Case Information
*1 OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN
Eonor8blo Ooorgr B. Shrppard
oomptrollar of Poblio Aooomntr
Allatin, ‘hxaxar
Dear 8irr O9lnion lo. 0-6&n
Ro : mn0r0n nd0 latter J~OP have rubmittod an
prod bj the ax
srntatira rr0m your
oodont, 1 rorido
l ritrno o Tar plr p o r rl at
2, thr doordrut mda artalu oonrirtlng of (1) oath who had mcsivrd yrarioua aYclstakco rrom thr deooaant, riimrgatina for tha fincn~i~i par lgL2, el ,620.OO. ihosdent ~18 In good laoalth st th* tima these tmnarers Vera m&de, rhloh fact la rupportrd by his physician’s statdmrnt. .;lthaugtr sarrrri yeera prior to
Limornblr Coorga ii. Arppcra, ;P&O 2
lgL2, thr droodsat had dispoard of hi8 lntrrest in s largs oarosntllr oorporatlon, ha oontlnurd his bwinoas, oivfo, md philanthropic aotlvltlrs, golnd to h14 orflcr saoh d4l rrn& 44 ab aotiro aaabsr or thr Board or Dlrrotirs 0r two lsrgr oorpolatlon4. During the year 1943, the only rrportoa girt or tranrrrr mda by tho dooodmt war or (I ohsptor hous spproabate raluo or ~11,000.00, glr- an to Aasrlosn Fiod Cross. Tho dooodont’m sroragr anwal looms duriw thr tsars 194l, 1912 4~3 1943 844 rpproxlutoly Thorr Is ppondod to tb sbors ststoasnt or #26,000.00.
rsots 8 girt sohoduls oorrrlag your0 prior to snd 8 sohoduls in tabular rorm rhowing all tranmrsrr f’rctm 1930 to 1942. %oh sohodulos or8 submlttod as tandlng to &on that the gift4 m4ds duriw the yssr by tho droodont rldanord a prior snd ooatlnulng prsctios of hslplug hlr r8lstfrar in nr0d or rinsnoisi s8818to~00.
krtlolo nl7, Borl8rd civu. atrtutor or TOUS, 44
smoadod, dororlkr property whI4h shsll be 4ubJsot to InhsrL- tsnoo taxal sncl ln ths lart ssntsa00 or thlr art1010 prorl4lon io audr ror iaposlng bhsritanoo ts108 uador oortsin oondi- tvm yam8 prior to ths tmasrarmd within tlona on property death al thr dsasdsnt, Tha 4a41y414 and iatrrprot4tion or thie last srntmor In itr reletion to thr aborr rtatrd Bats 1s ths graramsn 0: this opinion, It prorlaoo:
want trsorfsr as44 by 4 amhor, vendor donor, ah8 thar by drod, &k&; ale iir alit. #hall. unlsar rhoan ths OontmrY, br doomed to hsro hem aads In ccntrmrAatlon of drath and aubjrot to thr 81~0 hr 44 hrrrln prorldsd, if ruah trsnr- far la nsda 4Ithln two (2) ysnrs prior to thbr dssth ci the grantor, vwdor, or tionor, of 4 matrrlal yx.rt cf tls e3t4ta, or lf tts transfer arrdr althin such parlod le 1~ mture of a final dlstrlbu- tlon bt poy:ertp and rlthcut adequate velue3lr ccz:lderstIon.” ( .qhs,sl~ 32:rG) 313 ~rovlslon cry::! t06 8 rsbuttazla prrrunytlor tm t :rxnsfsru of 8 a?terlcl ,-ert 0:' tk.5 Saced3nt'l, 33tst3 Or tr~!7.$r3Ps ln the Mtlrr.3 of a flnS1 <iat: lD~tlcn 0: property z~da within tvo yasre prior to his daatb, warm aadr the drcsdont in contrzqlatlon of death (oea U. :. v. +*rllr, ln- fr.3) Jo? this orlcion it 1~ nrcaeaary to dotemine whether
Iionorabla COOr88 H. Sheppard, Fe88 )
ulr litI8 and. by the daoodrnt in in thr l imunt #lL, t 20.00 w8r8 (1) 8 mtrrlal part o? hi8 rstatr or In thr nattwo O? a final dlrtrlbutlon, and (2) rhothor tha ractr ruifioirntl~ OVoroOm the prarumptlon that th8f wor8 in oontrmplatlon or death, madr
Ihst thrrr gift8 asd8 durlog 1942 war8 in the naturr o? a ilnal dlrtributlon o? th8 drordrnt’r ratate 880~8 too pstrnt raquln dlrourrion (a88 lnfra), but part O? his 88t8t8” whrthrr th8J OOll8titUt8 “8 Mtrrial la not 80 obvlou8. Althou&h thlr phrarr, *a rtrrlal part or his 88tatai", u88d in th8 inh8ritanO8 tal hW8 O? NW #tat88 Oth8r than TIX88 88 W811 a8 ill th8 &t8l’lUll R8I8nU8 Cod8 Of th8 Unitad Stat88 (Tit18 26, 38OflM 6110, U.S.C.A.) th8r8 ha8 b88n iitti8 jUdiOiai OOn8id8ratiOn O? th8 e8aIIing and no rt8ndrrdr hat8 brrn by of phrrr8, rrtsblirhrd whioh 8ny p8rtiOUlsr 8a88 Oan b8 68a8UIYdr )'robably th8 ilrat judiolal COn8ld8ratiOn Of th8 aran- Of thlr phTa88 ~88 th8 ~&UWM COUrt Of ~18OOll8h ill hl R8 BbrlilL6’r EDtat (172 R. W. 734, 4 A.L.R. 1519). h thi8 Oa#8 th8 oourt had undrr ooMld8r8tlon a ~~18oonri.n kth8ritanor Tax Act (Vilroonrln Lawr, 1913, oh, 643) which bar a prorlrion 8ltilarly writtrn and lno.ludl.ng thle id8ntiOei phWi88. ti conaidrrln& what Om8titUt88 8 tMtrri81 part O? th8 d808d8lit'r th8 OOUrt raid: 88t23t8,
“Th8 nrxt qU88tiOn is Wh8th8r th888 giit8, or any o? thra, constltut8 a a8trrlal part o? th8 donor*8 88tat8. Obviously th8 lm would b8 ti818r of administration if it W8M ml’8 d8?lnit8 in ? il- t0 b8 d88m8d t0 ii@ th8 oharaotrr Or 8128 O? gi?tS baT8 b88l'I mad8 ill COIit8!dplatiOll O? drath. blheth8r pooeibls wn do not su&&8st. that 1s practicable “Ph8 UE8 O? the word 'mSteriS1' dOa not mk8 th8 i.htither a gi?t la?: lmpoaslbla of adolnletra tion. ccnstltutes b mtsrisl pert of a acnor’a astaLe in ls?t a judiolal question. As Legislature has net attaz~tad tc Gefins .. itk exactness wbt shall be ccosldered 3 mstarlal part C? DC estate, neither ;tiat question must be left to be drter- shall we. dad In rsch case 88 it arises. . . .” And it ~3 hrld that oooasional gifts Of 4500.00 or ;;l,OOO.OO rhould not, b8 d88m8d a mataria pert O? 811 88tat8 ralu8d 8t $330,000.00. It wa8 also hrld a018 than f75,000.00 giV8n
380 Honarabl8 OIorgr H. Sheppard, Pag8 4
by th8 d808drnt ill Unit8 Of 35.000.00 8Xkd $10,000.00 Within on8 y88r prior hi8 drath did oonltitutr a yltrrial part Of th8 88tat8 Md 188 %¶X8bi8.
0lJ8 y8ar bt,r, this raw OOUrt had thl8 qU88tiOn 8&B Mdrr OOllSid8r8tiOn (bl R8 St8ph8118011c8 ~Stllt8, 1. vi. 579). citing th8 !Sbrlin& 0888, tb8 oourt rrarrir~d that rh8th8r 8 gift 18 8 mt8ri81 Part Of 8n 88tbt8 18 in 8aOh a judlolal qU88tiOIl and ?Urthrr Said: 'Wh118 it lllll8t b8 8dmittrd th8 ratio th8 gift b88rS to th8 Wbo18 18 I t8m illlpOrtallt f8OtOr it 18 not p8r 88 d8t8r- 88kt8 mining taOtOr in 8aOh 0188. Tba 81S8 Of th8 gift it88u it- Of th0 8128 Of th8 88bt8 h88 8 dir8Ot b88ra r88p8OtiT8 UpOIl th8 4llSW8r. , . ."
Th8 8bOT8 Oa888 (b R8 ih81iIi@'8 g8tat8 and h Ii8 St8ph8IASOXl'S l!St8ttr) aI Oit8d qaotrd tr= 8t 18Ii&th in Ob888'r Sxroutrir Tr k!mOnWralth (145 & W. (26) 56) in whhh th8 Opinion -8 by th8 Court Of App8818 Of -lltUOe in &Tam- b8r In t&la lattrr oa88 it is rignlfloant that in hold- lng that $JO,O00,00 oonatitutrd a 8t8rlal part of th8 dror- d8nt'8 88tat8, OOMid8r8tiOIl WE8 8iT8n t0 th th8 within WhiOh th8 88t8t8 OOUld b8 diSpOS8d Of U8r8 fih8 gift8 OOntinU8d. 111 this FIgard, th8 OOUrt laid: “At that rat8 h8 would bar8 dl8po88d or all or hle rntlrr 88t.?t8 wlthln a ?8W y8ar8."
Wi8th8r th8 gift8 ill th8 pr888nt OO88 W8r8 8 mt8rilIl p8rt Of th8 d808d8nt'S 88tat8 18, th8r8fOr8 8 judlolal QU88- tion whloh mU8t h8r8 b8 d8t8rmin8d by wrigh& all Of tbr ?8Ot8 end olroumstancrr. It app8arr that 8uoh a d8tarmi.nation Should b8 8OT8rn8d PrinOipally th8 fOllOWin OOIlSid8Z8tiOnr:
1. Only On8 of the gift8 003prl8iEg the tOt¶l was in BXC886 or ;2,CCG,Co.
2. Ttis one Item included in t&a total in axc8as 0r of a iS,iCO.OO indebted- ;~2,O@O,OC was In fact a czmalletion ness orl,:inelly creeted In 1Fl.C.
One itsa includ8d i:: the total in ttz? azount of $1,620.00 ::a in fact conprlsed of nominal ncnttiy rz)nents aads by th8 d8cQdant t0 a ni808.
4. Tha total Of the gifta r8pr888nta Ollly 2s Of
the valuation of th8 d808d8lIt'S 8stat8 at tha tima Of his d8ath.
iionorablr horgr H. kih8ppard, Pagr 5
5. Th8 total Of th8 gift8 r8pr888nt8 53% 0-f tb
d808d8nt'r inO- during th8 yrar In which t&y w8r8 lPad8 and did aOtlSluy r8duO8 th8 n8t worth Of hi8 88tat8.
6. AlppTO~i~t8u ?l?tY r8 rould br r8qulr8d to dIrtribUt8 111 88t8t8 Of HOr8 than ~0,000.~ 8t th8 rat8 Of I:
#~,620.00 par year*
ui Of th888 OmSid8mtiOnS t8nd t0 th8 8OnOhiSiOn thati th8 al-8 art Of th8 d8- in U88tiOll nn not 8 Mt8ri81 P 88d8llt’8 88t8t8. a oo?tlmaan omprlll~. lM8oPOh a8 tb, th8 mar in *ioh War8 Md8 d808d8nt'8 inOOIM dUXim th8 ait8 was almOSt tWiO8 88 auoh 88 th8 &i?tS, it oould k argurd th8t not Otiy W8r8 th8 gift8 not 8 Mt8rIal p+¶rt Of th8 88t8t8 but th8y W8r8 mad8 from d808d8tlt'r inOOm during th8 y88r 19&? W8r8 a0 part Ot th8 %kn 8XiStlw 88t6t8 at all. Th8 -8 l OtMlly InOna88d d808d8Bt'8 88kt8 dPrifUJ t&t t88r. turthrr, bd th8 d808d8Jlt had 110 inOOn Wh8t8V8r, 8laOllt 8D.
8T8r888 iif8tiM WOUid b8 ?8qUhd t0 di8pO88 Of hi8 88tSh8 th8 amount thrsr mad8 anaualw. wsm gift8
'-&8?8 n8Xt t0 oonsid8r wb8th8r, l-8&3rdl888 Of th8 ClPOUllt iZlTOlT8d, th888 gift8 VII8 mad8 in "OOflt8~platiOn Of d8ath8 within ths airadB& of Arti018 7117, R8TiMd CiTil The pr8SUqtiOn Or8Ot8d by St8tUt88 Of ?8Xa8, 88 am8ndrd.
th18 art1018 that Sift8 mad8 within tW0 y8arS prior t0 th8 d8t8 Of d88th 8tyL11 br d88m8d to hav8 b88ll aado in OOlIt8ll!$~8- tiOn Of d88th 18 nbuttsblr. (if388 Unltad stat88 T. vi81b, in- h illh8ritNlO8 t8X 18 8 “8p8Oia1 t8X” and 8t8tUt88 in). lmposiag it should b8 oonetru8d llb8r8lly In favor or th8 tax- pay8r (kwls T. O*Harr, 130 9. Fi. (2d) 379). fn th8 8balnOr Of any T8Xa8 OOUrt d8Oi8iOnS in point, th8 d8Oi8iOM Of th8 UnIbd Stats8 SUpr828 CoUrt should b8 ?OllOW8d in COnStrUing provI8lons of th8 Tsxss Inheritance Tax Law8 mhich v.erC, prior (53s to thair adoption In Texas, included In the Federal law. Blaoknon v. Hanson, 169 5. b. (26) 962.)
A 18adIng case ir; *which the LnIted ZtRtSS >U;I‘E?B Court considrrsd the question of rifts or transfers ylda 1:~ cont8mpletIon of death aa provId8d In the kt8ru81 &venue tid8 (888 Titlr 26, SgctIon 8110, V.S.C.X.) Is United Ltatez ve r:‘8lls, (283 U. S. 102), fn which an extended dISOuszIon Of m8aning of thlr phrase was vmlttrn the lot8 ChI8f Just- tipgh88, Th8 ?OllOWine 8XO8rptll from this Opinion a18 drrmrd to hav8 a dirrot braring on thr instant Oa88: *6 Honorable OIorge b, Sheppard, Psga
orrtain fundaarntal oonrid~rrtlonr. It is raoag- Bitad that the referonce ia not to tha ganaral l xpaotatlon of daath whloh all l ntartaln. It aunt ba a partlouhr aonoarn, giving rlra to a datlnlta motirr . maneerr in Oontuputioa bath ora’l&dad within tha 8am oatagory, ror tha par~ora of taratlon, rlth trrnriarr lntandad take 8rr809 at 8rt8r daath or th8 tMB8- ‘Iaaa, brtr88B and darth, 18 raao&- tha tnnrfar by tbr 8tatdory prOvl8lOn Onat@ 8 pra- nlnd 8U8ptiOB in thr 0888 Or girt8 Wit&¶ tU0 J88r8 prior to daath. &It thi8 p?88U8ptiOB, by t& rtat- Pta b@fOM U6, 18 OXpr888)J tatad t0 ba nbut- tab18 ona, aara faot that drrth 8MU88 avan 8hOrtl.f 8it.r tha gift dOa datarnlna baolataly that lt 18 in oontamplation ot daath. . . . d88rdta V8WiIlR OirOM8teBO88
"A8 thr te8t. alwar 8Otlv8, It o86uot ba mid to br found the datamlnatlta mtlrr f8 laokin srr@ly th8t baOau8e 0r absrnos of a consolousn~is that- death le iaminent. ua age msy girr pm- monltlonr and pro~pti&s*inarpandant 0r mortal *7 Bonorebla Oaorga H. Shrppard, Fags 7 tart, the t l tatuta doss
SfiOrd8 It fOllOW8 l nb rao r girt8 intar ~1~08 nhloh l prlng rrom a dlrrannt aotlra. A8 ilhStrt%tiQ& tr8II8- round to ba rkia~a~ to purpoaar l 88oolatad farm with llfa, mthrr th8B rlth tha dlrtrlbotlon of proparty in antlolpatlon of daath, tha Corarnaant BOt OrhrU8tiVS. Thr plWpO888 rhloh B8l b8 rartad without partloular oon8ldar8tlon 0r tit avant TbSrS My b8 t68 darilr t0 r8006BiZS 8DSOi81 Birds or l xlganola8 or to dlrohar60 moral obll6atloonr. pha gratlilcatlon 0r ruoh da8ina nay ba a mora ooapalllng aotira th8n any thoughts of daa tL l . . . Thora no 8oapa rrom tha naoaa8lty oaretully 8OIWthiZiIU thr olraumtanoa8 or 88oh
oa88 to dataot tha Qalnant aotlra of tha donor la th light of hl b dlly and manta1 sondltlon, and thar gira tiao: tt tha manifart purpoar Of tha rtatuta." (Emphnrlr addad) (For othar oa888 Mllllkan v. Unltad Stataa, 283 U, S. 15; Nloho18 V. Cool&y, 274 U. S. 531; Colorado National Benk 305 u, 8. 23; v. Commission of Intsrnal ihrsnue, Eiackar v. St. Louis Trust Company, 296 U. 8. 16.) u8inf the above excerpt8 08 fl &da3 ma lnquirin& into the deoadent’s sotlves pro;n,ntiq the gifts In tlia pre- sent case, consideration has been piven to the principal itex the @iits a8 set forth cozprialng in tha abov8 agreed Sata- msnt of Facts.
Of tha sotal gifts, $8,000.00 ms glvan to fire ralatlrrr on Ikosmbsr 19, 1942, and 18 rrti~rnad a0 Christmar prrsrnts. ThlS itaa is mada up of thrurs ElftS in the amount
iionorablr Caorga h. Sheppard, Paga 8
of $2,000.00 raoh and two gift8 In tha amount of ~l,OOO.OO l aoh. Four of tha flrr raolplantr tharoof had prarlously raoalrad gift8 or flnanolal asslstanoa fro3 thr dsordant.
Gthar ralatlrar hot inoludad had, prior to 1942, bran glvan rarylng amounts by tha daoadant. Although tha rroord doar not 8hOrr that Chrlrtmar pr888nt8 ln 8IIOUlIt8 88 8Ub8tantial a8 thaaa had prior to 1912 barn glean by tha drordant, it ha8 bran noted that no Chri8tM8 prr 88Bt8 WhatSvST warm mada in tha yaar r0ii0ag. At tha tin0 tbrra girt8 wars mada the d4oadant Wa8 in good haalth and t& Only oOn8olouma88 or daath whloh might be to hia would lia “tha lsputad pramonltlon8 l Bd proaptlngr~ 0r old aga. It l ppaar8, how- l var, th8t thasa gift8 wars mad8 Uwough hi8 Rda81ro to reoog- nizr rpaoial Bead8 and xiganoiaa or to dlroharga moral ob- llgatlon8.*
Or tot81 (ift8, $5,000.00 W88 lrada a Baphaw in April, 1942, throu&h tha mBoall8tion Of an iBdabtadna88 orlginslly oraatad in 1940, fn tha daoadant had oan- oallad 8 largar indabtadna88 (410,125.00~ or a till aothar naphrw in tha 8801 aarmar. Tha orl(linal loan ot $~,OOO.OO war prsda ror thr purpoaa 0r halping tha naphaw in'rrtablirh- log a buslnaar . It 8ssm8 apparaot thrrafOr8 that thl8 $5,000.00 ltan fall8 proprrly rlthln daoadant~a daslrr ‘to hava ohildran, or Othrr8 who may ba tha approprlatr ob- jaot8 of tha dOBOr’8 bounty, lndapandantly 08tabllshad with oompatanolaa 0r tlm.lr own.*
Or tha total, $1.620.00 wa8 glran in monthly pay- nant8 to a nlaoa during tha yaar 1942. Tha raoord show8 that thr daoadant had bran giving thla nlaoa rariour amounts during tha iii8 yaerr prroading. Thr noord al80 8hows th8t this nlsos had lived in the asosdsnt’s home ad a child snd x8.3 loft a widow about 1930 kith two sons to maintain tend 6auoat8. It aesms enparent that the motlvr of this flnanolal assistance llils tha deoedsnt’s desire to”discharge moral ob- lipetiona”.
L‘n vhole, it ay,paara that thaso *era bona fide gifts inter vlvna i-2 ti;?t they ware asds for purposes “asso- cletsd ulth lifs”. The record renals th3t the drcsd*nt recognized moral obll~atlons to all of his relstivrs. In visa of the daosdrnt’s wealth and lnoomr tbar gifts were net they are not in a naturr of “a tsata- unusual. Certainly, msntary d18posltionR, and do not evldsnoe any attampt on thr pert of the dscedant to wads the inheritanoe tez.
Honorsblr George H. Shrppard, Fsga 9
Tha ibrogolng consldrrod, lt is conaludrd that (1) tha gifta In qurrtlon mrr not a mattrrlal part of thr drordrnt*r rstatr wltl.ln the meaning of Artlolr 711 Revlaad Clvll Statutrr of Toxaa, aa aamndad, and (2 that (rrgardlrra of amount lnvolvrd) thr faotr aub;aittrd am ~ufflolrnt to ovarooa the presumption that three gifts mny havr bran madr in oontrmplatlon of drsth a8 prorldrd by eald Artiolr. Aooordlngly, you an it la tha opinion a&lard
of thlr orflor that tha girt8 m&r by thr drordrnt in tha
amount of h4,620.00 during the year 1912 ma not taxabla under thr Inhrrltanor Tax Lawr of Taxar.
Your8 varl truly ATTCRNJ3T OENICRAL OF TqS/7 JL :mp