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                        January 7, 1960

Honorable Robert S. Calvert        Opinion No. WW-772
Comptroller of Public Accounts
Capitol Station                    Re:    Is a transfer by virtue
Austin 11, Texas                          of an antenuptial agree-
                                          ment, to take effect
                                          after the grantor’s
                                          death, subject to an in-
Dear Mr. Calvert:                         her1 tante tax?
         Your letter requesting our opinion on the above
question sets out the following facts:
     “Mr. J. B. Cage died testate, a resident of San
     Patricia County, on April 6, 1958. On July 25,
     1953, the testator entered into a pre-nuptial
     agreement with Mrs. Maurine Schultz, a widow, in
     which he conveyed to Mrs. Schultz his homestead,
     retaining his right to live in said homestead
     until his death, and.also for his daughter to
     maintain a room in said homestead forso long as
     she remains single, and $250.00 per mdnth to Mrs.
     Schultz so long as she lives. Shortly there-
     after Mrs. Schultz and the testator were married.
     "Subsequent to the date of marriage of Mrs.
     Schultz and Mr. Cage, Mr. Cage executed his last
     will and testament on the 29th day of April,
     1954, wherein he recognized all the provisions
     of the pre-nuptial agreement and devised the
     balance of his estate to his daughter.
     "We are now confronted with the question as to
     the proper inclusion and handling of the value
     of the annuity as well as the value of the home-
     stead for inheritance tax purposes as provided
     in the pre-nuptial agreement. Please advise this
     department whether or not the homestead and the
     value of the annuity provided In the pre-nuptial
     agreement should be deducted from the net value
     of the estate devised to the daughter, or charged
     to the wife as a deed, grant, sale, or gift made
     or intended to take effect In possession or en-
     joyment after the death of the grantor or donor.”
Hon. Robert S. Calvert, Page 2          (Opinion No. WW-772)


         The antenuptial agreement clearly sets out that the
property rant '.      shall not be effective until after the
death of 7 the husband). . ." and that the annuity of $250
per month was to begin '. . .upon and after the death of
(the husband). . .'
         Article 4610, Revised Civil Statutes, authorizes
such pre-marital stipulations as follows:
         "Parties intending to marry'Mayoenter Into
     such stipulations as they may desire, provided
     they be not contrary to good morals or to some
     rule of law; and in no case shall they enter into
     an agreement, or make any renunciation, the ob-
     ject of which would be to alter the legal orders
     of descent, either with respect to themselves, In
     what concerns the inheritance of their children
     or posterity, which either may have by any other
     person, or in respect to their common children;
     nor shall they make any agreement to impair the
     legal rights of the husband over the persons of
     their common children. No matrimonial agreement
     shall be altered after the celebration of the
     marriage."

     _    The
          _   admonitlon,contained
                ^ _                therein as to_ .
                                                  altering the
'liegal orders or descent;"1s somewnat vague and.nas appar-
ently never been satisfactorily defined. See 23 Tex.Jur.,
Husband and Wife, Sec. 20. However, we believe that the
oresent agreement is not In conflict with that inhibition.
Kunge v. Freshman, 216 S.W. 254 (Tex.Civ.APP. 1919). See
also Groesbeck v. Groesbeck, 78 Tex. 664, 14 S.W. 792 (1890).

         Our Inheritance tax statute, Article 7117, R.C.S.,
levies a tax not only upon property passing by will or by
descent and distribution, but also on that which passes
3,   .by deed, grant, sale, or gift made or intended to tak&
effect in possession or enjoyment after the death of the
grantor or donor. . . .' The question of the application of
inheritance tax to transfers under antenuptial agreements,
which transfers do not become effective until after the
grantor's death, has not been touched upon by any~Texas
cases. A survey of the other jurisdictions reveals that the
authorities are in conflict. See 85 C.J.S., Taxation, Sets.
1144 and 1147 (3) (b); 28 Am.Jur., Inheritance, Estate and
Gift Taxes, Sets. 1.33 and 185.
         The earlier New York cases held such transfers ex-
empt from taxation, on the theory (often not clearly~express-
ea) that marriage, or the promise of marriage, supplied
Hon. Robert S. Calvert, Page 3             (Opinion No. WW-772)

sufficient consideration for the transfer, and therefore the
recipient was entitled to payment as a creditor from the
decedent's estate. In re Baker's Estate, 83 A p.Div. 530,
82 N.Y. SuPp. 390, aff'd. on opinion below, 178 N.Y. 575, 70
N.E. 1094 (1904); In re Vanderbilt's Estate, 184 App.Dlv.
661, 172 N.Y. sipp. 511   fffa   lth   t      226 N Y   638
123 N.E. 893 (1919); Re'S%moli wl~l"~ppo~~v 435' i8i N'Y.
Sum. 542, aff'd. without OP., $30 N.Y. 559,'130 h.E. 893
(1920). But the opposite result was reached following a
1930 amendment of the New York estate tax law, which levied
the tax on all property In which the decedent had an Interest
at death, Including property which he had transferred In con-
templation of or to take effect In possession or enjoyment
after death, except where such transfer was to a bona fide
purchaser for full and adequate consideration In money or
money's worth. The court In Re Seltz' Eatate,T3T-.mv.
206 2bOm      Supp. 122, 262 N.Y 32 ltlbN ti 193 (1933)
heli that, because of the addition 0: the u&rllnea   reqdre-
ment, a promise to marry in an antenuptial contract aid not
furnish the required consideration; therefore, the transfer
was taxable.
         The court held in Re Oppenheimer, 75 Mont. 186, 243
P. 589, 44 A.L.R. 1470 (192b), that such transfers were tax-
able where the statute taxed gifts or transfers effective in
possession or enjoyment at or after the grantor's death, even
though not containing the requirementthat there be adequate
consideration "In money 6r money's worth." Under the ante-
nuptial agreement there Involved, decedent's widow was to
receive $150,000 In Installments beginning one year after his
death. The court, after quoting that portion of the statute
taxing transfers effective In possession or enjoyment after
grantor's aeath,~proceeded as follows:
    "It is obvious that, had the section quoted above
    merely provided that personal property passing by
    will or the laws of succession should be subject
    to the tax, the Intended scheme of taxation would
    have been a complete failure, for the reason that
    transfers, made only to take effect after the
    death of the grantor, would or could be substi;
    tuted for wills and intestacy in order to escape
    the tax. . . .It was never Intended by the law-
    makers, when enacting the inheritance statute, to
    permit the owner of an estate falling within its
    provisions to continue in possession and enjoy-
    ment of all his property and.the rents and income
    therefrom during his lifetime, secure In the
    knowledge that, upon advent of death, the legis-
    lative intent would.be effectually circumvented
                                                         .       -




Hon. Robert S. Calvert, Page 4,        (Opinion No. WW-772)


     by some device such as this. Clearly, a gift or
     transfer for a valuable consideration must be in
     praesenti in order to escape the tax. A deceased
     person can have but one estate, and all property
     owned by him at the time of his death, Including
     gifts or transfers previously made by him which
     are not to become effective until after his
     death, is taxable.”

         In Re Koeffler, 218 Wis. 560, 260 N.W. 638, 99 A.L.
R. 944, reh.aen. 218 Wis. 567, 261 N.W. 711, 99 A.L.R. 949,
holding that such a transfer under an antenuptial agreement
Is not taxable, the court criticizes the reasoning in the
Oppenheimer case as being too broad, In that a full applica-
tion OS the theory would tax all bona fide creditors of the
decedent upon payment of their claims from the estate. This,
however, seems a rather tenuous and unwarranted extension of
the above rule.
         The transfer under an antenu tial agreement in
People v. Estate of Field, 248 111. 17,
                                     t   99 N.E. 721, 33 L.R.
 .   . .   30 (1910) was held taxable on the theory that it
replaced the widow,s’claim for dower. For further authori-
ties see annotations in 4 A.L.R. 461, 44 A.L.R. 1475, and
167 A.L.R. 461.
         Comparing the two views, we are convinced that the
conclusion reached in the Oppenheimer case,is preferable,
for the reasons therein expressed. you are therefore advised
that the transfer of the homestead to the decedent’s wife and
the annuity provision by virtue of the antenuptial agreement
should be charged to her as a deed, grant, sale or gift made
or intended to take effect In possession or enjoyment after
the grantor’s death, and hence subject to the inheritance tax.



                        SUMMAiY

            Where provision was made for transfer
       of property and.for an annuity to the wife
       in an antenuptial agreement, both to become
       effective after the death of the husband,
       the transfer is taxable to the wife under
       Article 7117, R.C.S., as a deed, grant,
       sale, or gift made or intended to take
”      c




    Hon. Robert S. Calvert, Page 5           (Opinion No. WW-772)


           effect in possession or enjoyment after the
           death of the grantor or donor.
                                     Very truly yours,

                                     WILL WILSON
                                     Attorney General




    JRI:bct
    APPROVED:
    OPINION COMMITTEE:
    W. V. Geppert, Chairman
    y;et;;vT;Gregor    Payne
    C: Dian Davis
    Charles Cabaniss
    REVIEWED FOR THE ATTORNEY GENERAL:
    By': Leonard Passmore
