- 7 -
b. General Power of Appointment Trusts
Property in which a surviving spouse has a life interest may
also qualify for an exception to the terminable interest rule,
and, thus, for the marital deduction, if pursuant to section
2056(b)(5), the surviving spouse has a GPA relating to such
property. Sec. 2056(b)(5). Section 2041(a) generally requires
that the value of all property over which the decedent at death
possesses a GPA be included in a decedent’s estate.
Historically, a GPA has been equated with outright ownership
of the property because the powerholder (i.e., the decedent) can
appoint the property to his estate and, thus, dispose of it as
his or her own property. Graves v. Schmidlapp, 315 U.S. 657, 659
(1942) (stating “For purposes of estate * * * taxation the power
to dispose of property at death is the equivalent of ownership”);
Peterson Marital Trust v. Commissioner, 78 F.3d 795 (2d Cir.
1996) (stating “For tax purposes, a general power of appointment
has for many, many years been viewed as essentially identical to
outright ownership of the property”), affg. 102 T.C. 790 (1994).
In fact, the legislative history to section 402(e) of the Revenue
Act of 1918, ch. 18, 40 Stat. 1097, the predecessor to section
2041, states:
A person having a general power of appointment is, with
respect to disposition of the property at his death, in
a position not unlike that of its owner. The possessor
of the power has full authority to dispose of the
property at his death, and there seems to be no reason
why the privilege which he exercises should not be
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011