            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

                                          lr itr no Ta
                                                    o rp lr p o r ra lt
                                        2, thr doordrut mda     artalu
                                        and   oonrirtlng of (1) oath




                                 who had mcsivrd yrarioua
fincn~i~i aYclstakco rrom thr deooaant, riimrgatina for tha
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
306 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 that or
(I ohsptor  hous or tha spproabate     raluo or ~11,000.00,    glr-
an to tha Aasrlosn Fiod Cross. Tho dooodont’m sroragr anwal
looms duriw thr tsars 194l,1912 4~3 1943 844 rpproxlutoly
#26,000.00.    Thorr Is lppondod to tb sbors ststoasnt      or
rsots 8 girt sohoduls oorrrlag     your0 prior to 1942   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      1942 by tho droodont lrldanord
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-
tlona on property tmasrarmd     within   tvm yam8  prior to ths
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   or
     donor, ah8 thar by drod, &k&;          ale   iiralit.    #hall.
     unlsar rhoan to 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 arrdralthin
     such parlod le 1~ the 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 by the
drcsdont   in contrzqlatlon of death (oea U. :. v. +*rllr,ln-
fr.3) Jo? in this orlcion it 1~ nrcaeaary to dotemine whether
                                                                          379


IionorablaCOOr88 H. Sheppard, Fe88 )


ulr litI8and. by the daoodrnt in 1942 in th r limunt or
#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
madr in oontrmplatlon or death,

             Ihst thrrr gift8 asd8 durlog 1942 war8 not          in the
naturr o? a ilnal dlrtributlon o? th8 drordrnt’r            ratate
880~8 too pstrnt to raquln   dlrourrion (a88 lnfra),    but
whrthrr th8J OOll8titUt8 “8Mtrrial     part O? his 88t8t8”  la
not 80 obvlou8.  Althou&h thlr phrarr,     *a rtrrlal part or
his 88tatai",18 u88d in th8 inh8ritanO8 tal hW8 O? NW
#tat88 Oth8r than TIX88 88 W811 a8 illth8 &t8l’lUllR8I8nU8
Cod8 Of th8 Unitad Stat88 (Tit18 26, 38OflM 6110, U.S.C.A.)
th8r8 ha8 b88n iitti8 jUdiOiai OOn8id8ratiOn  O? th8 e8aIIing
of th8 phrrr8, and no rt8ndrrdr hat8 brrn rrtsblirhrd  by
whioh 8ny p8rtiOUlsr 8a88 Oan b8 68a8UIYdr )'robablyth8
ilrat judiolal COn8ld8ratiOn Of th8 aran-    Of thlr phTa88
~88 by 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.ngthle id8ntiOei phWi88. ti
conaidrrln& what Om8titUt88   8 tMtrri81 part O? th8 d808d8lit'r
88t23t8,   th8   OOUrt raid:

            “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-
      ii@ th8 oharaotrr Or 8128 O? gi?tS  t0 b8 d88m8d    t0
      baT8 b88l'I mad8 illCOIit8!dplatiOll  O? drath. blheth8r
      that 1s practicable      or pooeibls wn do not su&&8st.
      “Ph8 UE8 O? the word 'mSteriS1' dOa not mk8 th8
      la?: lmpoaslbla of adolnletra tion.      i.htither a gi?t
      ccnstltutes    b mtsrisl     pert of a acnor’a astaLe in
      ls?t a judiolal     question.    As the Legislature   has
      net attaz~tad tc Gefins .. itk exactness wbt shall
      be ccosldered     3 mstarlal   part C? DC estate,   neither
      shall we.     ;tiat question must be left to be drter-
      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? 81188tat8 ralu8d 8t
$330,000.00. It wa8 also hrld that a018 than f75,000.00  giV8n
                                                                             380


Honarabl8 OIorgr H. Sheppard, Pag8 4


by th8 d808drnt illUnit8 Of 35.000.00 8Xkd $10,000.00 Within
on8 y88r prior to 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, 177
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 0888 a judlolal   qU88tiOIl and ?Urthrr Said: 'Wh118 it
lllll8tb8 8dmittrd that th8 ratio th8 gift b88rS to th8 Wbo18
88kt8    18 I t8m            f8OtOr
                   illlpOrtallt      it 18 not p8r 88 th8 d8t8r-
mining taOtOr in 8aOh 0188. Tba 81S8 Of th8 gift it88u       it-
r88p8OtiT8   Of th0 8128 Of th8 88bt8   h88 8 dir8Ot b88ra
UpOIlth8 4llSW8r. , . ."
                 Th8 8bOT8 Oa888 (b
                                  R8 ih81iIi@'8 g8tat8 and h Ii8
St8ph8IASOXl'S         aI
               l!St8ttr)    Oit8d and 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 19401   In  t&la lattrr  oa88  it is  rignlfloant that  in hold-
lng that $JO,O00,00oonatitutrd a l8t8rlal 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.
111this 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 illth8 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.nationShould
b8 8OT8rn8d PrinOipally by th8 fOllOWin OOIlSid8Z8tiOnr:

                 1.     Only On8 of the gift8   003prl8iEg   the tOt¶l was
in BXC886        or    ;2,CCG,Co.

              Ttis one Item included
                 2.                             in t&a total in axc8as 0r
;~2,O@O,OCwas In fact a czmalletion              of a iS,iCO.OO indebted-
ness orl,:inellycreeted 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 lPad8and
did not aOtlSluy r8duO8 th8 n8t worth Of hi8 88tat8.

              6.      AlppTO~i~t8u           ?l?tY      lr8   rould br r8qulr8d to
dIrtribUt8     11188t8t8 Of HOr8 than I:
                                       ~0,000.~                     8t th8 rat8 Of
#~,620.00      par year*

              ui      Of    th888    OmSid8mtiOnS         t8nd   t0   th8 8OnOhiSiOn
thati th8 al-8         in     U88tiOll nn          not 8 Mt8ri81        art Of th8 d8-
88d8llt’8    88t8t8.         a oo?tlmaan             omprlll~.         PlM8oPOh a8 tb,
d808d8nt'8     inOOIM        dUXim     th8   mar
                                             th8 ait8   War8 Md8
                                                      in *ioh
was almOSt tWiO8 88 auoh 88 th8             oould k argurd
                                                   &i?tS,   it
                                                             th8t
not Otiy W8r8 th8 gift8 not 8 Mt8rIal p+¶rt    Of th8 88t8t8 but
that th8y W8r8 mad8 from d808d8tlt'r inOOm during th8 y88r
19&?  and W8r8 a0 part Ot th8 %kn      8XiStlw 88t6t8 at all. Th8
d808d8Bt'8     88kt8  -8             lOtM lly
                                   InOna88d   dPrifUJ t&t t88r.
turthrr,    bd th8 d808d8Jlthad 110 inOOn Wh8t8V8r, 8laOllt 8D.
8T8r888    iif8tiM   WOUid b8 ?8qUhd    t0 di8pO88 Of hi8 88tSh8
wsm gift8      in th8 amount           or
                                thrsr mad8 anaualw.
            '-&8?818 n8Xt t0 oonsid8r   wb8th8r, l-8&3rdl888 Of
th8 ClPOUlltiZlTOlT8d, th888 gift8 VII8 mad8 in "OOflt8~platiOn
Of d8ath8 within ths airadB& of Arti018 7117, R8TiMd       CiTil
St8tUt88 Of ?8Xa8, 88 am8ndrd.     The pr8SUqtiOn   Or8Ot8d by
th18 art1018 that Sift8 mad8 within tW0 y8arS prior t0 th8
d8t8 Of d88th 8tyL11 br d88m8d to hav8 b88llaado in OOlIt8ll!$~8-
tiOn Of d88th 18 nbuttsblr. (if388    Unltad stat88 T. vi81b, in-
in).     h illh8ritNlO8 t8X 18 8 “8p8Oia1 t8X” and th8 8t8tUt88
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
to thair adoption In Texas, included In the Federal law.         (53s
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
the m8aning of thlr phrase was vmlttrn by the lot8 ChI8f Just-
108 tipgh88,    Th8 ?OllOWine 8XO8rptll from this Opinion a18
drrmrd    to hav8 a dirrot braring on thr instant Oa88:
Honorable OIorge b, Sheppard, Psga 6


     orrtain fundaarntal oonrid~rrtlonr. It is raoag-
    Bitad that the referonce ia not to tha ganaral
    lxpaotatlon of daath whloh all lntartaln.   It aunt
    ba a partlouhr   aonoarn, giving rlra to a datlnlta
    motirr .        maneerr      in Oontuputioa     or
    bath ora’l&dad      within tha 8am oatagory,       ror
    tha par~ora of taratlon,   rlth trrnriarr   lntandad
    to take 8rr809 at or 8rt8r th8 daath or th8 tMB8-




    ‘Iaaa,      brtr88B
                    tha  tnnrfar     and darth, 18 raao&-
    nlnd        by   tbr
                  8tatdory       prOvl8lOn Onat@    8 pra-
    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 ltatad t0 ba 8 nbut-
    tab18 ona, and tha aara faot that drrth 8MU88
    avan 8hOrtl.f 8it.r tha gift dOa not datarnlna
    lbaolataly that lt 18 in oontamplation ot daath.
    . . .
               "A8 thr te8t.        d88rdta     V8WiIlR   OirOM8teBO88
    18     alwar      to   br   found   in    8Otlv8,   It o86uot ba mid
    th8t       the datamlnatlta          mtlrr f8 laokin srr@ly
    baOau8e 0r tha absrnos               of a consolousn~is that-
    death le iaminent.         ua age msy girr pm-
    monltlonr and pro~pti&s*inarpandant 0r mortal
Bonorebla Oaorga H. Shrppard, Fags 7


       SfiOrd8   tha   tart,
                         It fOllOW8    the t tha ltatuta       doss
                         intar ~1~08 nhloh lprlng rrom a
       not lnb r a o girt8
                     r
       dlrrannt aotlra.             A8 ilhStrt%tiQ&    tr8II8-
       farm round to ba rkia~a~ to purpoaar l88oolatad
       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 lxlganola8 or to dlrohar60 moral obll6atloonr.
       pha gratlilcatlon 0r ruoh da8ina nay ba a mora
       ooapalllng aotira th8n any thoughtsof daatL

             l... Thora 18 no l8oapa rrom tha naoaa8lty
       or 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
                   l
       thar gira tiao: tt tha manifart purpoar Of tha
       rtatuta." (Emphnrlr addad) (For othar oa888 888
       Mllllkan v. Unltad Stataa, 283 U, S. 15; Nloho18
       V. Cool&y,    274 U. S. 531; Colorado National Benk
       v. Commission of Intsrnal  ihrsnue,  305 u, 8. 23;
       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
cozprialng   the @iits a8 set forth 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~rnada0 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
laoh. 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 8hOrrthat Chrlrtmar pr888nt8 ln 8IIOUlIt888 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 lsputad to hia would lia in “tha
pramonltlon8 lBd proaptlngr~ 0r old aga. Itlppaar8, how-
lvar, th8t thasa gift8 wars mad8 Uwough hi8 Rda81ro to reoog-
nizr rpaoial Bead8 and lxiganoiaa or to dlroharga moral ob-
llgatlon8.*

          Or tha tot81 (ift8, $5,000.00     W88 lrada to a Baphaw
in April, 1942, throu&h tha mBoall8tion Of an iBdabtadna88
orlginslly oraatad in 1940, fn 1936     tha  daoadant had oan-
oallad 8 largar indabtadna88 (410,125.00~ or a till laothar
naphrw in tha 8801 aarmar.  Tha orl(linalloan ot $~,OOO.OO
war prsdaror thr purpoaa 0r halping tha naphaw in'rrtablirh-
log a buslnaar. It 8ssm8 apparaot thrrafOr8 that thl8
$5,000.00 ltan fall8 proprrly rlthln tha 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.lrown.*
            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 the 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
unusual.    Certainly,   they are not in a naturr of “a tsata-
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 mattrrlalpart of thr
drordrnt*r rstatr wltl.ln the meaning of Artlolr 711 or
Revlaad Clvll Statutrr of Toxaa, aa aamndad, and (21 that
(rrgardlrra of the 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  a&lard  that it la tha opinion
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
