Untitled Texas Attorney General Opinion ( 1963 )

.
Honorable Robert S. Calve& Opinion No. C- 37
Comptrollerof Public Accounts
Capitol Station Re: Whether shares of stock
. Austin, Texas are subject to lnherl-
tance taxes upon death
of husband where shares
had been Issued to hus-
band and wife as joint
tenants with right of
survlvorshipand had
been purchased by the
husband with the separ-
Dear Mr. Calvert: ate funds of the wife.
Your letter requesting the opinion of this office on
the above captioned matter reads as 'follows:
"We desire the opinion of your of-
fice regarding the Inclusion for ~lnherl-
tance:tax purposes of stock held in
joint tenancy with rights of survivor-,
ship, and not as tenants in common,
where``thest,ock,was,purchasedby the
husband withthe separate funds of his
wife.
"W. L. C. Poetter died testate, a
resident~ofDeWitt County on December 4,
1961, and his wife, Mrs. Virginia L.
Poetter, who quallfled as Independent
executrlx,/madethe required reports as
provided in the Inheritancetax law to
close the estate for Inheritancetax
purposes.~ Mrs. Poetter's,reportwas
accepted as filed and the tax paid.
"Subsequently,a request was made
by Mrs. Poetter and refused by this
Department,for a waiver of consent to
transfer 255 shares of San Antonio
Drug Company stock standing In her name
and the name of her deceased husband
adsjoint tenants with rights of
154.,
Honorable Robert S. Calve&, Page 2 Wnlon No. c- 37
survivorshipand not as tenants in
common, because the stock was omitted
froniher inherItan& tax report.
((Mrs.Poetter has now submittedan
affidavit to this Departmentsetting
out the facts wlth respect to the pur-
chase of this stock and her attorney
has submitted a memorandumbrief glvlng
his opinion that this was the separate
property of Mrs. Poetter and, therefore,
no'part of the estate of W. L. C. Poetter
for inheritancetax purposes. Both of
these Instrumentsare enclosedherewith.
"It appears to us that one-half.the
value of this stock Is lncludibleIn
the inheritancetax report and a tax
due thereon in view of your Opinion
NO. w-1348. Please advise whether
or not our view is correct ln this
matter."
We quote th6 following.excei@'fromMrs. Poetter's ,affi-
davlt:
"Au‘ing the llfetlms of my husband, ,'~
Wilb&t C. Poetter, who d&d Decem-
ber 4, 1961, and for many years prior,
thereto I maintained a checking ac-
count ln the First National Bank of
Yorktown, Texas, styled 'MOPS. W. C.
Poetter?: 1 opened this account ln
the early 194Ols, prior to 1946, wh&
011 was begun to be produced from my
separate lands In Dewitt County,
,Texas,and I placed my royalty checks
from th& production of said oil into
this account-. I placed no other fQnds
in the account except my royalty
checks, which were my separate funds,
and I dld ~thisIn order to,keep my
separate funds apart from any com-
munity property fund& of my husband
and myself. No community property
furidswere ever~placedinto this ac-
acccunt was my sole.
count, and,:.h.ls,
aa separate property.
.I-I-.
,..a_
. .
Honorable Robert S. Calvert, Page 3 Opinion No. C- 37
“From time to time my husband,
Wllbert C. Poetter, would select varl-
ous corporations In whS.chI might ln-
vest my funds as they accumulated in
my separate account aforesaid and at
his suggestion we would purchase stocks
in the corporations for me, he placing
the order for same with the various
brokerage firms or companies and I would
then draw a check on the aforesaid ac-
count In the First National Bank In
Yorktown, Texas, and thereby use my
separate funds to purchase the stock
as part of my separate estate.
"My husband, Wllbert C. Poetter,
when he would order the stock for my
separate estate and property would
have the shares Issued as follows
(or similarly) 'Wllbert C. Poetter and
Mrs. Virginia L. Poetter, as joint
tenants with right of survivorship
ana not as tenants In common'. This
was done by him under the Impression
that this would make the stocks easily
transferable or sold In the event of
my death before him, whereas If the
stocks were In my name alone he felt
there would be much Inconvenience
ana expense in transferring or selling
the stock. There was no understanding
between my husband and myself that
any part of the stocks In question
were to be anything but my separate
property during my llfetlme.and my
separate funds were used to purchase
these stocks under the understanding
that the stocks purchased would be my
separa.teproperty and would be no part
of his property or estate."
The memorandum brief submltted In connection with the
taxpayer's posdt.lonin this case contains the following para-
.graph:
"It is our feeling that despite the
stocks being lcsued in the joint tenancy
manner as above set forth that the actual
ownership was still based on the intention
Honorable Robert S. Calvert, Page 4 Opinion No. C- 1,
of the parties and the source of the
funds used to purchase same. . . .
.Wlththis ln mlnd we feel that the
above shares pald for by Mrs. Poetter's
separate funds were her separate prop-
erty. Please advise us your ruling on
this."
Attorney General's Opinion No. ~-1.348 (Jtie 8, 1962)
held that the decedent's one-half interest In a bankaccount
which the decedent and another held as joint tenants with
rinht of survlvorshlvwas sublect to an Inheritancetax when
received by the survivor at &e decedent'sdeath. The opinion
consldered~thecase of Davis v. East Texas SaVineS 6cLoan
Aasoclatlon, Tex 354 S.W.2d 926 (1962) which held
that a savlruzaand lokiificate Durchasedby the husband
with his se&rate funds an&issued *'hia name,-but subsequently
reissued to him and his wife as ;lolnttenants with right of
survivorship,passed at his death to the wife. At page 931
the Court pointed out that when the"contractwas.ma$e with
the savings and loan aasociatlon,the wife became vested wlth~
a present;though defeaalble, interest ln the deposit. Her
. interest would have been defeated If the certificateh&d been
changed 3y her husb+nd or the deposit wl,thdrawn'beforehis
death, or if she.hqd predeceased-h&n,but-.slnce.none of these
things happened, at hls death, the.@f‘e bCcsme the sole owner
of the entire deppsit.
me Davis case-.,cannotbe diatin&lshed from the case
we are pr&ay consld&Lng becauae.lt lhvolveda aavlngs
and loan certificateand this case lnvo&ves stock. When Mr.
_' Poetter, acting as agent for his wife, and with her knowledge
and consent atidisclosed by Mrs. Poettercs affidavit,made
the contract with the various corporationsfrom which he pur-' '
chased the stock4 and When thenstock was-issuedby the varlous
corporatiO;nstd Wilbert C. Poetter and Mrs. Vlrglnla~L.
Poetter, as joint tenants with I'lghtof survlvorshlpand not
as tenants inc&nmon", both joint tenants becam vested with
'a'present,though defeasible, lnterest,lnthe stock.
. The fact that Mrs. Poetter an& her husband Intended to
preserve the separate ctiacter of;her property cannot change
the legal effect of their actual transactions. You are
therefore advised that at Mr. Poetterls death, Mrs. Poetter
received his one-half joint Interest in the stocks Involved,
and that such amount Is subject to an inheritancetax.
. ,
, .
Honorable Robert S. Calvert, Page 5 Opinion No. C- 37
SUMMARY
Where a husband used wife's separate funds,
with her knowledge and consent, to purchase stocks
Issued In his name and In his wife's name as
joint tenants wlth right of SurViVOPShiF md not
as tenants in common, the husband's one-half
interest became vested at the time of the pur-
chase subject to being divested, and was, at
his death, subject to an Inheritance tax upon
passing to the survivor under the terms of the
contract, despite the fact that the husband and
wife had Intended the stock to remain the sep-
arate property of the wife.
Yours very truly,
WAGGCNER CARR
Attorney General of Texas
By:``&%/%+&+~"y^c~ 4
Marietta McGregor Payne.
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Jack Nor-wood
Howard Fender
Frank Booth
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