Estate of Leona Engelman, Deceased, Peggy D. Mattson, Executor - Page 12

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          specific to Mr. Engelman’s property; and (3) execution of the               
          document should not be characterized as the exercise of a power             
          of appointment, due to the extent of decedent’s rights in Trust             
          A.                                                                          
               C.  Analysis                                                           
               The estate’s point that execution of the power of                      
          appointment did not itself constitute an acceptance rests on                
          Example (7) of section 25.2518-(2)(d)(4), Gift Tax Regs., which             
          provides:                                                                   
                    Example (7).  On January 1, 1980, A created an                    
               irrevocable trust in which B was given a testamentary                  
               general power of appointment over the trust’s corpus.                  
               B executed a will on June 1, 1980, in which B provided                 
               for the exercise of the power of appointment.  On                      
               September 1, 1980, B disclaimed the testamentary power                 
               of appointment.  Assuming the remaining requirements of                
               section 2518(b) are satisfied, B’s disclaimer of the                   
               testamentary power of appointment is a qualified                       
               disclaimer.                                                            
          From the foregoing example, the estate deduces that execution of            
          a revocable instrument providing for the exercise of a                      
          testamentary power of appointment effective at death does not               
          preclude a later disclaimer of such power.  Yet respondent does             
          not argue otherwise, pointing out that merely executing an                  
          ambulatory instrument does not constitute acceptance because the            
          instrument is subject to revision.                                          
               Nor does there seem to be any significant disagreement                 
          between the parties about the corollary principle that an                   
          exercise of a power of appointment which has become effective may           





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