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be accumulated in the discretion of any person other than the
surviving spouse, or (2) the consent of any person other than the
surviving spouse is required to distribute the income. Sec.
20.2056(b)-5(f)(7), Estate Tax Regs. The power of appointment,
if exercisable during life, must be fully exercisable during
life. If exercisable by will, the power must be fully
exercisable regardless of the time of death. A power of
appointment is not exercisable in all events if it may terminate
during the life of the surviving spouse without his or her
complete exercise or release of it. Sec. 20.2056(b)-5(g)(3),
Estate Tax Regs.
The incompetency provisions in Article VII of the Agreement
take the property passing to Trust A outside the statutory and
regulatory requirements for the marital deduction. In Estate of
Tingley v. Commissioner, 22 T.C. 402 (1954), the surviving spouse
received an income interest and an inter vivos right to withdraw
corpus. Under the terms of the trust, this right terminated upon
the surviving spouse's legal incapacity or upon the appointment
of a guardian; upon legal incapacity or the appointment of a
guardian, the trustee was given the discretion to use and apply
this part of the net income and corpus for the surviving spouse's
benefit. The Court in Estate of Tingley held that the estate was
not entitled to the marital deduction mainly because the income
interest and power of appointment were outside the scope of the
predecessor to section 2056(b)(5). This was so even though the
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Last modified: May 25, 2011