 Honorable Robert S. Calvert    Opinion No. W-630
 Comptrol~lerof Public Accounts
 Capitol Station                Re: Whether corpus of trust
 Austin, Texas                       consisting of intangible
                                     property.held in Louisi-
                                     ana by Louisiana trustee
                                     is subject to Texas in-
 Dear Mr. Calvert:                   heritance tax'
          .~Inconnection .with.y-ourrequestfor an 'opinionon the
"'above captioned matter you have~supplied us with the following
 facts. Ida Mitchell Looney, hereafter referred to as Decedent,
 was a resident of Dallas County, Texas, both at the time of her
 death and~at the time she executed an irrevocable trust agree-
 ment with Tulane 'University.'.Pursuant to.the agreement,    .'
 certain stocks and a check for $3000 were turned over to Tulane~
 University which was to pay the income to the Decedent during
 her lifetime~and upon the Decedent's death, to .distribute said
 income to her cousin for life. Upon the death of the Decedent's
 cousin,.TLilaneagreed to use such income for the support of the
 Thomas GreenProfessorship~of Education.

          The agreement is clearly a taxable transfer under that
portion of particle '7117,Vernon's Civil Statutes, which imposes
 a tax upon transfers made '. . .by deed, grant, sale or gift
made or intended to take effect in pos;ession or enjoyment after
 the death of the grantor or donor.      if the property is
"within the jurisdiction of this State... ."'.for inheritance tax
-purposes The attorneys for the estate submit that since the
property ,whichpassed at Decedent's death by virtue of the trust
 Instrument was intangible personal property which had acquired
a fixed business situs in Louisiana, it is not within the jur-
 isdiction of this State for inheritance tax purposes.
          In the fclloiringcases the Supreme Court of the United
 States limited the right to tax intangibles (reserving the ques-
 tion of a decision in the.event such intangibles had acquired a
 business situs) to the decedent's domiciliars state. Farmer's
 Loan and Trust-Co. v. Minnesota, 2% U.S. 2014 (193G); Baldwin v.
 Missouri, 26i U.S. 503 1330 ; BeAdler v. South Carolina Tax
 Commission, 282.U.S. 1' 193d ; First National Ban;<of Bosto.nA
 Maine, 28E U.S. 312 (1932). However, on May 29, 1239, the
 United States Suorcse Collrtabandoned its single d~eathtax
 theory~and held~that intargible property co;npTisinga trust was
.. .   .




            Honorable Robert S. Caivert1 Page 2       (Opinion


            sub.iectto tax both in the state of the deceased,owner's
            d~omrcileand in*the 'statein wihichthe tr-ustwas held.byet,he
            trustee. Curry v. McCanless, 307 U.S. 357; Gravesv. Elliott,
            307 U.S. 383.

                     In the Curry case, ~the decedent had reserved the
            right to dispose of all the trust property by will, and by
            will did make a disposition of it whichediffered from that
            provided
            _   _.   in the trust instrument. In the Graves case,,the
            decedent's death extinguished a power of revocation which she
            had reserved in the trust.
                     In Russell v. Cogswell, 98 P.2d 179 (Kan.Sup., 19&O),
            the Kansas Supreme Court took the view that the power of dais-
            position reserved in the Curry case and the power of revocation
            reserved~in the Graves case were the equivalent of .ownership
            and pkoperly 'identifiedwith the decedent's domicile. Since in
           %he.Russell case the transfer in trust was a?iirrevocable one
            created with a Missouri trustee eleven yea% before ~the dece-
            dent's death, the court held that while the transfer was .one to
            take effect at death, the property of the trust had acquired a
            busintss situs in Missouri and that the State of Kansas was
            without jurisdiction to tax. In order for the court to reach
            this result, it was necessary for it to distinguish Pea~rsonv,
            McGraw, 308 U.S. 313 (1939).    In the Pearson case, the courts
            -hat       an irrevocable trust in Illinois created~in contem-
            plat~ionof death was taxable by the State of Oregon/the dece-
            dent's.dmicile.    At page 318, the court said:

                     "Accordingly, the transfer was taxable on the
                 authority of Curry v. McCanless, supra, and re-
                 lated cases. For constitutionally the property
                 was 'within the jurisdiction of the state'.of -
                 Oregon since that jurisdiction is dependent not
                 on the ~physicallocation of the uroperty in the
                 state but on control~over the oumer."
                     The Kansas Supreme Court distinguished the Pearson case
            on the.ground %hat in that case the intangibles constituting the
            trust corpus had never acquired a business situs in the state
            of Illinois.
                          We regard this distinction as insubstantial and speci-
                                    Central.Hanover
                                              --    Bank & Trust Co. v. Kelly,
            s:y;1ys.r;p~y;4;y.        1n the Centra~&iiv?r-&ii    XL?j?FGm
            case, a resident of New Jersey made an irrevocable transfer in
            trust of certain securities which were at all,times kept in New
            York and administered by the trustee. The trustee was to pay
            the income to thengrantor for his life, then to his wife for
            life if she survived him; if she predeceased him, the principal
      Honorable Robert S. Calvert, Page 3        (Opinion No. WW-6S0)


      was to go to his two.sons, non-residents of New Jersey. It was
      held that a New Jersey inheritance tax upon the transfer, as
      one made in contemplation of death and intended to take effect
      in possession or enjoyment at or after death, did not violate
      the due process or equal protection clause of the 14th amend-
      ment. At pages 96 and 97, the court said:

                "It is much too late to contend'that domicile
           alone is insufficlent to give the domiciliary
           state the constitutional power to tax a transfer
           of intangibles where the owner, though domiciled
           wlthin the state, keeps the paper evidences of
          the intangibles outside its boundaries.         See
          Blackstone v. Miller, 188 U.S. 183; Blodgett v.
          ?%iberman, 2'('(   U .S . 1; Curry v. McCzniess, 30.1X.S.
            5(, and cases cited.. The command or the state
c.
.,!
          .over the.?wner, the obligations which domicile
          creates, .the practical necessity of associating
          intangibles with the oerson of the owner at his
          domicile since they represent only rights which he
          may enforce against others--these are 'the founda-
          tion for the jurisdiction of the domiciliary state
          to tax. Curry vI McCanless, supra. We recently
          applied that'principle,to sustain, on facts very
          close to the present ones, Oregon's power to tax a
          tran,sferof intangfbles held in Illinois by on&
          domiciled in Oregon. Pearson v. McGraw, 308 U.S.
          313..    And‘ see Van Dyke v. Tax Commission, 235 Wis.
          .128,' 292.N.W. 313, aff'd 311 U.S. b05. The execu-
          tion Of the present trust agreement in New York,
          the circumstance that the remaindermen as well as
          the trustee were non-residents of the taxing state
          are quite immaterial. Domicile is the single con-
          trolling consideration in this situation, bs it is
          in the case~of the taxation of income derived from
          activities outside the state. Lawrence~v. State
          Tax Gommission, 286 U.S. 276, 279; New York ex rel.
          Cohn v.-   Graves, 300 U.S. 308"
              The general rule is stated~i;husin 85 C.J.S., Taxation,
      sEC. 1115, pp.852 and 853:

          "Where the settlcr~of a trust of intangible pro-
          perty r,etainss-~:ch
                             an interest in the property
          that there is a taxable transfer at the time of
          his death,, . .$he state in which the settlor is
          domiciled at death may tax the transfer, although
          the trust was estabiished in another state, the
          trustee and the securities are located in another
          state and'the decedent was a resident of another
  Honorable.Robert S. Calvert, Page 4        (Opinion No. W-680)



         state at the time he created the trust, and
         although the transfer is validly taxed by
         another state."
           You-are therefore advised that the corpus of the trust
  under consideration is subject tc an inheritance tax under
  ArticW7117,   V.C.S.


                             SUMMARY
                 Intangible personal property transl
            ferred to a non-resident trustee by an
            irrevocable trust agreement under bihlch
            the Texas trustor was to receive the in-
            come,.forlife, said'income being payable
r; !        upon trustor's death to a th%rd party
            for life with remainder over to Tulane
            University in trust is subject to Texas
            inheritance taxes.
                                 Very truly yours,
                                 WILL WILSON
                                 AttorneysGeneral




  MMP:bct
  APPROVED:
   OPINION COMMITTEE:
   Geo. P. Blackburn, Chairman
  C. K. Richards
  Milton J. Richardson
  Z. J. Turlington-

   REVIEWED FOR THE ATTORNEY GEFW-@.L:
   BJV   Leonard Passmore
