Untitled Texas Attorney General Opinion

. Honorable Robert S. Calve& Opinion No. C- 37 Comptrollerof Public Accounts Capitol Station Re: Whether shares of stock . Austin, Texas are subject to lnherl- tance taxes upon death of husband where shares had been Issued to hus- band and wife as joint tenants with right of survlvorshipand had been purchased by the husband with the separ- Dear Mr. Calvert: ate funds of the wife. Your letter requesting the opinion of this office on the above captioned matter reads as 'follows: "We desire the opinion of your of- fice regarding the Inclusion for ~lnherl- tance:tax purposes of stock held in joint tenancy with rights of survivor-, ship, and not as tenants in common, where~~thest,ock,was,purchasedby the husband withthe separate funds of his wife. "W. L. C. Poetter died testate, a resident~ofDeWitt County on December 4, 1961, and his wife, Mrs. Virginia L. Poetter, who quallfled as Independent executrlx,/madethe required reports as provided in the Inheritancetax law to close the estate for Inheritancetax purposes.~ Mrs. Poetter's,reportwas accepted as filed and the tax paid. "Subsequently,a request was made by Mrs. Poetter and refused by this Department,for a waiver of consent to transfer 255 shares of San Antonio Drug Company stock standing In her name and the name of her deceased husband adsjoint tenants with rights of 154., Honorable Robert S. Calve&, Page 2 Wnlon No. c- 37 survivorshipand not as tenants in common, because the stock was omitted froniher inherItan& tax report. ((Mrs.Poetter has now submittedan affidavit to this Departmentsetting out the facts wlth respect to the pur- chase of this stock and her attorney has submitted a memorandumbrief glvlng his opinion that this was the separate property of Mrs. Poetter and, therefore, no'part of the estate of W. L. C. Poetter for inheritancetax purposes. Both of these Instrumentsare enclosedherewith. "It appears to us that one-half.the value of this stock Is lncludibleIn the inheritancetax report and a tax due thereon in view of your Opinion NO. w-1348. Please advise whether or not our view is correct ln this matter." We quote th6 following.excei@'fromMrs. Poetter's ,affi- davlt: "Au‘ing the llfetlms of my husband, ,'~ Wilb&t C. Poetter, who d&d Decem- ber 4, 1961, and for many years prior, thereto I maintained a checking ac- count ln the First National Bank of Yorktown, Texas, styled 'MOPS. W. C. Poetter?: 1 opened this account ln the early 194Ols, prior to 1946, wh& 011 was begun to be produced from my separate lands In Dewitt County, ,Texas,and I placed my royalty checks from th& production of said oil into this account-. I placed no other fQnds in the account except my royalty checks, which were my separate funds, and I dld ~thisIn order to,keep my separate funds apart from any com- munity property fund& of my husband and myself. No community property furidswere ever~placedinto this ac- acccunt was my sole. count, and,:.h.ls, aa separate property. .I-I-. ,..a_ . . Honorable Robert S. Calvert, Page 3 Opinion No. C- 37 “From time to time my husband, Wllbert C. Poetter, would select varl- ous corporations In whS.chI might ln- vest my funds as they accumulated in my separate account aforesaid and at his suggestion we would purchase stocks in the corporations for me, he placing the order for same with the various brokerage firms or companies and I would then draw a check on the aforesaid ac- count In the First National Bank In Yorktown, Texas, and thereby use my separate funds to purchase the stock as part of my separate estate. "My husband, Wllbert C. Poetter, when he would order the stock for my separate estate and property would have the shares Issued as follows (or similarly) 'Wllbert C. Poetter and Mrs. Virginia L. Poetter, as joint tenants with right of survivorship ana not as tenants In common'. This was done by him under the Impression that this would make the stocks easily transferable or sold In the event of my death before him, whereas If the stocks were In my name alone he felt there would be much Inconvenience ana expense in transferring or selling the stock. There was no understanding between my husband and myself that any part of the stocks In question were to be anything but my separate property during my llfetlme.and my separate funds were used to purchase these stocks under the understanding that the stocks purchased would be my separa.teproperty and would be no part of his property or estate." The memorandum brief submltted In connection with the taxpayer's posdt.lonin this case contains the following para- .graph: "It is our feeling that despite the stocks being lcsued in the joint tenancy manner as above set forth that the actual ownership was still based on the intention Honorable Robert S. Calvert, Page 4 Opinion No. C- 1, of the parties and the source of the funds used to purchase same. . . . .Wlththis ln mlnd we feel that the above shares pald for by Mrs. Poetter's separate funds were her separate prop- erty. Please advise us your ruling on this." Attorney General's Opinion No. ~-1.348 (Jtie 8, 1962) held that the decedent's one-half interest In a bankaccount which the decedent and another held as joint tenants with rinht of survlvorshlvwas sublect to an Inheritancetax when received by the survivor at &e decedent'sdeath. The opinion consldered~thecase of Davis v. East Texas SaVineS 6cLoan Aasoclatlon, Tex 354 S.W.2d 926 (1962) which held that a savlruzaand lokiificate Durchasedby the husband with his se&rate funds an&issued *'hia name,-but subsequently reissued to him and his wife as ;lolnttenants with right of survivorship,passed at his death to the wife. At page 931 the Court pointed out that when the"contractwas.ma$e with the savings and loan aasociatlon,the wife became vested wlth~ a present;though defeaalble, interest ln the deposit. Her . interest would have been defeated If the certificateh&d been changed 3y her husb+nd or the deposit wl,thdrawn'beforehis death, or if she.hqd predeceased-h&n,but-.slnce.none of these things happened, at hls death, the.@f‘e bCcsme the sole owner of the entire deppsit. me Davis case-.,cannotbe diatin&lshed from the case we are pr&ay consld&Lng becauae.lt lhvolveda aavlngs and loan certificateand this case lnvo&ves stock. When Mr. _' Poetter, acting as agent for his wife, and with her knowledge and consent atidisclosed by Mrs. Poettercs affidavit,made the contract with the various corporationsfrom which he pur-' ' chased the stock4 and When thenstock was-issuedby the varlous corporatiO;nstd Wilbert C. Poetter and Mrs. Vlrglnla~L. Poetter, as joint tenants with I'lghtof survlvorshlpand not as tenants inc&nmon", both joint tenants becam vested with 'a'present,though defeasible, lnterest,lnthe stock. . The fact that Mrs. Poetter an& her husband Intended to preserve the separate ctiacter of;her property cannot change the legal effect of their actual transactions. You are therefore advised that at Mr. Poetterls death, Mrs. Poetter received his one-half joint Interest in the stocks Involved, and that such amount Is subject to an inheritancetax. . , , . Honorable Robert S. Calvert, Page 5 Opinion No. C- 37 SUMMARY Where a husband used wife's separate funds, with her knowledge and consent, to purchase stocks Issued In his name and In his wife's name as joint tenants wlth right of SurViVOPShiF md not as tenants in common, the husband's one-half interest became vested at the time of the pur- chase subject to being divested, and was, at his death, subject to an Inheritance tax upon passing to the survivor under the terms of the contract, despite the fact that the husband and wife had Intended the stock to remain the sep- arate property of the wife. Yours very truly, WAGGCNER CARR Attorney General of Texas By:~~&%/%+&+~"y^c~ 4 Marietta McGregor Payne. Assistant Attorney General APPROVED: OPINION COMMITTEE W. V. Geppert, Chairman Jack Nor-wood Howard Fender Frank Booth -158-