.
. . . .
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