Untitled Texas Attorney General Opinion ( 1961 )

. .
E ATTORNEY GENERAI.
OF TEXAS
September 7, 1961
Honorable Robert S. Calvert Opinion No. WW-1134
Comptroller of Public Accounts
Capitol Station Re: Deductibility for inheri-
Austin, Texas tance tax purposes of
administration expenses
incurred in connection
with the administration
of the entire general
Dear Mr. Calvert: community estate.
You have requested,that we advise you as to whether fees
of the executor, administrator, accountant, appraiser and probate
court costs should be allowed in full as a deduction for inheri-
tance tax purposes upon the death of the first spouse in those
cases in which there is an administration of all of the general
community estate.
All of the fees enumerated by you and the probate court
costs may properly ‘bereferred to as expenses of administration
and, except in certain circumstances which we will specifically
note, the same rules as to deductibility for inheritance tax pur-
poses will apply.
In many instances, with certain exceptions not pertinent
to your question, lthe entire community estate, and net merely
the decedent’s interest therein, is subject to administration
upon the death of either member of the community. 14-B Tex.Jur.
185, Decedent’s Estates, Sec. 1126. It ,sohappens that the cases
we will hereafter discuss were concerned with fact situations in
which thehusband predeceased the wife; however, the conclusions
we draw from these cases would be same if the wife dies first
and if the entire community estate is subjected to administration
at her death.
It has been held that the community oronertv 1~sgenerally
regarded as belonging to the estate of the deceased husband, subject
to administration by his executor and tne payment of his or the
community debts. Therefore, there can be nq,dismemberment of the
::,
’ For a discussion of various types of administration under the
Probate Code see "Community Property in the Administration of
Estates", 33 T.L.R. 1012 and "Probate Code Changes in Administra-
tion of Community Property", 34 T.L.R. 1012.
Honorable Robert S. Calvert, Page 2 Opinion No. WW-1134
estate for administration purposes. Lovejoy v. Cockrell, 63 S.W.2d
1009 (Comm.App., 1933); Tracy v. Lion Oil Co., 312 S.W.2d 562,
(Civ.App. 1958, no writ history); Goggans v. Simmons, 319 S.W.2d
442 (Civ.App. 1959, error ref.,n.r.e.).
Under Article 3630, V.C.S., as that article stood prior to
the adoption of the Probate Code, it was provided that until parti-
tion of community property is applied for by the surviving spouse
and made, "the executor or administrator of the deceased shall re-
cover possession of all such common property and hold the same in
trust2for the benefit of the creditors and others entitled there-
to."
It has been stated that the fact that the community pro-
perty is subject to the debts of the deceased husband and to
administration by his executor may be regarded as an elementary
principle under the laws of Texas. Nesbitt v. First National Bank
of San Angelo, 108 S.W.2d 318, 320 (Civ.App., 1937, no writ history).
See also Speer's Law of Marital Rights in Texas, 3rd Ed. 820, Sec.
657. Under the decision in Jenkins v. First National Bank of
Coleman, 101 S.W.2d 845 (Civ.App. 1937, no writ history), the
rule would be applicable not only to estates administered under
the jurisdiction of probate courts but also to estates administered
by independent executors.
In view of these principles, it has been held that where
the entire community estate has been subjected to administration
by the executor of a deceased husband, only one-half of the admin-
istration expenses was attributable to the decedent's portion of
the estate and that, therefore, only one-half could be deducted in
computing the Federal estate tax. Lang's Estate v. Commissioner
of Internal Revenue, 97 F.2d 867, 872 (C.C.A. gth, 1938); Estate
of Oscar Leavy, 42 B.T.A. 991 (1940); Schumacher v. Commissioner,
8 T.C. 453 (1947). In the case last cited, only one-half of the
attorney's fees paid for assistance in probate work were allowed
as a deduction in determining the estate tax on his portion of
the community property. Also allowed as a deduction were one-half
of the payments for accounting services and one-half of the exe-
cutor's fees.
We are in accord with the results reached in these decisions
and think them applicable in determining allowable deductions for
Texas inheritance taxes. However, in certain instances, even
though the entire community estate is subject to administration,
with the result that only one-half of the general expenses of the
2 Article 3630 was omitted in the Probate Code, but partition may
still be had. See 33 T.L.R. 1012, 1025.
. . .
Honorable Robert S. Calvert, Page 3 Opinion No. W-1134
administration are deductible from the decedent's one-half of the
community property for inheritance tax purposes, where an attorney's
fee is paid by the estate for services in connection with Federal
and State3 death taxes, we are of the opinion that such amount
should be deductible in full since it is attributable entirely to
the decedent's share of the community property. This was the re-
sult reached in Lang's Estate, supra.
Our holding on this point as to the ded,Actibilityof only one-
half of the expenses of administration is limited to those instances
in which the administration of both shares was necessary for the
settlement of the affairs of the entire community, as for example
where it was necessary to determine the amounts of community debts
and liquidate assets to pay them. If the administration of the
community is totally unnecessary except for the purpose of facili-
tating the computation and payment of Federal and State death
taxes due by the estate of the decedent, we are of the opinion that
the entire expenses of the administration should be allowed as a
deduction. Succession of Helis, 75 So. 2d 221 (La.Sup., 19%). _
In those instances in which the decedent possessed separate
property as well as community property, the expenses of administra-
tion should be apportioned between the separate and community pro-
perty in accordance with the value of the decedent's estate in
computing inheritance taxes. Re Coffee's Estate, 120 P.2d 661
(Cal.Sup. 1.941). The Goggans case, supra, is a Texas case which
has reached the same result as to apportioning administration
expenses. We quote the following excerpt from page 446:
"The other points relate to charging
the community estate with the funeral
expenses of the testator, and to charging
the expenses of administration propor-
tionately to the separate estate of the
testator and community estate.
"It seems to be the law that funeral
expenses of a deceased spouse in a reason-
able amount are primarily chargeable to
the community estate. Goldberg v. Zellner,
Tex.Com.App., 235 S.W. 870; Norwood v.
Farmers & Merchants Nat. Bank of Abilene,
Tex.Civ.App., 145 S.W.2d 1100, error
refused; Richardson v. McCloskey, Tex.
Com.App., 276 S.W. 680; Hacker v. Piper,
Tex.Civ.App., 2 S.W.2d 997.
3 Article 14.10, Ch. 14, Title 122A, 20-A Tax.-Gen , V.A.T.S.; ex-
pressly provides that "attorney's fees and Court costs accruing
in connection with the assessing and collecting of taxes provided
for under this chapter. . ." shall be deductible.
- -.
Honorable Robert S. Calvert, Page 4 Opinion No. WW-1134
"Nor do we perceive any error in
the action of the court in charging
expenses of administration propor-
tionately to the separate estate of
the deceased and the community es-
tate. Appellant inveighs against
the practice of administering on
the estates of living persons and
charging them with administration
expenses. The decisions, however,
seem to authorize what was done in
this case. 14-B Tex.Jur., p. 185,
sec. 11~6; Huth v. Huth, Tex.Civ.
APP., 187 S.W.523; Norwood v.
Farmers & Merchants Nat. Bank of
Abilene, supra; Lovejoy v. Cockrell,
Tex.Com.App., 63 S.W.2d 1009."
Article 14.10, supra, allows the full deduction of funeral
expenses. Other than this, the above stated rules of apportioning
expenses of administration would be determiniative of the amount
of allowable deductions for inheritance tax purposes.
SUMMARY
Where the entire community estate is
subjected to administration, only one-half
of the general administration expenses are
attributable to the decedent's portion of
the estate. Therefore only one-half of
such expenses are deductible for inheri-
tance tax purposes. However, if adminis-
tration of the community is unnecessary
except for the purpose of facilitating
the computation and payment of Federal
and State death taxes, the entire ex-
penses of administration are deductible.
Attorney's fee paid by the estate for
services solely in connection with
Federal and State taxes are deductible
in full. If the decedent's estate is
composed of both separate and community
property, the expenses of administration
should be apportioned between the de-
cedent's separate and community property
Honorable Robert S. Calvert, Page 5 Opinion No. WW-1134
in accordance with the value thereof
and the allowable deduction for inheri-
tance tax purposes computed In accordance
with such apportionment. a
Very truly yours,
WILL WILSON
Attorney General of Texas
MMcGP:jp
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
W. E. Allen
Gordon C. Cass
Robert T. Lewis
F. C. Jack Goodman
REVIEWED FOR THE ATTORNEY GENERAL
By: Howard W. Mays