26 U.S. Code § 2041 - Powers of
appointment
(a) In general
The value
of the gross estate shall include the value of all property—
(1) Powers of appointment created on or
before October 21, 1942
To the
extent of any property with respect to which a general power of appointment
created on or before October 21, 1942, is exercised by the decedent—
(A) by will, or
(B) by a disposition which is of such
nature that if it were a transfer of property owned by the decedent, such
property would be includible in the decedent’s gross estate under sections 2035
to 2038, inclusive;
but the
failure to exercise such a power or the complete release of such a power shall
not be deemed an exercise thereof. If a general power of appointment created on
or before October 21, 1942, has been partially released so that it is no longer
a general power of appointment, the exercise of such power shall not be deemed
to be the exercise of a general power of appointment if—
(i) such partial release occurred before
November 1, 1951, or
(ii) the donee of such power was under a
legal disability to release such power on October 21, 1942, and such partial
release occurred not later than 6 months after the termination of such legal
disability.
(2) Powers created after October 21,
1942
To the
extent of any property with respect to which the decedent has at the time of
his death a general power of appointment created after October 21, 1942, or
with respect to which the decedent has at any time exercised or released such a
power of appointment by a disposition which is of such nature that if it were a
transfer of property owned by the decedent, such property would be includible
in the decedent’s gross estate under sections 2035
to 2038, inclusive. For purposes of this
paragraph (2), the power of appointment shall be considered to exist on the
date of the decedent’s death even though the exercise of the power is subject
to a precedent giving of notice or even though the exercise of the power takes
effect only on the expiration of a stated period after its exercise, whether or
not on or before the date of the decedent’s death notice has been given or the
power has been exercised.
(3) Creation of another power in certain
cases
To the
extent of any property with respect to which the decedent—
(A) by will, or
(B) by a disposition which is of such
nature that if it were a transfer of property owned by the decedent such
property would be includible in the decedent’s gross estate under section 2035,
2036, or 2037,
exercises a
power of appointment created after October 21, 1942, by creating another power
of appointment which under the applicable local law can be validly exercised so
as to postpone the vesting of any estate or interest in such property, or
suspend the absolute ownership or power of alienation of such property, for a
period ascertainable without regard to the date of the creation of the first
power.
(b) Definitions
For
purposes of subsection (a)—
(1) General power of appointment
The term
“general power of appointment” means a power which is exercisable in favor of
the decedent, his estate, his creditors, or the creditors of his estate; except
that—
(A) A power to consume, invade, or
appropriate property for the benefit of the decedent which is limited by an
ascertainable standard relating to the health, education, support, or
maintenance of the decedent shall not be deemed a general power of appointment.
(B) A power of appointment created on or
before October 21, 1942, which is exercisable by the decedent only in
conjunction with another person shall not be deemed a general power of
appointment.
(C) In the case of a power of appointment
created after October 21, 1942, which is exercisable by the decedent only in
conjunction with another person—
(i) If the power is not exercisable by the
decedent except in conjunction with the creator of the power—such power shall
not be deemed a general power of appointment.
(ii) If the power is not exercisable by the
decedent except in conjunction with a person having a substantial interest in
the property, subject to the power, which is adverse to exercise of the power
in favor of the decedent—such power shall not be deemed a general power of
appointment. For the purposes of this clause a person who, after the death of
the decedent, may be possessed of a power of appointment (with respect to the
property subject to the decedent’s power) which he may exercise in his own
favor shall be deemed as having an interest in the property and such interest
shall be deemed adverse to such exercise of the decedent’s power.
(iii) If (after the application of clauses
(i) and (ii)) the power is a general power of appointment and is exercisable in
favor of such other person—such power shall be deemed a general power of
appointment only in respect of a fractional part of the property subject to
such power, such part to be determined by dividing the value of such property
by the number of such persons (including the decedent) in favor of whom such
power is exercisable.
For
purposes of clauses (ii) and (iii), a power shall be deemed to be exercisable
in favor of a person if it is exercisable in favor of such person, his estate,
his creditors, or the creditors of his estate.
(2) Lapse of power
The lapse
of a power of appointment created after October 21, 1942, during the life of
the individual possessing the power shall be considered a release of such
power. The preceding sentence shall apply with respect to the lapse of powers
during any calendar year only to the extent that the property, which could have
been appointed by exercise of such lapsed powers, exceeded in value, at the
time of such lapse, the greater of the following amounts:
(A) $5,000, or
(B) 5 percent of the aggregate value, at
the time of such lapse, of the assets out of which, or the proceeds of which,
the exercise of the lapsed powers could have been satisfied.
(3) Date of creation of power
For
purposes of this section, a power of appointment created by a will executed on
or before October 21, 1942, shall be considered a power created on or before
such date if the person executing such will dies before July 1, 1949, without
having republished such will, by codicil or otherwise, after October 21, 1942.
