Case Information
*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN
GROVER SELLERS ATIORNEY GENm*l.
Honorable George Ii. Sh8ppard
Oouptrollsr of Fublio Aoocunts
Auratin, Ts%as
Dosr Sir:
Opinion no. Q-7040 . (1) Whether a #INI paid oat
RI I ln oompromlro oi a will atmtart 18 te banrflolarler SWm your lrttrro oi ra
il;stetr i&a. 1'. A. @enlay, ti by you, M r8etc thr
furnlshrb
arrtsin bepasstr o? prrronal proport , and oontalnrd thle provision di6pomiug
0r my property, d and p.mramd or, %lng paragraph, after , togethrr afth all of ng or this will, shell I in equal ahareu In Fnrbytrrlaa Churah in tba I the Southarm Prosbyteri~n uroh in thr Onltad Staten Churoh In the Unltrd 8tatee (aomaonly known as the southern Frasbgtarlan Churoh) ti aqua1 sharee, tha ramindar of all *2 %onarabla George H. Sheppard - Fag8 2
tha property I may avn 01: ba interested in at tha time of to mana$a, 8411 or diepose of aa my baath, roe elapla, they may prOp6r.* of the will ms made by seven nlaoaa end nephews.
A contest On June 7, 1945, tha Judge of th6 Caunty Court at Lew of lallaa the tam urery e&dniatrator County entered an order Ulraoting a&ate to pay tha oontaetante tha auin 7,000. This order reeds B in pert a8 follower
Wn this day. . . ooming on to be heard the application a? the Temporary Admlnlatrator of this %&eta for approv61 of a proporition to settle tha aontast brought against tha probata af this will by 6artuin oontaatantr
.: and it appaarlng to the Cwrt to the prapof184 8attl6mantI that all the parties ana ;t*intarast hara agraad is to the advuatagr banaflolarias of said will . . . rapraeantal herain elro by apaoial oounaal, and that aafd proposed bualnaae settlement Ir a raaeoMbla, duet, and
lIka disposition ot what may be 8, dengarwa, long end 8~pansI~a lltlgstion, It IS th8w0r8 0ra8r8a tha aald oontont by tha paymant o? ro orltlon to aattla to the aontaetantr, 7, 00.00 ba en4 haraby la approved; tha Tamporary Adm5.niatrator la hereby ordered and eothorlaad to pay uid amount. , .* oo~rmI.68, the will we n4mltt.d
Aitar to probate. lnharlteaaa tax rapurt , tha l xaouto r bat Beken tha In pragarlng porltion $7,000, king $1,000 to aaah of the crontartenta, rhoula be aat up ar thair distrlbutiva ehera of the aetata and SIn6a sash a2 tha oontaatanta would have 6n exemption tax86 to them. In axoasa of &l,OOO, thls wauld result In no tex fram then ior any part of the $7,000.
For a atatamant oi the fiats regardin& thw 8aoond quaation, ua quote the ?olluwi~ frum Oha latter of 3, W. MoUIllln, your InharItanoa Tax Auditor:
*The eaoond quaation arisen to the taxability of tha as portion of the Brteta whIoh was wlllad to the Praabgtarlan Uhuroh of the Unitad Stetaa. l xaouto r in prapati.u#l lnherltanoa t6x report, ahowad this baquas e (te taxable end wfth 62 axamptlon only $500.90. The Repr6..nt,stiVes of the Qtats now oontant? that this w6a In arror an8 entire orppnizetion and amount is non-texsbla a~ eoirg to e ral&ious la ta be usad in 'Razes.
gonarabla George 13, Shapperd - Page
Yhs Fraabytarlan Ch&rah ID organised along tha following aaotion era organbad line: The looal ahurahae In e aar$eln Into Prasbytarlae. A number of Prarbytarlaa oonstItuta e synod. Tha gotaming body of the Churah ia oellad the General Assembly and la mada up of rapreeantativas from the various rreabyterias. General ksaambly maata annually and at thsaa meetinglo paa~aa ordera, rasolutiona ato. and diraot how the buaInara of tha Churah Is to ba oonthota4. These 4lraotitas ara for tha guidance of various Boaras oraated by the @anareA Aaeambly en4 throu& which the bualnaaa of the ehnroh Pa oerriad on.
“Thaw Gana?al A~aambly la en Inoorporatad bo4y undar the lewr ctf North Caroline, The Gaaazul Aesambly has oraetad a Soar4 or Troataaa whoa* offiaa ir looata4 et Cherlotta, Morth Car0liaa. When bepoasta or donations 0r
ropsrty era raoairr6 by the Ghureh, thr, usual prooa4ura a for the Boar4 of Truatara f: take ohar&a of hen4linmg property. The looms other Pro88868 from thaaa propartlra era dlrtributad by tha Truakaa in eooordenoa with diraatlns from the Gan8ral Asaa6bly. In oeea ot for a spaolfle purpoaa, propartybaquratho4 donated in l ooordenoa with terms of uuoh baquaat or la handled the Uanetlon. When proparty la raoslvad by baqaaat or 4onstIon ia Indiaetad, proparty Is uaad end no ~paoiria pur$ose for any purpose wldah the G4narel ~Assambly my think proper.
It oatz be apsolY10 diraotiva order funds whioh it has on hen4 wad fo r e l psoiflo pu or ln e 8poolfIo arae* In owe, the instant the Chnara Assembly resolution T l/2 or tha Mrs. F. A, Manley %&eta ba usaid
f.yse,” Tha Traaaursr ,ot the Churoh edriser ma that par fear Churoh a~am4a approrimatal~ $13,000.00 In Taxa~s l/Z of the fund8 darlwd and that fry thia estate will, under Qiraotlva mmtloaad, ba used l’waa. of the Prasbytarlan Church
*The Ganarsl Haa4qusrtars of the Unltad States $s looated at I.120 Liberty Bank Dullding, Dallas, Tares an4 has bean looatad in Dallw~ sin08 1922. l/2 ai the ssteta
“1 daolinad to allow going to the frasbytarlan Churoh of tha ~nitad States a8 Owmpt~ It la apparant from the WI11 and from the manner at orgenieatlon of this Churah, these funds oould be uasd for any purpose a114 et w pl.404 the Qanaral lrsaemblg should dlraat. In other words, its uaa was in *4 mnora bla Qsor&~ li. Sheppard - Fags 4
no eenee limitad to Toxae. Iti appanrs to ma that tha rsal quastion prssantsd 12 whether the rseoLiAl.on paeaad by the General nftar draedent’s eatat@ was to br uaad in Taxsa death to the -ssss?bly eiisct l/2 OZ t!iis would chare,,a the canerel rule end Ln4k4 this bequest rxanpt.
II! this ooncaotlon, I cell your ettentlon to Attorney Se~mrel*e opinion +G-2816. Thla opinion oallr a ttsntion to the aa~e ol ran Jscinto Ketlonel Bank te. Sheppard, 125 z, ::. (26) 715, Court statad a8 followa~ in %lch
manor did the Xl1 of ‘Tilroy require the funds derived from hle davlso to be uard In Texas. Claaorly undrr the Chartar and said X11, beneficiary oorporatlon aould hava uaad thr dariea anywhara the dlraotors, thanof, should detarmlne in their maatlngs in Qhlo. * It a?psars fxom tha Attornay Gsneral*s ruling thslr la t&at the Kill lterlf met ll@t porltlon tha asa OS to tha State of Taxae. This yould tha proparby Involved aoam to ba ospaofally trur when ths property ie nillad to an organleatlon whioh by Its Tary nature expands its funds 0~42~ a larga area and of whloh thr state of Taxae Is only a part. As pointed out in the ;rttornag Ganaral*s Cplnlon if an agraamant after daath of tba deoedent was parmittad to ohan@ the taxable status of a baqurat than there would 444n .to~~ba no raaaon why othar taxahla b+na- iiolarlse would not ba antitlad to so Oontreot. A baqueet a non-relatlva m ht by thlo roeaodurcr baooma taxable a parson with a h ghsr sx8mpt cpn and ardapr tax Y sltogsthnr.”
Your first question hea bsan pas&ad upon and ssttlad by Grana V. E.fo,nn, 162 S;W. (2) 117, (writ of 6rror refused). In that 0444 thera vtaa a will oontsat, the wllL was adofttrd to pro- tiy fan a~raad jud~raent Frobata Oourb wh@h lncorporstsd bate It the settlsmnt eereamant waohad batw4m the parttas. Appallant, who wae tha pereon nnmed In the will to rrosits all ot;dacrdsntva property, contended thet only the BUSI of $98,4%82 peeeed to her end that aha owed taxes to the State on this amount, and that eha DIpsd no taxae on tha balanaa of ths a&ate whioh wab given to the/’ Qontestant in comprcml44 of tt:e oontsat. Th4 oourt reviewed tba authorities and held the entlra aatate wae taxable to appsllent.
The rationala of the opinion Is as follows:
“It Ie our si.4~ that ahe did reoolw all the property The court oould not alter by th3 term of We will.
will end the fsct that eke gave up a part ,oP the property to 3~)Es good her title to the balaw4 did not altar It.” *5 Bonorable George R. Shappard - ra(lr 5
Gf tha ooutentlon that the &mount rswlmd by the l o~, who wes tba contestant, was not received frool appellant but wan reaelve6 troln the father’s estate by virtue of ths laws oi deeaont and dls- tribution eince his rkht to maintai? ths aontest was dsrlvsd eolslg from his status ae sn hair oz the testetor, the aourt dar
n Reg~rdlesa of the ae,rec;rwnt whloh browht it ebout,*t~a’fuat ramalos that ths will of the deosdent wss probated terns of it appellant reael+ed all ot the estete. Mthout probstinp, of the will she would hatie By agrerlng ios the oonteetant got no part of the 6etats.
to take a part of the eetste whloh the will gave to her, she purohasod her peaae and thereby scoured unqurationrd title to the bnlanoe. It In true the eon wee able to maintain the .aontest bemuse of his heirship, a&d so in a aenae being an heir did enable hia to gat a portion estater cli& not oonwnt for him to share 3nt appellant the set-ate beoause ha was an heir but only beoauee he was a contestant ot the will whloh gave all or the e&ate to her. There is ‘nothing to foaioote thab the son would ha?8 gotten anything If be hsd not oanteated the will, Or othar ohildren oi the doordent; ii he had left aDy, would have shared In the eoapromise eettfsment he& they not bsen psrtiee to the aontest., Both the appellant and the probate aourt drslt with the aon, not as en heir rserelf, but an a oontestsnt OS t!n3 will.” A olosely analogous sltuetlon wae rwlrwr6 by thl8 ‘. Opinion So. 0-6035, a oopy of. whloh I6 enoloeed
department .here- with, and it ma he16 that the sttorn8f’a fe8s,.%n queatian rhould not be dmluated befors ooqmting ths tux. In answer to your rirst question, is our opinion
the $7,000 paid out lr. compromise of the will oonteet ia taxable to the two benerloiarlea, unbar thr *Ill.
t?e paw now to a oonaidrretlon oi focir second question, whloh arises untier that portion or nrtiole which reada 5s fOllowa t tha,b thlo Artlale
Y3-ovlded, however, shall not apply on property. pansine to or ior the ~86 oi the United Stat88 eduostional or ahartfible organization or any rel&ioue, when mob bonueat. devise or ai$‘t Ia to be used wlthla thla I xq&aele e~pplleiIT $&&a” *6 mnorublr George H. Sheppard - Pags 6
pie lnejority or deoleitma from other jurladlotlons, under similar atotutse, 40 not allow aremptiona from the payment of an 1nherltenae tax to a roreign religious, or edueatlonal oharltnble sorporo tion, tlven ii” it oarrids on same of Its work sfthin the utete. me rensons ror euoh rule hsve boen stated verioualy ae follower
*Tt~xae must be relaed ror the support a:%d conauct ot the ~ovrrmmnt. ?‘Jxamption to oherltable, eduoational, and is bottomed upon t&e faot that they religious orignlzatlona they are rennder ear-doe to tha &ate, for whloh reaaons burdena of taxation. relieved oertaln Tha etf8ob of an sxamptlon Is equivalent to an appropriation. It oannct be aal4 to have been the intent legislature to m&e epproprlatlona for the benerit or Mlntanaao8 or forean whioh, at best, have a reaote ohanor only to oharitirs, of this atate.” Morgan v. A. T, & 9. benefit the oltizana F. Ry. Co., 116 Kan. 175, 225 1'. 1029, 3i, ii. L. R, 625, th6 CallfOrnl.tk aorporatlon “:vhile we may assuae would raltmllJr rxwmi61 tha provfrlonr or the will in tha usa of the rtate would have Tao vlsit+eL ropwty, yet power riiabl XI& it to enforar ooaplianarr True, the 001 is reglstrmd in the date and permlttad to 40 poratlon mmnln tn businesr.thrrein, but it la not soizpelled t&a stata.” In ra Thomas~a Sa$aba, 185 Sarh. 113, 53 I"(2) 305. *It 1~ the pollc ~ai soaimy to enoouqga bonrvolrnoe But it 9 a n 0 t the proper funotloa .of a ptate
and oharity. ,-. its own l.imibe, and divote Its ramararcl to to go outside laiaalons $or suppo*t 04uae of rqllghn, ~’ oduoatiotl, benerlt of mankind ~st large.@’ Iltuaphreya v1 9taM. Ohio St, Rep. 67, 70 X.3. 957, 65 L.R.A. 776. by the Court of
Theaa rules ham been oited with apprwal ln ?San Jaolnto Rational Rank v, Sheppard, I.25 S'G(2) Civil Appeals 719. AlthouiJh that easa’ was oontrokled by statutes as thrg existed. in 1931 (at whiah time Artiole 73.22 provf(lrd for an exemption “ii : . organlzzio; looated prrssl~ to a rellgloas rrLthln this hJ, bhis 3tew) Estate an4 th6 twauesb i r’t: be. u~rd and the statutes have been sisended sinae reaovu th llmltation of location of the or enlzation, tho obsemt$on Or ok on t&a Phaitatlon Of use vii hln this & jtate, aa quoted you in your request, Is the only expresalox by the aourts of this Stete on the mattsr. 1-t ie frobebla the oourts will follow vials ln construing present Artiale 7122,
~onore#lr G4or&e E. Sh4pp4rd - P4ge 7
In acoordano4 with this rxprcrasion, w4 feel that 4 baqu44t In aada 4x4mpt under Artlolr 7122 only when the baqu4ut Ie 4prcIfIoally roqulrad by the tarme or the will ta br uesd In this Stat4 or whan th4 powsra of the benaflclary er4 1Imltad In such e menner thot It mnnot lagally meka ~44 of ths bequoat outsida of this :itate. Thr 4msndaanta oi brticla 7122 In 1931 and 1933, rrmovlrg CL4 rsquiramrant tha aorDorets bsnsrlolary ba “looatad” In tlil.4 Liteta Indloata put ItreIgn 4 olaar l4glal4tlv4 intrnt end dom4etIo corporation8 of this tgpa on ths tmm tooting If tha b4queiet Is requlrad to bs 484~3 wlthln this Stats. Mrs. Xanla.y*e will sod drvlerd to ths i:rsrbyfarIan b4qu44thad “In raa elmplr,
Ohuroh of the United Statse on4 half of bar property menags, 8411 or dispoas of aa thhsy m4y e44 propaP, and without 4ny 1ImItatIon a4 to plea4 of Its u44. Ae rtetad by your Inharltanor afl'alrs oi’ tha Churoh ar4 oonduoted by and undar Zh4 ‘Ibx Auditor, Ae44mbly, which Is Inoorporated rup4rvIaIon and oontrol of tha tinare The Caneral Aseambly Is thr aotual law4 oi Korth Carolina. undsr tha raolplrnt of tha proparty. 84~104, th4 propsrty he8 bsrn rao4Iv4d by and tha 444antLal ooatrol of It4 diapoeItion foreign oorporatlon, th4 I4 In that oorporatlon ovar which thle Btstr hae no oIrltorIa1 powar or 4uparoIsIon. Oonarel harrsmbl~Llr, in ths edmInIstratIon of tha satand ovar a.’ buaInae4 tha Churoh whloh, by Ita~ rary nature, large aroe o? whioh tha State of Tdaaa I4 only 4 part, wet axpand Tha eraa Is not, by the terma of tb Its funde omr euah large ~44.
wIl1 mari, rsstriotrd In 4ny my. UnCmr all or thr rulee ntatad 8bova, thI4 baqusst is without tha rxamptfon In hrtlola containad Is rabjrot to th4 lnharltanoa tax.
We 4r4 raturn- hanwIth your ii14 on thlr ~4~4. , tmlf
Vary youm, ATIWRM‘GY UEmRAL OF TEXAs Aeslstsnt AL~Mlll
Knalosurae