           OFFICE OF THE ATTORNEY          GE~~L       OF TEXAS
                                  AUSTIN


i-bnoraue George Ef.sheppud
Ca@rollar of Pablla 4oouda
Au&in,      %xaO
De8r Slrl




              Tour lrttor xoquost.
aubleot raadr u      follow,


     tt,     Tonr,   on t
           ewr er d o f a n l




                                                    lo d;
                                                        8nd
                                                          th e _

                                                   lo o uel the     ”
                                                   to th e De P o lo h la
                                                 1* lnot1tutiea
                                              ra u lnhorlt8noo
                                            8 kwm8l    B&c ln
                                            Erroator of fho will
                                           the olkto. 9%. in-
                            o xtio r a l8lt8t8h u b o o n
                            op8xtrmit  ur d
                                          o x 8mlned. ‘Wha10
                            r k trfo xlnh e r lta tuno e
                                                       p u*

                  oat8ta to the twfa rlstoro oi tb                do-
    00880: 8nd ttio ro!al8l&dr~to the 80
Hoaonblo Gooxgo 8. shoppad, z!rgo8



             %r. EQurQ 5. Boylo8, of IIoustan,who ra
        resent8 the Flr'atlhtioaalBank haonrittent iz
        buik-anopinionin rhloh ho holds that  tbla m-
        windor interest ia not taxable for t&o m8aon
        that it w   not be doton&wl at-fhia time whothor
        or not tbo nophw will etor bon&it in the r+
        ulndor  or the 86td4,  aa hi8 dut&,  before      the
        death o r llther o fth e
                               two a ieto rwm,
                                             o uld  ultlmto-
        lf rlaos tho oorptu of this T~uat Eatat in tho
        hada of the W'slohin 'FaithIkmo.
              *Youwill find doha      hereto the opinion
        of l’r. Boyle8 and the oopy oi the last will and
        taatamat of the d@au(LIIed,for your uaa In advii~-
        ix&gthin daputment   whothor or not we have din-
        trlbutod the o&ate in a oorrsot mannor ror in-
        heritanortax purp6tw."




             I2~aprooi& question pntimted by your lotter haa
nblor   haul ,B555Od Uson by an apwmto  o0ul-tin.Rxaa.   Thr
p-051~     or 555055bg inme5~00       tu05
intemata, ho, he&mar,
and trqenuftyai
very nature of tho problem la auah thct 110.parfaotrolutlan
la posriblr. ia etatad by Rotsaror Bagart in hia tmt, *The
rAK Of wWt5 urd mlteO8” (1935),     vol. 8, IWO 986, ( 879,
wha     dirfi0titf ht18~OCTIt0 rind 5f3~fi0
                                         mtih0d wbi0h 15 5t th5
aaw tiwe oqultrblotathollfotoxmstmd~tha              porma or      :
;eraona to rhoa future     lnterosta am    llmitsd 5nd yot givoa
        protaotioato the rwenuu
udequ8t.a                                 of the atate."
          '&ore the orentual moiplantr oi the taatabor~a
bounty am aot 40rinitaiy a5aortainatkathis aoath bsoauw,
au in the lmtant oaaa, tbs are nude depmaottt upon ruturv
ocntlngenoioa,the total iaiorltama tax llabllita map vary
O-~n3id6lrhl dopending qen (1) tho number or personawho
say take (2f thrlr mlationahip to the featator or, 13)- tlw
tax examption or poaalbls t&or8 8uoh a5 oh5rltioa.    A5
hflnits rmarbtror aimnti    adiod8  0r aaaoariae  lnhorlt-
mee taxes ugmn thaao unoartsin futura i~ntererta hsvo bsori
ev0lvod by airierat atutor at difiennt timea.
           'sow atatma m&a the tax on unoarta3.nfutun in-
tmosto pysblr lnuaedi8toly et the hi&8st wraible r&o
(i.e.' UQO~ t&o l aauaptIoa~th& tha o&tfn~:imat,hmotor
lmpm&abl., r1l.lOOOUT u!zlghwill    m8ult ifithe gnatsat
tax) with pmf aion for ~run4 ia the weat th0 prop~rtt,
aotually mzara to beneflalar&r     6akIng at a lower Mt..
In zw 91.oo*s iiat8te(108.8) 164 klaa. 139, 204 X. k'.84s1 fn m
Rllrm'8aad.i5 (1916), 176 A pq 31,lr. l&w, l&2 :I.Y. t. 458.
Ptbor tiatute8 d:atingnIah totwwn fsolmioally rented rad
otmtlE.~:ent rwzahdwa   m      t&   tax payable u oa tba a.&21
0r the teatator in t&o ma0 (jit           awe Prider;;  but
!~oatgmlag the-ynent or the ~tax       the hrrppd.ag 0r tlu
oontln:enopin ,thooaae o2 a aontln~ant xtwiaitraer.    canmon-
wealth v. s'crbr+u'8 Sxaautor (3914),-156;;'y, 877 la 5.~. .
9791 In re Rociwrelt,~(18941 J45 l?.Ye ~120 Z.Z',i;   x, ~81 ' :
25 I,. 9. A. 4961 Ayore P.~~ch~oago,ntl6* &t       CO.~(Ill*'>-.
19mM) 58 ::.?s.310 %Illla6a, Omu~llk~loner  v. Uallerlurb:
(rnonnf37 9; '3.(i&16.
          In other oases, we find the tax,yortpomd, until
    ersntual takers OGW into poaao8a1on, even upon the
?.:'ie
taob&mllg vested rovaindora, if the reemlnder,~though
rested ir'a~bjaot~t~befouume,     or oponIn&to a&sit o$hard
0r the oha0,   ??oorr~-8.cfmlmau*6lth,~(V~.~l930)lsg s;~B.'~
035.                   .~ .,.,:~~          $~.              :;

          ?ho history of the cbanglng pmrisiom in tt8"
Wmrlturor tarat~tuto of NW York ior the treatment     of
rutqro oontlngent lntsm*W ( rlor to thd adtigtionb ifew
York 0r an estate tax .inl*SOB olamrlr illrwtntoa tL
rcrlatr of poealblr appromhoa to tha problm. Thlr lo(p
islatlve ~hlstcry &a traoti lo a moaf intw8af.Ing-r
by !',r.
       cTuotfas~?!ram?oIUin Zalo&m v* Stale ikx &maIaaIon,
(lQZ0) El-5II.E* 464 at phlgo467t
         "8 , . zinw the enaateon6  et the ‘Bangor
    Tax Law in lO(ie(Oh. 483). the ala @f th0 L&a-
    28tuxe baa boa at all times to rPopt a mathod
    of 1opi.n~the tax rhlajiwould ba iair to both
    ,thelife tinant and the fatura interoat and would
    pmtaot the revenura~o? fhs St&e. Fran time to
    tlmo, varlow nethnilm for dobig thin acre triad,
    3pcrieaoe revealed tholr defook. Under the orlg-
     i~i   15~ wd   ‘tka early omao~n65, the *rerursre
    to eontfngent rwaindomoa uexe not,taxab~o upon
    t\iotcatetar*a do&h, PLattorof Cagrs ill N. Y.
Hanamble 08orge.H. 8hOpmrb, Pago 4


    343. ‘l%eywar. taxable at the t3.n.a     what thay
    veetrtlin porw~r         Mtter of Stewart, lS1
    II.I, 874. AM tlm ?a    z than payable uw om
    patad upon the value, l8’of the testrtti’rdeath,
    a? the pmp%rty tMlreIT.d, less ths 1Qlus or
    tb int8n~n1iii0    ngld.0mtt0r  ,. 0r CJGCSB,
    lS4 7:.P. 109. unaor thlr method the xwvt4nio
    derlvocl rm fh% tax CD the oontin#xttr~s1nd.r
    wea lesa than it *ould have’bwn hcd the ru6ninaor ”
    b%eB 8 vetltsa .eJao*rel-the stats loat t&e bono-
    fit or the mamy during the porlod intsrvsni~
    between the Math af the tcmtator and that OS
    the ll.rstenant. To ovemw          this loiiato the
    state and the di#oriaiPaUari thmroby in favor of
    the oontin~wt mmdndemon,        tha,b&8l.atum pro-  I,   ,~,,~
    vl13al‘by Cha tar lb84 of the Jbtr    of 1097 t&at
    tte tax pye Iilr on the veatlnfjdf tim eontingsnt    1
    rezdntler~shoultl be mu.aumd by the full val?aa
    of the pro brt aI,of tho testoter*satith, ritll-
    out arauotfng the value oi~tha intervanla&l.iio
    estate, !:attaret L%llg4amn, 819 FL Y, 886. Thir
    statutte, whlls da Its lkoe eUmirutln8 tM din-
    orieiaatitmIn favor of oontlas~ont.ron;eiorxot&
    WB   iauad t0   fU\rlt   i?llWioru, ~10@6 “Of XOV0BU0,
    to the Stats. Tax08 ~aroepodoelleotiaor wha they     :~1~~
                                                            :’
    booam duo beoawa lt proved to be ingoasiblo
    tomtis~srtelnourmatly whur the ooatt4gonoioe
    hrrpnea and heneo wtw a tax baoawapaynble. To
    mn8ay this doroot it ua8 p2cda0a by Ohapter 76
    of the laws of lt39i that the tax muot be paid u@n
    the ta&ator*r tlutkt and t&t it ehouL4 then bo
    pdd out 0r the,oorpur ‘oftba srtate at the hlgharr(r
    a plioabla ‘mt0, With 4 prOVi8iOA tQr patilLst0
    &a rmiaindelrmrm tbr rycprun with interort~if 1t
    should prove t&t  a loeer rata wae rpsUoabl*
    Patter of 7sndmfit    198 X. Y. 69. *IMa prod-
    cion, while iull m#.wiaq       the State’6 rev-
           Savokod ti0nwlnda r 5ub a tthe lx p o na ao t
    E@ho     tenant. Mattar of Brw, 178 N. Y. 60%
    For under thin pat81011 th+ 1lf0 teMnt loat
    t.h*inow on the full muat deauotad to enaIr@
            ar’ths tax on the oontlnwtt romdndrr
    ptiprpsnt
    and the nnalndarrss  rooeiro6 rz0m tlw State w t.
                                                    th
    intarmt such pa?t:hamof u prqvatl not PO bo
    ~~~qu.lndfor tha ultiaato peymosntof the tax.
    Themupon 8W    rolld to th   lifs t*nant *m ai-
    forded by chapter so0 of the Lmaa oi 19U~ . .”
          Ronorable Esorga Hi Shippard, Tags S



    . .               -MSTINCTIQN



I
               se have at&ad     tho problem hsre involnd to be
   t&o esa%asmeat of 1BheritaBoe      tax%. upon
   illt%resta.  Ye u80 the   term  *uncartaln
   atl~iaeely,  intendlog theroby to InoluQo all interrata
  when ultlxato l'..ipi.Bt.la poasaraioa oannot be d%flnItc
   iy memined      at the a0dh of tha donor. ma         inma          .
  not oaly w&t wore teohnioally knmn to tL0 otwduo~ law aa
  ,okntIng%ntremaInd%re,and lxoout6ry tlavlt~es        but also thoao
   rw~lnUom,     ah&oh, tbnueh taohnloa:lyV%st%kr ar% l      +bjeot,
  upon oontIn,~.tmoiea,,to    partial or,fmnpl6ts am3tb~0~. so
. far a8 t&O aifliO&iOB~ Of iahOl'ittU%CO     tU8. a&?00OllQWWd,
  the tikphydlotal di8tin&ioM 6f -01-t prOi!Ortytin bo-
   tween *nated* and ~0onttiDEttMF       retaIn0era aboultiheme no
          ~igniri0~~108~
                T%o ArmrIoan Tar fnatltuto, in it% Hemtatoxent
      of theilaw or property ha8 dlaoardsd sntlrelp th% t%zm,
      noontlnneatmtdnaar*,    uml olaaaIflaa all rexalndwa In




                   (a) lndof%aalb~y veated;
                   lllwtration: 'to B for llte, m+7alnaer
              to C anA his heira* - C hae a rsoginder indotees-
              Ibly vested.
                 ~--(b) v%Stfnleubjsot to &OA
                   ~rm8twi0nl     w0 n for iit0 ret::clinaer
                                               i
              to the oUl&on ot B' - B has l oil1.d    C. C he.
              6~M!IdRaOr VOStOd 8UbjeOt t0 Open 8ad 1st iB
              other ohIldr%n born tc D
                    (c) varb~a aubleat to oaimleto~dereaoane
                    fllustrat~onr It P r    iir       lhder ari
              r.shall by will arlpot:t.b:: In :kfii$ of a~-
              rolntwent~ xwnalndet to-Q uul hle heIra* - C has
              a rmdn4er toot06 t~ubjeot to ocmpletd,asfemmnoe
              by wa   sxbroin  cr the ptmer 0r o~~polntmthtoon-
              fermb     on   him.
     two-oluaas of roma$adora h.va am   baca almast
     UQI~C~UUY ~~~Ulflcd b7 8tdUta."    - 19 liarvard.
     Law &3*Iow lee.
         “That an 4.t.k In maa1ad.r la V?!.t.d
    dcea not &up17 a aart.inty that it will ever
    aot\ully take offset la persassion,beoauar
    every rskmIndar oi . llfo eat&a or ice tall
    la subjaot to uno.rt.lnty la this raapeot,
    oonsoquanton tha poralbIllt7 that the prao.-
    ~asntlkk    may o&lot   the est~ta In rsfmia-
    drr by raason of the drth Oi the r6m.lndefaUJI,
    or his duth without 188~8, ktori~ the datsr
    zdnatloaor the pprsosdantsatato.* - 31 corpus
    Wff.E..ugdum 90, S.oe 69, oitjlw oumarou.

          T&e modern tmdeno7 to dltsngard the bohalml
d1atlnotIonbatwwa "veeto4* md *oont~aPt* rutarc la-
taraata in ths lpplloatlan oi iabarltuwa or estats tams
lo lxa~lIfIad bf tha iallawing quetatIoaa~
           Yta6alabem arc to bo appraised at tholr
    pm~ont    V.lU.. latter Oftzbormsk1   al3 r-Y. Y.
    U$l.~;s3. X:44.. T&a7 are sift. ilk. pmsont
                 In ilxla& fholr telue a0 distlao-
    tloa la ti ba drawn tmtwua the o~aasaa U
    cmaa8rs.    maher  rutad or ooatinmat. (lb-
     hu1. oursj F      tha parpoe. of taxation the
    kntlngsno~ is %mlmtsd      and tha gift in olasaad
    a slbaoluW. arattero? Tam,      W3 Y. Ye 8l.8,
    liltIT.H. 9Sl." - Card000 tr in Tn CB ParkarQ
    Eatata (1919) 886 X. I. 8&O, ieS n. B. 366.
         “iv.do not straea the distlnotlonbstwsaa
    the gift of . oontl~oat r.mal~d.rand the gift
    of a vested ram.ln6.owhioh 1. lubJaot to dlvast-
    maat upon the &ppudag of a matla&6onoy. %e
    b4843ws a40i410n pa5ariiy UPM the mtum UI~
    praotloal afiaot of tbr oontlngaaop.~ - Lahmm,
        la 3s Zragan (1939) 873 N. Y. 337, 9 ?L X.
    fhd, 953, 111)h. L, R. k430at p. ZY%
         *The inosoapablo ratl0n.l. oi thaa daoisIoa
    (xl.in v. U. Se, &?@30. 8. 8911, randared by a
    ummlmua Court,wg. that    the StbtUta   taxatd   not
    x4r.l;~thou   inter.&. whloh ara daamad to pa..
Honorable Osorgs i3.Shappsrd,PM.                     0


        at ,daathaooordlng to raflaad t*obaloalltIaso?
        tho laiuo? propsrtt. It also texea inter viva6
        tra.?afara that lra too muoh akin to toatamantary
        dispositionsnot to be aubjaoted   to the cans es-
        01.8. 3y brl.n&ag   Into the grass aatata at his
        death tht whloh the settlor gave oontingently
        upon It. thin Court ?aataaa4 on the vital.feotor.
        Ji mfuiad   to subordln&a the plain I)urpoaaO?
                                                               or ancient

        st p. ll.016Q y. ct.       444.   04    t.       Ed.    604,     12!3A.
        .
        --.3. 13a&




             lhara Is no auggedloa In the Taxaa lnbarltsnss
ttu attstutato lzdloate a le~lslatIv8 Intent to dlf?a~atIata
batwiaa taobnIoally*vaat@td*and *oontlwent* future      intarasta.
Cur    Inherlt6noatax atatuto  aatd?aate throughoutL olrar in-
~teUtiOA   OR the :art Of tho L.~i.l~tU$'ato Mk. all th4 mp-
er~typassin& tram tha daoedeat to his baaadDarIss tuta    tIa
at his bath, whsthar tha latmasta of the savarai bena-
fIoIarIsa ba ~0880440ry or futura vastatlor oontlngeat.No-
:.‘:.ara (lowe fin4 aup prorlalon wh1oh would authorlao tha
~ost~onsmnt of the aaaassmaat or oollaotIon of the tax to
aWait    happaah3    Of   OO~i~CMieO           Or    the       X%pCdA&     Of   ?UtWa
lntarsata Into posaaaaory estataar In hot, th* oontmry
Intention Is to ba found throughout Chapter 8 of TIt.1.122.
3~1s faot was lost iorolbl7 pointed out in the opinion of
,;gslatantAttorney  Canaral F. C. Pomrimoy to the Cmptrollar
re?tWng to the fFataeaof J, ferry muma, dated July 27,
133SJ ?-heroinit was held that tha eAtin    artate O? ths
zcstetor was rsauitlp taxable la aglte of the faot that
his xl11 ;:rovsdad for a gl?t to oh&rltp in the avant Of th0
~:aathof his two ohlldren without lssw. ‘i:e  quota frcm this
o~lnlon:
             Vha first quostloa la as to whothar our
        statute ymvides ?or,the pressat payment a? an
        inherltaaoetu or whathor,  in a oua llka this,
        pay&At ahou3.dba portgonad u&t11 the taksrs oolarr
        Into poaaeaaionof their est$a.
     "SOL& L. lb wJ4?e,                 ~tlox.11,          mltae
thi lam (18followat


m*tttr or Itututory ooll88ruaaie&
inquiry nu to tha lnu la anf putloulsr  State
shculd start with an '4mmination c? the ourreat
etatuto.'
     “!?4farr&~tO the atauto,    Article 7117'Qro-
TldU that proputy   'ahall \tpon passing to or ror
the ~8. of my paaon * + * bs subjoot to l kx.'
     *We sub&t that  the pmpwty    *panout at
the bath oi/tha tea t& l   oltbmqb
                              r , hlr fnfon-
tlon bntl~theetlreofof thr uQl isthat it t&o
4rf00t    ,*b     ~OWW~,OII    ~83    -Joma*            Ofknr~d8.
Adwnr          aouao81 oaaoqda       that th4    tu     on tha a01
tate shaulb k lorla6 at thla tin., 'buf that
paywant dmald not ba -do uatll whsn an4 ii thr
oontingsnal4s prmmed for in the WI11 aatual1.y
hagwr      ~'
         "By Artlalo 7150 the kxablo values of owh
taxable laterad in             the   eatato mustbe pnma8-
ly datamlaad.




      *&tia14 Tl?% prooti6u ,forl mm4.n ill
the proprrty mbjoet   to tratlon to tw~uro the
paym4lt  oi dl taxam,  pezbatiw rod 008ta pro-
rl-6.4   tar    in   th4   ohpkr,      This     me8as    that   a
lien exbtr not 8lea4 on tlm wtrml                       Mmtloa8
or lutemete to 800~ the tax UW 0x1tech, bu%
tbd tha tu QUO 6n moh hequest or in:rraet is
a lien on all the prqmrty of the astate.
         w-ti.014         7154      pmia08   that is th4 a~l0wst
of the t4x du4 undm                   tha law~is not pi&cl in tf?mb
eonthe      tram    the     -d&to     or   said   aee4sem4nt,   44m4
sIxl1~dx-a~tw per oent penalty, etc., end ii
not paid in nine matbm the ootkntyor 4ietriot
attorney shall ills luldln-a cto     lia
                                       So -  tely
                                              -
close the t8x urn.
     "Article 7135 proda   that no siml aa-
cwnt of any cxeoutor ede.inlatmtoror trustee
shell be appoled by the oouatp judge unless
ouoh arcour$t        show‘,         aa     the JUl&e finds,     tm     s
                                                                                   *I.


                                                                                 ‘~I)
                                                                             L’
     "Artiaie 7lZ6 prorids‘ that no notes bands,                           ,~,
stocks, eta., tub eat to taxation, shall &I ‘?                             .A_
tranricrrsdoi aoiliared to lagatee or h&r
until th eto z.p tr ohllua s
                           lea4rteiaad a ndc utl-
tied that all the iahcrltaaoo~ taxes:due tha
State'hare been paid, and Irtlole 71Z7 We8
any 0orjxirat1onwho rl@letoe Said proYleio8
llablt for the ~~eid  tue8 and peUlti4s riad
aoetr oollootloa.
    )%Taok I!?UXTUS    is thirty-dght    am! hie sloter,
Tatbryn is forty yruo or rqsg t&r iirb.8x-
pact&46        are ~applVA.mtely twnty-nina Urd
ttianty-right     y;iare,r0o,potlV0ly.~Md t0 thW@
tlie twenty-cm      yaar trust  rrrlod p;covideCfor
etter thrir’G4ath      lrrdwe kam a~prozln~telffifty
yaws before it omld be daiialtrly aeoertainad
rho will cltixately hme isto enid raxiaddor
@stat&. Tador the oaatrntloe ot coull~el,the
~aymnt OS tbs WOS tight be ~~4pt~d4d          SOT
fifty yaars, and during t&et goriod the finel
rtport or the exscutora coula not bF Br~roPedi
                                                                         A
                                                             ‘,   dim



,HanorableGeorge B. ,Sheppard,%ge     U.


     the letetcroould not be oloeed, and no dietrlbu-
     Goa. thanof could k tie.     So au&It that maoh
     is antirely inoonsletontnith the prarislanaof
     our statute end that th8 Loglelatura mild not
     have intended say 8uah zwu&t. Xt la, thoreiora,
     our.oonoluel6athet all inheriknoo taxes provided
     ior by ths T4bue rtdwtre  ar6 pmsrntly pueblo.
                                                                        .’
          “It .le oonteadml by oounerl that the seta&
     renmlnln~ upon the aoath oi Jaok and f:athrfnoaa-
     oat b4 tued until it shall be 40rinimy     aemr-
     talnad rho will ultimeta~y oame into  oal4 setak.       .
     1 oaanot agxw with this oontratloa.
           Wur statute pmwidee for just  iuah a oon-
     teatiaa.  Artlclo 7l23 r~~ldee that ii the prep-
     arty puslag spell 'k 4Pri4id~loto~twoor mm0
     eetat*e,~ah an retata ror~~liroor for 11~4 end
     a ramlnder, the tu rtuLl be levied oa eaoh es-
     tat0 or intereat separately,*ooording to the
     value of the 6amo et tb do&h of tho dooe4oat.
     Th4 value of artake r or.yeare oetatee for life,
     mmnlnder~ and mnultlaa, 8hd ba determlao4.by
     the Aotuulae Omblaod Zxporlrnoo Tables, at
     Sour par awt ampound interest.*
            It  ma be ~aoaoedd (u lndioated by Su4ga Cordoso
la his ~oplaioaih Galama vq %Wia        ?Bx Comaieelen,~quoted
above) thet    to require all lnherltuto~ tuw~ to be mid at
the denth or the tmtator       ls uafdr (1) in tha8 tlu llrr
tenant’s lnqme is -due d laeoiu a# the prlnol*t$             2
trust 18 mduom4 to my tha inhorltutootuee
malnder lntsnete,     (21 in that   higher or lowarT axoa ouy
bo raid than the ultismte 418pOritlW ai Urrmmti f’utUn
iatsnete would roquirw Unquertlombly urder tk hne
statute this ie roquirodto be 4eae. ad suoh a raqulrw
mat, la~olvlog this llo ma nt     of~tborotloal uufalrneeb,
does not render the rtatuts invalid. To quota emin        fr4m
Salaam v. Stat0     Tu Carrirelon (lO281, 876 U. 8. 484 at
pe&4 491:
            vhr   rsot that a better t axing wstom mlsht
     ba 6o~~lved &me not raadu    the 1~ ti~aLi4. Aa
     me aal4 lrlY&rep0118 Thratre   Co. ** b%laago
     220 u. s. $1, 6940, *Tu bo able In find fed
     with a law La not to domoaetrut* It8 lnlfalldlty
     . . . Tha groblsme of gararnment are praotloaS
     &m   9d WY ju~tiry, ii they a0,not~mqu5r0,
     r o w-l>o o c o mo da tio  n8
                            --lllogioal, it say be;
     and uaaoloatiilo.”l‘. . IWall ruuh objoo-,
     tlonr lt may be amwmd that      minor ineq~lltl~
     and hardships   ere incidents of every system of
     taxntlon~anddo net ?oader the leglrlatlanob-
     noriou6 to the ~adorel Constitution.*nsral
     h!!!erioeB
              mlk   car carp. 1. nay, 278 u. n. 337."
Anndat peco 4V.Ot
                    ‘ibeduo pmoe8a alawe l?l~ae8ue
     restrZti0i on a Stat0 a0 to thu t&4 at whi&
     on inhorltanootarohall bo lstled or the pmp-
     lrtg valuodror purposee’or8uoh tar. Co~pam
     Cahen *.‘~?mvmter,    SOS U.:6. 54%”
          AS salb in ZWaOlmabla bw     Rariw 160 (lWQ)s
          “It has lo@$ boon undi8putsd tbmt the port-
     ponsmcmt or 084asrioa or the trueerr43d   rn8
     doe8 not or ltaelf prsrsnt the t&l:U iPpo8ftloa
     0r an lnherstam* .texl~sino* io theory the trak8-
     rertex   18 a tu on tha priilqe    0r.8~000881~~~~
     and not,on the propwtg tranefarmd, It 8eQu
     quite prOper that the 8weo88ar8 t0 any part O?
     the dwmlaut% interest, ubthar tho vaetlng in
     porreealonbe la the preoont or future, ohmld
     be subjeat to the ah@rga.*
          Prm the rorogoiag, w    have aonoludidrd!
                                                  (1) That
r0r inheriteneetar ptZqO806, ft   ir f.lm’trrialwhether
mum k~~~ertfd~intsmsta6m teotai0axiy *vmad= or
*tioatingezW(8) that thu pxeaetatute requinr the a8oeas-
ment aa paysent or all iahrrit8nor tu*r upon the 'aath
or the .aeoedsrst, even thou& (a) it waker the raealndor
nan1~1tues vaymblr out CU the aarpur Of the ecltata(b)
it mculree the rate an& tha -t       or tax to be barad
on aom *guctw ar to the oltlcmte disposltlon Of fatura
intersots, (5) that in rplto 0r auah ralllng8,  8ueh a tar
16 noneth8ls68 cmstltutienal~
--



     <




                     Ylth there ooaelu8loae ln mind,':-!8  turn te a
         oonaidcrationof the propor lBOtbd Oi aeeeeelng the tax
         upon unoortain hmuu        laterester 3 sub@?t that th3 only
         alternatiVe    under ,cttr 8tetutr is to beao the a.p8eoewnt
         u~aa the P.08t    robsble 0r paeefble ruw0 oontlnp3noieo.
         Rsle rule is &weaelg eecpted ky atatute in the Ztnte~of
         Xeeh,in:t~, and appliedby the co*& in fn re %tr)n*B
         Zetete (lose) 107 Faeh.X60, 15 ::ao.1I3d)$33.
               In'thet oeee the teetatrlx had left her propert9,"
     to her two ailoptedchildren leged X3 end 16 rSSpSOdV*lyi
     at her de&h with 3~Wi8iO32    that~winthe ~eveatthat both
     or 6tywld &80d~*iamn        ahall die b9rm ~~~irfng at..;.!~.
     n;ajorittumar.rieQ'lend
                           ~tit-hout laaue, then (to,1m;raister
     ,Juliaor her heirs."~ Under t3o ‘3whlnyton atstcto, tho
     propertp paeeing to tho ohlldren me8 texeble at a rate of
     lf, but lr it went to the eiettrqa heirs, it wao taxable
     at 10%   '=hooeurt held that the tax wan te be cuaputed
     ee thocgh .theproparty wculd otentually paos under the
     eoet probable oont$ngenoy. Fe attoter
                   "The.DrSOWt tl.oBQ)
                                     'etitutsmnulrta,-th*
              paywtnt of the tax $.m?eiil8toly
                                            upon-the,~tr&%. "
             rsr cr the,propOrtyat *Am hi#mt rate ~,    ~ba- ,'~.
                                                     p$sL
             ble; that 18 the word ~poeeible @ wee c aged
             to*probablet end the 00urt wa8 meted ni.th the
             power to abjust the tax ir fame *appear to ba
             exoeesl~e. *

                  '%Bile It Is poe~ible thet the two ohj.ldren
             mep.not reaoh~thelcmajorltp, It ie likewlae
             poesible thet some or the ctl-k3r  oant.lik~encioa
             me9 never he?-l‘en.%-6jualcfellyknow that it
             le mcre grobeble or mar0 likely that the two
             ohfldren will errire attheir rajoritp, reflmr
             tbon~prsdecoasethe dao8deqtve sister or the
             heire cr the latter. We oan herdly hold as &
             urttor Gr law thet the probability ie that tho
             tuo ohllbma     or themea ci?f6 end 10 years will
             not eur?i~s theieir sother's efetor, :-eagrw
             with the trial oourt thet the pmb&bilitlee are
             ell in ravor ot the eat&o rootSng& tho lineal
             heirs, and that    tho tu woukl tWNm]~Utsll
             that baela under the pruWdon of tha statgy;,
          It Is true that in the above case the :?eehin~on
atztute expreaaly dlreoted the computationof the tax baaed
upon the happenIn&!ot the moat probeble ecntingenoleapro-
ridod in the ~~111. It lobma to ua, however, that even ia’
the absenceOS auah axpraas statutory provialon,the tar
met of nwesalty be ocucputed  upon the baala of the moat
 robaptleooutlnganoloa, where the statute requiroa (as in
!‘Giima    paymeunfof alLtasea upon the 6eath of the teata-
for.  Suoh uas the eonolualon r-rthe oourt In In ra Neabitt*s
lCatate(19231 198 n. Y. 0. 451, atid. by Ct. ot APR., 237 ,,_
II.Y. Se7, 145 H. E. 72Q where tbare was no statutory
~i~otlon to eeaesa the &ax on the unoerfaln future luter-
eats u9on '*probebilitiaav~,
                           landwhore ths will rovidetlfor
a oharltahlo gift upon a remote poueibllity. f hl~8ea a ing
the tax, the oourt alm9ly looked to the probabilttleao?'
the oase and Ignored entirely the remotely pooafble @it     ~~_~
to the tax uempt oharity. Ye quote, fmm ,the oy.lnion of    ,,
the dourt in the ITeab$ttowe, et i-age 454:
            Vhe oontlngentr&an0eiataxod     in the
      two trues  with a atit  over to an exempt hos-
     pital oorporatlonin tha eventof the failure
     or issue or the orlulndlaeatule que trust
      cannot be held too remote to be aaesaaed a 4
      their preeeantvalue atthIS ,tine.Yatter~of~
     ~YarkerI8Rateto, Eab Vi ‘I.i%O, 123 Ii.3. 30&
      the devise
               \, IIto thenohlldren OS the tuetator's
     deceased dau&ter and in default of their tak-
     lng by death b&ore vesting, to their irsue,
     an4 in default of Wvuo, to the hospital oor-
     poreticn. lbe oontiwpnoy bare is not rweoto~
     It Is llmlted'oulyon two llver,~an6 the rc-
     bablllty of lonue of the grtmd00n8; and t&
     poaaibilityof their taking is presently tara-
     ble:'
              Slnoe lnhrltanoo tuor are baaed upon the value
or pmporty rooel-go4by the variouabeneflelariaa,and the
statutes unually preaorlbe a graduated tu and lp o o iiio
axamptiona ior the benefloiarleo dopending an the sire of.
their rea9eotivebequests and their degree Of rolatlonahip
to the deaeaaed, the problem oi taxing ;mcertain future
lnterctoto    la usually more aomplexundsr an lnherltanoa   tax,
than   underan estate    tax ouoh as  tho Federal Govermant~a.
The problem is ldentloal,however unOer the two typos of
statutes where .thero is an una~l-4 sin iutUre    gift to a tax
exempt   c I, rlty.  the federal deoi~lone In suoh oaaoa, are
Honorable George 2. Sheppard, Pmgo 15


themfori balp?ul. It la f&pl?loant that la thaa*     Oaaea
the V111tad  Stabs Supreme Court tna adopted the rule of
probability,   as illuatratd by the ?ollouing two dealsions.
              In Itheaa Tr3at Co. v. t’.9. (19231, &78 U. S.
151, 49 F. Ct. ml           73 L. Ed. 64V tha aourt ooMlaeraa the
areoament o? the +odaral estate lax upon or:estata nhlsh
had bean ls?t in trust, the laaoma, .and M mob of the
 rrlinoipel   as *may be neoea8ary to suitably neintain her
 Itnas aueb oonrort as 8he non en oya* to .boj?uiUto tN
wJaou or the testator for bar 11to, with the ontlre re-
nelnder r:aaolq to a tax-exalt Oharlty. The nldow aotual-
ly    died within ‘a year of the death        e? the teatator, and
barore tha tu had boon Wooseed,               ~Tbhi
                                                  gorsrnwnt ur&
that that proportion of the lalue of the eatata attribu-
table tomthe taxakempt oharlt should be reauoed beaaum
cr the ri&t given to intaao t Ii         0 prlnclpal Sor the support
of the rida%         The eatata o~ntended, on the othar,hand,
t&t slnoe the widow aotWly dlod before the aasoramont
or the tax; her life estate should be valued upbn its
aotual short Curation,          nthor than upon the wldow*e llro-
expeotanoy at her hurrband~a          bath. Both o? theeo~ouatexb
t!ona asremjeotad         by  th   OOWt,   OA the t.~rOWdthat the
tax    muat  be ~aaseoaod    u&iontha baa18 &. the probebilitir8
as of the date of the foatator’a           do&h.    The ootwt found
that tha inoogo frun tho property vma In hot amply auf-
fialtint    to’aupportthe ridw rithaut thr naaaaalty o?
dipring into the, prlnol@aL)an& that the uldarr’alit&
rxpeotanoyat her huaba;id*adrth               baaed 0 on the a000 to6
mortality ta b les, mur t b e thm boat o r lva EUstin& her PI?*
oatato even though aubaequent aroa$a belied the loouraoy
of au0ilpre~lotlw.           Said Pr. Tuatloa Fmlmar

              Thera was
       greater     than the
      tends      human affairs.*
           %!iira 9. c. s., ~76 v. 3. 4e7, 40 1::.
                                                 at. s47,
7E J..Ea. 567,    tenanted B tax problsa very similar to tha
fnatant oa8a. Ghe teatator left his prworty     %ritrust for
his nieoa (aged 18 at bla death), slm t(’ t&o the pro~~Q
rrae of the truat at t&e age of 40, but If sha &led witbout
issue bsioro attaining thq e&g c& 40, then the propwty
was   to go to oertain       a!mritiiea,   The   eatsto   aOught   to m-
c’uoetho taxable value a? tbq ertata by the satlsatad   pro81
ent velue a? the poeaiblllty that the! oharltfsa  m&zht ocmo
    iBt0 pome88toa.    wit the court, again MBouBoing that
    the tar asart be bawd vpa the moat probable iutu?a otoatu,
    ,rejeotedWc contcntlan end held that   the poselbillt~ of
    the aMtie#     taking wa8 eo ruwte ae ta be dime&&Ned
    for kekxpnrpeou, Branbole, J l, #p a k ingr o r th e aourt at
    pa-        4941

                    TXC Congmar, in providing for the de-
               teminatioa ~of the aat eatate taxehle, Intend
               that a ~dtihotltua8hould be aade Sor a coatlna-
                      th elotuel value or rthioh oannot br de-
               sea a y,                                             -
               tearainedtron any kaonr data: Neither the tax-
               payer, aor the revenue offiocr-even if equipped
               with all the aid mbiob the aotuarlal art oaa
               aupply-o~tib nort   than Ru,W tit t!x va;luoO?
               this oontingeaof. 3t 16 olear-that Congreso
               did aot Intend wt    a do&a&ion should be medo
               for a ObBtiB&OBt gift Of ttit Ohar(LOtdJr~"




    it ,iaour ep
                      4~1
                       P on
                              these padaoi~lea to t.hw0rao.e
                              tba9'yon hwo
                                       oomectly wseaaed t L
                                                           Me    Betato,
    la outllBe4 in your lottar, Aa ltatod in th eb r i*i    r ub & l
    by t&e lttonwy for tha bMk      wbothrlstere efdooedaatare
    elderly and rotordl 0#n     o&r    thn the mphw.*      Ruti
    upa thr.irmapootive life mpertanoiu!         it 18 prabablo that
    the JW@VSV will m&live the bibtOP&        &   porslblo oantia-
    geney thet   the alacrityal&ht take rho~ld be dlon$ati~I for
    purpms     or oomputi~$the  tax. ,The
    die out or the oat&e anil jpaafaeat
    ooverrd ageiaet the awOUtOre     3fde   ‘I* R
    Tex. 668, 70 2. w. (Mial699‘ on n&adag

              Vo do aot 8gree vltb tha    faioa et the Bank'6
    attorney that the a88oMsaoat ea4 0 03.sot&on 0r the tax upon
\   the rwmain&rr intalwt'~to the a.ph.w at&et b. ddW'&     Wt%l
    the death of tha liie twt8.     XB support af thicleonfa-
    tion, he oltea the following pwa6ge.fram   Xa ro HollunW'~
    E8t&e, ~1% 1T.3. IQ. 92 198 Atl. $08 vhloh W68 qU?fird
    mith approval by tba A&.n          Oourt eS dvll Apxmlr in %thea
E   v. Shevpud, J&3 3. We (2&J 9961            ,
                    *me tw9 or tuability is not the tiae
               of the omaplets diverting of the treneroror~e
I              Interest or ovnerehip, it ie the tim6~of the
t
.




         complete auooesal~n by the ttanaieree.      1Qm-e
         there la 6 tnnaier ol'.a6pulfio interert in
         property and the auooeaaion 0r the tzularerso
         doesnot beeoa~emduaderth4 fezma of tie trezu-
         Ser is uot to hemono, dcmplote until a tlw at
         or after t&e duth ct the trencferor,     ttrt t-7
         fer 3.6 tanble..  '7210 Elatinotio~ . . , rest0 cm
                Aether the doaee is dejdred     of an ia-
         G-QAt of some kind . . . until the donor's math."
              In both the Rollarrdor end :*thscr aa8es the acurts
    were di6cuaalng the problem Of vben a6 inter tiro6 tnbafer
    may be taxed u a teatementary disposittcmunder the pro-
    rlaloaa ot the 6tatutea la the mapeotlre 8tatea meklag
    auoh tranaiera 6ubJeot to en lnheritanoe   tax when *rydo or
    intendedto take etioot la posse6alon or enjoyment lr terthe
    death of the pmntor or ,Conor.* It is a::parent that tha
    lbo~o quoted 1-r       umot eppl~ to the questlen of vhether
    the aaae66ment and p6yment of a tax upoa a ruadldor In;
    toreat my be pOatpOBd until the duth of the llie tenant,
    boamae the words Ctraqferor" ena “doaorwournot bo applies
    to a life tenant, udler# he heve l power of appolntmmnt.
              T h oeo a tentlo
                           o fthae
                                 T h nkltsorney
                                         ’a           a s
                                                        to th e
    the when the tu cipoxi the crnslnde~ iatenat   oi,the   nephew
    ;;waG;y   is refuted by the oaurf in the -thea      a~aae, at

              "At the 6th   a? rantor or aottlor the
         rull poaeeaaien an4 0$ oymeat of all of the
         trurt eatate vested in appellant throwh the
                                                         t




                                   one or tho ralur of
Eo~orable OaorgeIi. Sh6pmr4,   ParJe18


                                                               ,




     estate, ~ahloh rQht ot 6njaymnt~tho 6tatute
     taxes.* (bphula    mm4 1

         l%r are we persuedea by the oirort to Qlatlnguiah
be~een %a. ?athe6t,6lBtsr66t and the interest.of the.tiphew
      Vader the okaeItl~ation   of rmainder,  made by the
~&&an   Law f8atltute.  guotad lb we, the ocphaw has a roatti
reaainclor,aubjeot to ooapl6te befeaaaaoo:
          Tbd 13anksrattorney Brgu68 that If 'tlm ahrrity~
shoWI e7imtBally oaw bto possesalon, the enoutor reight
b6 llablo to It Sor Inh6rlt6~00 tuea pBId BPOB tho Bephn*s
rW6iBd.r  interoat. @On thii threry, SVO2?yahuity   hOliBr:
6 rwalndrr abaolutaly VeStOd, UWendent upon 6 lit6 eatat.,
ro~l4 halo a right to mover  iron the exooutor for part
ot th6 iaherit~oo taxes pal4 on behalf of the llio~taawt
la thaevent the life tuut   .4164 prior to hIr life lxpoot-
aaoy, upon whloh the tue6 wre 8aueaetY and paid. Such a
theory is refuted by It&on Trust Co. v* W. 3. (l.OM), 87
c. s. 151, 49 s. Ctr 891, 73 2. Ea. 647, aited above.
         c:eUM   retur&ng to you herewith your rile a this
Eatat&

                                  Yours vuy       truly
                               ATlwaEY CERW         OF TEx&3


                                         mlt.er     a. Eoeh
                                                  Aulatmt
