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Hon. Robert S. Calvert                      Opinion No. V-l    146.
Comptroller   of Public Accounts
Austin, Texas                               Re:   Imposition  of inheritance
                                                  taxes where surviving
                                                  spouse elects to take less
                                                  than community     share un-
                                                  der deceased   spouse’s   will
                                                  disposing  of entire com-
Dear   Mr.     Calvert:                           munity estate.

                   We quote the following   excerpt   from    your    letter   of No-
vember       20,   1950:

                   “This department  has under consideration  the
       correct       inheritance tax due by the Estate of Enos Ray
       Hart.

              “Since there is a substantial difference  in the
       wills and the trusts set up under the wills in the T.G.
       Hendrick’s    case covered by your Opinion No. V-704,
       the Albert Handly case covered by your Opinion No.
       O-5557, and the will made by Enos Ray Hart, I am re-
       questing that you review the will of Enos Ray Hart and
       advise this department whether the entire estate of
       Enos Ray Hart, less the portion taken by the wife un-
       der the will, is subject to the inheritance   tax levied
       by Article   7117 Rawle C. S.”

             By the terms of his last will and testament,    Enos Ray
Hart undertook to dispose of the entire community estate of himself
and his surviving wife, Mary Elizabeth     Hart; and Mrs. Hart was ex-
pressly required to elect whether she would take under the terms
of the will or claim her interest in the community estate.      Mrs.
Hart has elected to take under the terms of the will, which makes
certain specific bequests and provides for the establishment     of four
equal trust funds for the benefit respectively   of Mrs. Hart and of
Mr. Hart’s three children by a prior marriage.       The trusts are to
terminate within a maximum period of five years from decedent’s
death, at which time the beneficiaries   wit1 receive such corpus as
remaioe   in the respective trusts.  As a result of her election, Mrs.
I-&at will receive less property than she wou1.d have received had
she chosen to claim her share in the community estate of herself
and Enos Ray Hart.
Hon. Robert      S. Cabvert,   Page 2 (V-1146)




              We quote again from        your letter   of November         20th:

              ‘It is andlhas been the constructionof       this de-
       partment that the,entire emtate of Enos,Ray        Hart, in-
       cluding the community pooperty less the portion taken
       by the widow under the will, Ls subject to the inlaerit-
       ancc tax Levied ur&r Agtkle      7117.    It ir the conten-
       tion of the attorneys  repsrenting     the estate of Enos
       Ray Hart. deceased,    that only one-babf of the commu-
       nity portion of the eatate of Enos Ray Hart is taxable,
       That the tax Ls determined    by the 8ule established      in
       your Opinion No. V-704.     T&s attorneya,      however, ad-
       mit that there is a suktant6ab difference       between the
       wlbb made and left ky Enos Ray Hart, deceased, and the
       community and mutual bst caili of T. G. Hendrick and
       wife. We &all, therefore, tlaank you to advise in the
       premises.’                                                   :

              Artbcb 7117, V.C.S., declares that *All property wtth-
in the jurlsdfctlon  of tl&s State . e o whfcb ohall pass absolutely    or
in trust by wbbb me e skabb, upon pasing     ~ e . be subject to a tax for
the bmmflt d the State’n General Revenlae Fund.         , , .? If any part
of Mrs. HartOr one-half fnterert in the fommunhty estate passed to
third patties ‘%y will* within tbe meaning 06 the above quoted por-
tion of Article 7117,,your  construction Ls correct,  Otherwise, no
part of her one-half interest bn tlue community estate is subject to
tax.

             The prov&aicpns of Mr. ,Hast’a will do, of COUPSB,differ
from the pi~ovis8ons of Mr. Handby’s w$bband from the provisions
of MP, HendrickOs wall but the on&y conslusfon    consistent with the
holding of Att’y Gene Op. O-5557 (1943) and Att@y Germ.Op. V-704
(1748) is that no part of Mrs.      Hartb      Pnterest in the community           es-
tate can be regarded      aa having pasred       by the wlbl of Mr.       Hart in
the sease that it is subjest to tax under Artbcbe 7117. In Opinion
O-5557, the nurvlvlng wife abAowed her &are of the community      to
pass into th testamentary trust created by Mr. Handly’s wlbl. Un-
der the provisions      of the trust,   Mrs.   Handdayreceived     a portion  of
tke trust income’for      bbfe, After   her death, otbr      ~neficbarios    were
to receive   the enttre income and, &lmately,   the corpus            of the trust.
Mrs. Handly’s    relllnqutshment of her community   interest              was viewed
as a Wan&e        or gfft by ksr to take affect after     her    death.    There-
fore, the twnder  cot&~           have been taxable      affir    hurband’s        deatb
as pamring by his wllb.

              In Opinicm V-704,   the rurv&vAn~ wlb bad mecotod with
Mr.   Hendrick    tlw jcdmt w&Mand trust inetr%tneatt wkbcb was admbtted
toprobate after Mr. Hendolak’~ death as kls bast wbbband testament.
MS. Hetirkk’s   wbbl dbrposed of kke eetli~e cotnrnu8bbtyestate and
Hon. Robert   S. Calvert,   Page 3 (V-1146)



established   a million dollar trust fund. Various beneficiaries     were
to receive   stated percentages    of the income and, ultimately,  of the
corps    of the trust,    Optnion V-704 held that by the terms of the
joint, mutual, and contrrctcaal will Mrs. Handly had made a trans-
fer or gift of part of Iu?r .&WC of the community estate to the trust
fund, the gift to take effect upon the happening of a limiting condi-
tion precedent,    to wit, her husbaad’s death, not hers.   Such trans-
fer was, therefore,    not subject to tax at Mr. Hendrick’s    death as
passing by his will.

             After Mr. Hart’s death, his surviving   wife elected to
take under his will.  By her affirmative   act in so electing, she ef-
fected a gift of such part of her share of the community estate as
has passed to third parties.   Such p’opeaty was, therefore,    not sub-
ject to tax at Mr. Hart’s death as passing by his will.

                             SUMMARY

             WhePe the surviving spouse elects to take less
      than his or her share of the community property un-
      der a deceased   spouse’s will disposing  of the entire
      community eetalte, no psrt of the surviving   spouse’s
      one-half interest in the community estate is subject
      to inheritance  taxes as passing by the will of the de-
      ceased spouse.

                                      Yours   very   truly,

                                       PRICE DANIEL
                                      Attorney General


APPROVED:

W. V. Geppsrt                                                  Assistant
Taxation   Dlvlsion

Jesse P. Luton,       Jr.
Assistant

Charles  D. Methews
First Assistant


MMC /mwb