           THE      ATTORNEY          GENERAL
                        OF   a‘EXAS




                      October 20, 1961

Honorable Robert S. Calvert           Opinion No. ~~-11.65
Comptroller of Public Accounts
Capitol Station                       Re:   Method of computing for
Austin, Texas                               inheritance tax purposes
                                            the present value of a
                                            $lO,OOO.OO bequest to be
                                            received by Culver Military
                                            Academy after the children
                                            of testator reach the age
Dear Mr. Calvert:                           of 25 years.
        We quote the following excerpts from your letter re-
questing an opinion from this office on the above captioned
matter.
            "Harry A. Raider, Jr., died testate a
        resident of Bexar County on May 16, 1959, and
        under his will, the deceased created two trusts
        out of his entire estate. His wife was devised
        a life estate in the first trust with the re-
        mainder upon her death or remarriage to Trust
        Number Two. The corpus of Trust Number 'Iwo
        passes to the two children in fee when they
        reach the age of 25 years, subject to a
        $lO,OOO,.OObequest to Culver Military Academy.
        The corpus of either trust cannot be invaded
        for any purpose until the children reach the
        age of 25 years. Therefore, Culver Military
        Academy is guaranteed the $lO,OOO.OO in cash.
            "Since Culver Military Academy is a
        corporate or educational entity, we do not
        believe life expectancy and discount tables
        apply in discounting this bequest to the
        Academy. Please advise whether or not we
        should apply any kind of discount table to
        the bequest to the Culver Military Academy,
        because this bequest is postponed for a period
        of years, which in this case is 23 years."
        It is to be noted that under the terms of the will
the $lO,OOO.OO bequest to Culver Military Academy is to come
out of the corpus of a trust, the use and benefit of which is
Honorable Robert S. Calvert, page 2 (~~-1165)

given to the children of the testator until said children
reach the age of 25 years.
        Article 14.01, 20-A, Taxation-General, Vernon's
Annotated Texas Statutes reads in part as follows:
            "All property within the jurisdiction of
        this State, real or personal, corporate or
        incorporate, and any interest therein . . .
        which shall pass absolutely or in trust by
        will . . . shall, upon passing to or for the
        use of any person, corporation, or association,
        be subject to a tax for the benefit of the State's
        General Revenue mnd. . . .'
        Article 14.08, 20-A, Taxation-General, Vernon's
Annotated Texas Statutes provides as follows:
            "If the property passing as aforesaid
        shall be divided into two or more estates, as
        an estate for years or for life and a remainder,
        the tax shall be levied on each estate or in-
        terest separately, accordingly to the value of
        the same at the death of the decedent. The
        value of estates for years, estates for life,
        remainders and annuities, shall be determined
        by the 'Actuaries Combined Experience Tables,'
        at four per cent compound interest." Emphasis
        added.
        Under the terms cf the wi~ll,the property passing
($lO,OOO.OO) is divided into the following two estates or in-
~terests:
        1)   For years - to the children of the testator, the
             use and benefit of said $lO,OOO.OO until they reach
             the age of 25 years.
        2)   Remainder - to Culver Military Academy, said
             $lO,OOO.OO after the children of the testator reach
             the age of 25 years.
        Article 14.08, supra, makes no distinction between
corporate and natural beneficiaries. Therefore, the value of the
intere~stof the children of the testator in said $lC,OOO.OO
should first be determined pursuant to the provisions of Article
14.08 above. The value of the interest of the children should
then be deducted from said $lO,OOO.OO in order to determine the
present value of the remainder interest of Culver Military
Academy. Upon this value the tax should be assessed. By using
this method of computation, the entire present value of the
Honorable Robert S. Calvert, page 3 (~-1165)

property passing will be taxed and double taxation avoided.

                          SUMMARY
                          -------
             In computing for inheritance tax purposes the
          present value of the $lO,OOO.OO bequest to be
          received by Culver Military Academy after the
          children of the testator reach the age of 25
          years, the value of the interest of the children
          of the testator in said $lO,OOO.OO computed
          under Article 14.08, 20-A, Taxation-General,
          Vernon's Annotated Texas Statutes, should be
          deducted from said $lO,OOO.OO bequest.

                                    Yours very truly,
                                    WILL WILSON
                                    Attorney General of Texas



                               By Vernon 0. Teofan
                                  Assistant

VOT:jln

APPROVED:
OPINION COMMITTEE
W. V. Geppect, Chairman
Norman Suarez
Bob Shannon
REVIEWED FOR THE ATTORNEY GENERAL
BY: Houghton Brownlee, Jr.
