Honorable Robert S. Calvert Opinion NO. c-165
Comptroller of Public Accounts
Capitol Station Re: Proper method of com-
Austin, Texas puting inheritance
taxes where will devises
,property in fee simple
to named beneficiary with
remainder over in the
event any of said prop-
erty remains at death
Dear Mr.' Calvert: :' of beneficiary.
,~
You have requested the opinion of this office on the
above captioned matter. Gus C. Klemstein died testate. His
wife survived him..,, Attached to your letter,bf request is a
copy of the~decedent's,last will and testament. The pertinent
provisions thereof,are the following paragraphs:
"It is, our will and desire that the
survivorof us, Gus C. Klemstein or
wife, Mary Klemstein, as the case may
bej shall have and hold in fee simple
all of the Estate of every description,
real , personal or mixed, and whereso-
ever situated, which either .or both of
us may own at the time of~the death of
the first of us todie, and with this
in mind, I, Gus C. Klemstein do hereby
give, devise and bequeath in fee simple,
unto my beloved wife, Mary Klemstein,
all of my property of every kind and
character whether real, personal or '~
mixed, and wheresoever situated; and
I, Mary Klemstein, do hereby give, de-
vise and bequeath in fee simple, unto
my beloved husband, Gus C. Klemstein,
all of my property of every kind and
character whether real, personal or
mixed, and wheresoever situated.
"In the event any of our Estate re-
mains on.hand at the time of the death
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Honorable Robert S. Calvert ~ Page 2 (Opinion No. e-165 )
of the survivor of us, or when we are
both deceased, then, in such event, the
remainder of our Estate, shall then vest
in fee simple in our beloved niece,
Lahree Munsch, and with this in mind,
we hereby give, devise and bequeath in
fee simple, unto our beloved niece,
Lahree Munsch, all of our property of
every kind and character, whetherreal,
personal or mixed, and wheresoever situ-
ated, which we may own or have an inter-
est in at the time of the death of the
survivor of us or when we are both de-
ceased. ”
You ask whether the rule laid down in Calvert v. Thompson,
339 S.W.2d 685 (Tex.Civ.App. 1960~,:error ref. )’‘is applicable.
I In the Thompson case, the decedent’s will contained the follow-
ing provision:
“All of the rest and residue of my
property, real, personal and mixed, I
hereby give, devise and bequeath to
my beloved wife, Cora Thampson, during
her lifetime, with full power to sell
or otherwise dispose of same, and at
her death, to my children John W.
Thompson and Ida May Thompson, flhare
and share alike, in fee simple.
The tax was assessed against the interest of Cora
Thompson, and its amount was determined on the basis of the
value of the entire residuary estate. The court held that the
fact that the life tenant was given the power of disposal did
not change the estate Into something other than an estate for
life,, citing, among other cases, Wier.;.2Smith,(~;4;~x.a;d(1884);
gdds .y. Mitchell, 143 Tex. 307, la4 s d 823
authorities cited therein. This, of course, had long’been the
established rule in the jurisprudence of this state.
At page 688, the court said:
“.I?J The statute, Art. 7123,l supra,
1 Article 7123, presently carried as Article 14.08, Ch. 14,
Title 122A, 20A, Tax.-Gen., V.A.T.S., reads as follows:
“If the property passing as aforesaid shall
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Honorable Rob,ert S. ,Calvert, .Page 3 (Opinion No. c-165 )
is plain in~providing the method for
determining:the value of estates for
life .and remainders and any other method
of determining such values would violate
the statute; For this reason the most
probable future disposition of the estate
by the life tenant would not be a proper
item to be considered in determining the
amount of inheritance taxes due. . . ."
The taxpayer takes,the position that the Thompson case
dealt with a fact situation in which the will involved clearly
created a life estate, and that, therefore, the instant case
is distinguishable therefrom.. We agree. We think that the
nature of the estate received by the decedentrs wife is governed
by McMurray v. Stanl.ey, The holding in the McMurrax case has
been ably summarized in the *,case, supra, at page 826:
"In McMurray v. Stanley, 69 Tex. 227,
6 S.W. 412, 413, the testatrix; Mrs.
Bagley, devised all of her property to
her husband, N. G. Bagley, adding that
he should have full power and control
over the same to use and dispose of as
he might desire, and in another clause
she directed that if at his death he
should have 'any of said property still
remaining in his possession not disposed
of or used by him' the same should be
given to her mic+es. The plaintiffs
were the nieces'referred to in the will
and sought to r,ecover from the executor,
devisees and legatees of the husband,
N. G. Bsgley, certain proper,ty that be-
longed to the estate of Mrs. Bagley at
the time of her death and was not dis-
,posed of by N. G.~Bagley before his
' (Contld)
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
interest separately, according 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 com-
pound interest."
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Honorable Robert S. Calvert, Page 4 (Opinion No. c-165 )
death, and also the proceeds remaining,
in the hands of N. G. Bagley at his
death of certain property of his wife's
estate that he had sold. The trial
court sustained demurrers to the plain-
tiff's petition, holding that Mrs.
Bagley's will vested in her husband
an absolute title in fee, and that it
neither gave to the plaintiff's any
right to any part of her estate nor
affected It with a trust In their
favor,
"The Supreme Court in its opinion
recognized the rule announced by many
decisions that when property Is devised
generally or indefinitely, with full
power of disposition, the devise is
construed to pass a fee, and an attempted
limitation over 1s void. See Trustees
Presbyterian Church v. Mlse, 181 Ky.
567j205 S.W. 674, 2 A.L.R. pp. 1237,
1.240;. 33 Am.Jur. pp. 492, 493, Sec. 29,
pp. $98-500, Sets. 36, 37; 3 Page on
Wills, pp. 385-388, Sec. 1123. The
court, however, declined to apply that
rule to Mrs. Bagley's will, believing
that if it did, the testatrix' inten-
tion would be defeated, and held that
while N. G. Bagley, the husband, took
under Mrs. Bagley's will an estate In
fee in the entire property, a trust
would attach for the benefit of the
nieces and that they were entitled to
receive ‘all such property as belonged
to the estate of Mrs. Bagley at the time
of her death as was not consumed in its
use or disposed of by N. G. Bagley be-
fore his death.'"
Thus the McMurray case and the many cases that have
followed it stand for the proposition that the conflict between
the gift apparently absolute and the gift over of property not
disposed of will not defeat the general intention as ascertained
by reading the instrument as a whole. See 28 T.L.R. 125; 17
A.L.R.2d 76-78, "Anno: Absolute Grant - Purported Limitation.'
We think the intention of the decedent in this case as
manifested from all the provisions of his will necessitates the
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Honorable Robert S. Calvert, Page 5 (Opinion No. c-165 )
same result as that reached in the McMurrae case. Since the
beneficiary received an estate in fee impressed with a trust,
the provisions of Article 14.08 are clearly inapplicable; and
the inheritance tax must be computed on the full value of the
property received by the surviving wife. The nature of the
estate created must be determined, of course, In each case by
ascertaining the intent of the testator from the will as a
whole.
SUMMARY
Where will creates an estate in fee in
certain properties impressed with a trust in
favor of a third party should any portion of
the'estate remain at the death of the first
beneficiary, inheritance taxes should be com-
puted on the full value of the property re-
ceived by the first beneficiary rather than
under the provisions of Article 14.08.
Yours very truly,
WAGGONER CARR
Attorney General of Texas
BY
APPROVED
OPINION COMMITTEE:
W. V. Geppert, Chairman
J. H. Broadhurst
F. C; Jack Goodman
Paul Robertson
Robert Lewis
APPROVEUFOR THE ATTORNEY
GENERAL
By: Stanton Stone
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