- 23 -
the creditors of his estate. An interest adverse to
the exercise of a power is considered as substantial if
its value in relation to the total value of the
property subject to the power is not insignificant.
For this purpose, the interest is to be valued in
accordance with the actuarial principles set forth in �
20.2031-7 or, if it is not susceptible to valuation
under those provisions, in accordance with the general
principles set forth in � 20.2031-1. A taker in
default of appointment under a power has an interest
which is adverse to an exercise of the power. A
coholder of the power has no adverse interest merely
because of his joint possession of the power nor merely
because he is a permissible appointee under a power.
However, a coholder of a power is considered as having
an adverse interest where he may possess the power
after the decedent’s death and may exercise it at that
time in favor of himself, his estate, his creditors, or
the creditors of his estate.
Sec. 20.2041-3(c), Estate Tax Regs.
In support of its position that, pursuant to the agreement
to amend the inter vivos trust, under section 2041(b)(1)(C)(ii)
decedent did not have at the time of her death a general power of
appointment with respect to $5,000 of the principal of the inter
vivos trust, the estate relies on the agreement to amend the
inter vivos trust which was entered into by Mellon Bank, N.A.,
and decedent and Mr. Wright’s other children, who were Hester
Wright’s nieces and nephew. We reject the estate’s position.
The deed of trust provided in pertinent part as follows:
(a) * * * In addition, the Trustee shall pay to
said niece or nephew such sums from prin[cipal] as he
or she may request in writing, not to exceed FIVE
THOUSAND ($5,000) DOLLARS in any one calendar year on a
noncumulative basi[s.]
The agreement to amend the inter vivos trust provided in
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011