Untitled Texas Attorney General Opinion ( 1961 )

WVILL WILSON AlTORNEYG~NERAL October 10, 1961 Honorable Robert S. Calvert Opinion NO. ``-1160 Comptroller of Public Accounts Capitol Station Re: Exemption from inheritance Austin, Texas tax of devise to Shriners Hospitals for Crippled Children under submitted Dear Mr. Calvert: facts. In connection with your request on the above-captioned matter, you have advised us of the following facts. L. Alberta Watkins and her husband, who predeceased her, had executed a joint and mutual will. Paragraphs 3 and 5 of this will read as follows: “3. In case of a common disaster of the undersigned testators causing the death of each of us, then,,in that event, we jointly and severally devise and bequeath all of the property, whether real, personal or mixed of which we,may die seized and possessed to Shriners Hospital for Crippled Children, a Corporation, for the use and benefit of the hospitals owned, operated, and main- tained by said Corporation. 8, . . . “5. In case either testator survives the other, but makes no other or later will, then In such event, the estate of such survivor shall pass under and accord- ing to the program of distribution set forth in numerical Paragraph Three above." Article 14.06, Title 122A, 20-A, Tax.-Gen., Vernon's Annotated Texas Statutes, provides an exemption from inheritance taxes for transfers to charitable organizations if such charitable organizations are to use the gift within this State. Article 14.06 also contains the following further provisions for exemption which reads as follows: "Provided, further, that If the property so passing is to or for the use of a Honorable Robert S. Calvert, Page 2 Opinion No. ``-1160 religious, educational, or charitable organization which conducts its operations on a regional basis, one such region of which includes the State of Texas, or any part thereof, then a bequest, devise or gift to be used within such region shall be'deemed to be'used within this state. "For purposes of this paragraph a region shall comprise not more than five contiguous states, either in whole or in part, one of which is the State of Texas." The Attorneys for Shriners Hospitals for Crippled Children have supplied you with certain information which they deem pertinent in the determination of the taxability of the devise in question and which is offere~din support of their position that said devise Is exempt from an inheritance tax. We quote the following excerpt from the letter submitted to you in connection with this matter. "Shriners Hospitals for Crippled Children is a wholly charitable corporation organized pursuant to the laws of the State of Colorado. This organization,owns and operates hospitals for crippled children located in different parts of the country; one such hospital being located in Shreveport, Louisiana, which services the region of Texas, Arkansas, Mississippi, and Alabama. In other words, crippled children of parents financially unable to supply needed orthopedic care, hospitalization and surgical treatment from the states mentioned are admitted for treat- ment at our Shreveport, Louisiana, hospital entirely without cost. Over the years since our hospitals have been in existence, many crippled children from the State of Texas have been admitted for treatment at a cost of many thousands of dollars which might otherwise have been spent in treating such children in public institutions within the State of Texas. "Shriners Hospitals for Crippled Children have always been affiliated with the Imperial Council of the Ancient Arabic Order of the Nobles of the Mystic Shrine of North America, Honorable Robert S. Calvert, Page ~3 Opinion NO. ``-1160 a fraternal order. The 'charitable corpora- tion was organized tomoperate the hospitals which administer the charitable work of the Shrine fraternal order. The Shrine is operated under the so-called Lodge System form of government, which means~that Shrine Temples are chartered by the parent body and are~located throughout the country. Eleven such Shrine Temples are located in the State of Texas, one such temple being in Austinand another in Dallas, where the Watkins estate Is being administered. The other temples are at Amarillo; El Paso, Wichita Falls, Fort Worth, San Angelo, San Antonio, 'Waco, Houston and Galveston. The members of the Shrine fraternal order make annual payments toward the operation and maintenance of Shriners Hospitals for Crippled Children and the various Shrine Temples are responsible for locating and processing crippled children who are eligible for admis- sion to our hospitals. The Shrine Temples also provide transportation for the children to and from the hospitals and assist in many other ways ,in furthering the charitable endeavors of the organization. II . . . "As indicated above, -the funds to be received by Shriners Ho~spitalsfor Crippled Children from the estate of L. Alberta Watkins will be used at the Shreveport, Louisiana unit of Shriners Hospitals for Crippled Children for the care and treatment of crippled children from the State of Texas. An affidavlt to such effect over the signature,of one of our cor- porate officers was to have been attached to the inheritance tax report. . .' The submitted affidavit was signed by George M. Saunders, Secretary of the Shriners Hospitals for Crippled Children. The substance of the affidavit Is that George M. Saunders is the Secretary of.the Shriners Hospitals for Crippled Children and that, as such officer, he ~1s authorized to make the state- ments contained In .the affidavit on behalf of the Shriners Hospitals. These,,statcments:areto theeffect that the Shriners Hospitals for Crippled Children is a charitable Honorable Robert S. Calvert, Page 4 Opinion NO. ``-11.60 Colorado corporation owning and operating hospitals for Crippled Children throughout the country and providing care for children of parents financially unable to provide such care. He states that the Hospitals are administered and operated on a regional basis and that one such hospital unit is located at Shreveport, Louisiana, and is known as the Shreveport unit of Shriners Hospitals for Crippled Children. He states that children from,,theState of Texas are treated there and that it is hereby . . .stipulated and agreed that the funds and/or assets received by Shriners Hospitals for Crippled Children from the estate of L. Alberta Watkins will be expended exclusively for the care, surgery, hospitalization and treatment of crippled children who are residents and domiciliaries of the State of Texas at the Shreveport, Louisiana, unit of said Shriners Hospitals for Crippled Children wholly without charge;. . ,' Attached to the affidavit is a copy of a resolution adopted by the Board of Directors of Shriners Hospitals for Crippled Children at a regular meeting held in Miami, Florida, on June 15, 1961. This resolution provides, in part, that, among other officers, the Secretary J.sauthorized, directed and empowered in the name and in behalfof Shriners Hospitals for Crippled Children, a Colorado corporation, to take certain enumerated legal steps. Paragraph 3 of the resolution reads as follows: "To make and execute all necessary contracts and documents affecting the property of Shriners Hospitals for Crippled Children, and other properties of the corporation;" Paragraph 9 reads as follows: "To make and execute any and all papers and documents as may be necessary from time to time to comply with the laws of the state in which any of the properties of the corporation may be located for the pur- pose of protecting and safeguarding the same;" Paragraph 10 reads as follows: "To make and execute such agreements, papers and documents as may be necessary from time to time to settle any controversies over the properties of the corporation, or such suits as may be pending affecting the properties of the corporation, and as may Honorable Robert S. Calvert, Page 5 Opinion No. ``-1160 be deemed necessary.‘for the’protection bf the proparties of the corporati,on;” Tha foregoing facts clearly satisfy the requirements of the statute. The limitation as to the use and expenditure of the devise is in no way lnconsistant with the terms of the will. The Secretary of Shrlners Hospitals for Crippled Chll- dren is plainly authorized to so bind the corporation. The regional operation of the Shriners Hospitals for Crippled Children within the states of Texas, Arkansas, Mississippi and Alabama meets the statutory requirement that the region shall comprise not more than five contiguous states, either in whole or In part, one of which is the State of Texas. In Attorney Qeneralls,Opinion No. W-1141, the following statament appears in connection with the proper construction of the statutory provision hare under consideration: II .The Legislature did not see fit to pr&ide any yardstick for measuring the amount of baneflts which this State should receive from the charitable organization operating on a regional basis; yet it Is avident that tha Legislature did not intend to accord an exemption for all charitable, bequests, devises or gifts since this regional axemptlon provision is limited to regions of not more than five contiguous states, either In whole or in part; one of which is the State of Texas. Therefore, necessarily the statute contamplates that this State receive some teneflt bafore exemption will be allowed . . . The “benefits tast” established by Opinion No. NW-1141 as determinative of exemption has been mat in this case by Irrevocably committing the devise In question for the use and benefit of the crippled children of this State. You are, tharefora, advised that the devise Is exempt from an inheritance tax. SUMMARY A devisa to Shrlners Hospitals for Crippled Children, a Colorado charitable corporation, is exempt from an inherltanca tax undar Article 14.06, 20-A, Tax.-Gen., V.A.T.S., by vlrtua of the corporation’s Honorable Robert S. Calvert, Page 6 Opinion No. ``-1160 regional operation in the states of Texas, Arkansas, Mississippi, and Alabama and by its irrevocable commitment of the devise for the use and benefit of the crippled children of this State. Very truly yours, WILL WILSON Attorney General of Texas Assistant MMP:lmc APPROVED: OPINION COMMITTEE: W. V. Geppert, Chairman Henry Braswell Tom Burrus Linw~ardShivers REVIEWED FOR THE ATTORNEY GENERAL By: Houghton Brownlee, Jr.