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                     THE    AITORNEY           GENERAL
                                 OF    TEXAS


                                        September 25, 1957

          Hon. Robert S. Calyert,        OPINION NO. WW-262
          Comptrol,lerof Public Accounts
          Capitol Station                Re: Whether deceased joint
          Austin, Texas                      tenant's interest is
                                             subject to inheritance
                                             tf;Etnder submitted
          Dear Mr. Calvert:                       .
                  We quote the following excerpt from your letter
          requesting the opinion of this office on the above cap-
          tioned matter.
                    "An inheritance tax report has been filed
                  with this department for the estate of Nellie
                  R. Dillln who died intestate a resident of th'o
                  Stata of Iowa by the decedent's two surviving
                  sisters, Mrs. Cora B. Watts and Mary Lois Dlllin.
                    "The only property owned by the deceased In
                  the State of Texas is an undivided one-third (l/3)
                  Interest in 320 acres in the John Mark Survey,
                  Abstract 555, Harris County, fully described In
                  a deed dated October 16, 1926, of record in Volume
                  681, page 126, of the Harris County Deed Records,
                  in which the father of Mrs. Cora B. Watts, Mary
                  Lois Dlllln, Blanche T, Dillln and Nellie R.
                  Dillin, conveyed the property to them, his four
                  daughters, as joint tenants with tha express pro-
                  vision that upon the death or deaths of any of
                  the four grantees the survivors of them would
                  take the title to said property. Blanche T.
                  Dlllln died in 1952, and her undivided one-
                  fourth (l/4) interest did not have sufficient
                  value at that time to tax. The statut,oryexemp-
                  ions of the three surviving sisters exceeded the
                  value of the Texas property."
                  You state that the undivided one-third interest
          of Nellie R. Dlllin now exceeds the statutory exemption
          and request the opfnion of this office as to whether that
          interest was, upon passing to the survivors, subject to
          an inheritance tax,
Hon. Robert S. Calvert   Page 2   Opinion No. ww-262


        A joint tenancv ma?7legally exist in Texas if
expressly created by c&tract,- Chandler v. Kountze
130 S.W. 2d 327 (Tex. Civ. App., 1939 Error ref.) Adams
v. Jones, 258 S.W. 2d 402 (Tex. Civ. App., 1953). -The
foll.owingdefinition of a joint tenancy is given in 14
Am. Jur.79, Cotenancy, Seti;6.
          "An estate In joint tenancy Is one held
        by two or more persons jointly, with equal
        rights to share In its enjoyment during their
        lives, and having as its distinguishing
        feature the right of survivorship or jus
        accrescendi, by virtue of which the entire
        estate, upon the death of any of the joint
        tenants, goes to the survivors, and so on
        to the last survivor, who takes an estata
        of inheritance free and exempt from all
        charges made by his deceased co-tenants. . .'
        This being the nature of the estate which was ,.
created by the deed from the father to the sisters, the
question is whether on th,edeath of Nellie A. Dillin    -
there was a taxable transfer under Article 7117, Vernon's
Civil Statutes. The pertinent portions of Article 7117
are the following:
          "All property within the jurisdiction
        of this State, . D .whfch shall.pass abso-
        lutely or in trust by will OP by the laws
        of descent or distribution of this or any
        other State, or by deed, grant, sale, or
        gift made or intended to take effect in
        possession or enjoyment after the death
        of the grantor or donor, shalLupon pass-
        ing. e . be subject to a tax. 0 . o Any
        transfer made by a grantor, vendor, or
        donor, whether by deed, grant, sale, or
        gift, shall, unless shown to the contrary,
        be deemed to have been made in contempla-
        tion of death and subject to the same tax
        as herein provided if such transfer is
        made within two (23 years prior to the death
        of the grantor, vendor, or d,onor,of a
        material part of his estate, or fi the tran-
        sfer made within such period is in the nature
        of a final distribution of property and
        without adaquate valuable consideration."

                              -2-
Hon. Robert S. Calvert   Page 3   Opinion No. ww-262


        The general rule is that no tax may be imposed in
respect to property acquired by survivorship in case of
a joint tenancy under statutory provisions taxing trans-
fers by will or by intestate laws. 85 C.J.S. 902, Taxa-
tion, Sec. 1143; Attorney General v. Clark, 110 N,E. 299
(Mass. Sup, 1915); bl C J     1650 note 4a; In re.Rentz's
Estate, 61 N. W. 2d 148'(Mi%. Sup. 1953) *
        In 4 C.C.H. Inheritance, Estate and Gift Tax Re-
porter, par. 1570B, p. 80,212, the following explanation
of the general rule is given.
               .Jointly owned property is usually
        considered taxable only by speolfic statu-
        tory provision, because, owing to the fact
        that the interest of the decedent passes
        by right of survivorship there Is not a
        transfer by will or under the Intestate laws,
        so that a specific provision is necessary to
        bring such joint estates within the scope and
        operation of the act. The cases, In fact,
        are almost unanimous in holding that the
        interest of the survivor comes not by inherit-
        ance or succession, and that, accordingly
        there is no transfer under the intestate laws.
        The theory on which the taxation of such
        property Is justified is that, while the vest-
        ing of the entire estate by right of survlvor-
        ship is not an inheritance or succession,
        nevertheless the death of the decedent
        ordinarily makes the survivor the sole and
        undisputed owner. Such death enlarges, in
        practical effect, the quantity of his estate,
        for up to the death of the deceased joint
        owner it was within his power to have changed
        the joint estate to a tenancy in common, and
        hence death, from this point of view, is the
        generating source which consummates the joint
        estate in its full plentitude. But this
        theory is not wholly convincing or satisfact-
        ory, and, like the attempt to tax insurance and
        dower, rests on an implied assumption which
        does not stand the test oE analysis.  The
        attempt to tax such interest may be criticized
        as perhaps an unwise extension of inheritance
        taxation to objects properly beyond Its reason-
        able scope. In addition to the Federal Govern-
        ment most of the states have a specific statutory
                                                        L   I

                                                                .   .




Hon. Robert S. Calvert   Page 4    Opinion No. WW-262


         provision making the vesting of joint es-
         tates by right of survivorship taxable. A
         number of states have no statutory provi-
         sions, and in most of these joint estates
         are not taxed, but in South Dakota, prior
         to the adoptlon of a specific provision
         taxing as to jointly held property, the
         taxing authorities taxed such interest as
         a matter of general constructfon. The
         soundness of such a construction is possibly
         open to doubt,"
        You are therefore advised that no Inheritance
tax accrued when the surviving sisters succeeded re-
spectively to l/2 of the deceased sister's interest.
                         SUMMARY
         The surviving joint tenants do not owe
         any inheritance tax upon the interest
         received at the death of a joint tenant.
                             Yours very truly
                             WILL WILSON
                             Attorney General




MMP/fb
APPROVED:
OPINION COMMITTEE:
George P. Blackburn, Chairman
Ralph Rash
Wm. R. Hemphfll
REVIEWFDFORTHEA'Pl'GRNEYGENF.RAL
By: James N.Ludlum
