick tlw jcdmt w&Mand trust inetr%tneatt wkbcb was admbtted
toprobate after Mr. Hendolak’~ death as kls bast wbbband testament.
MS. Hetirkk’s wbbl dbrposed of kke eetli~e cotnrnu8bbtyestate and
Hon. Robert S. Calvert, Page 3 (V-1146)
established a million dollar trust fund. Various beneficiaries were
to receive stated percentages of the income and, ultimately, of the
corps of the trust, Optnion V-704 held that by the terms of the
joint, mutual, and contrrctcaal will Mrs. Handly had made a trans-
fer or gift of part of Iu?r .&WC of the community estate to the trust
fund, the gift to take effect upon the happening of a limiting condi-
tion precedent, to wit, her husbaad’s death, not hers. Such trans-
fer was, therefore, not subject to tax at Mr. Hendrick’s death as
passing by his will.
After Mr. Hart’s death, his surviving wife elected to
take under his will. By her affirmative act in so electing, she ef-
fected a gift of such part of her share of the community estate as
has passed to third parties. Such p’opeaty was, therefore, not sub-
ject to tax at Mr. Hart’s death as passing by his will.
SUMMARY
WhePe the surviving spouse elects to take less
than his or her share of the community property un-
der a deceased spouse’s will disposing of the entire
community eetalte, no psrt of the surviving spouse’s
one-half interest in the community estate is subject
to inheritance taxes as passing by the will of the de-
ceased spouse.
Yours very truly,
PRICE DANIEL
Attorney General
APPROVED:
W. V. Geppsrt Assistant
Taxation Dlvlsion
Jesse P. Luton, Jr.
Assistant
Charles D. Methews
First Assistant
MMC /mwb