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Mr. Peterson did not tie himself or his heirs up
at all. He gave Mrs. Peterson a power over the trust
that was great enough to undo any harm that stemmed
from reliance on the absence of a GST at the time the
trust was created. It is this fact that, in the end,
not only gives additional support to the view that the
Treasury Regulation on constructive additions is a
reasonable one, but also negates all of the taxpayer’s
arguments that on “policy grounds” the exemption should
apply in this case.
6 This understanding of the purpose behind the
effective date rule is underscored by the other
provisions of the rule. First, the rule provided that
the GST would not apply to transfers made by wills that
had been executed before the date of enactment of the
GST (October 22, 1986) if the decedent died before
January 1, 1987. Pub. L. 99-514, �1433(b)(2)(B). This
exception ensured that an individual who did not have a
reasonable time between the enactment of the law and
his death to alter his will would not be penalized by
the new provision. Second, the effective date rule
allowed an exception for any individual who was ‘under
a mental disability to change the disposition of his
property and did not regain his competence to dispose
of such property before the date of his death.’ Pub.
L. 99-514, �1433(b)(2)(C).
Id. at 801-802 (emphasis added).
B. Simpson v. United States
In Simpson v. United States, 183 F.3d 812 (8th Cir. 1999),
revg. and remanding 17 F. Supp. 2d 972 (W.D. Mo. 1998), the Court
of Appeals for the Eighth Circuit addressed a factual scenario
nearly identical to the instant case and held a transfer to
grandchildren pursuant to the exercise of a general power of
appointment was eligible for transitional relief from GST tax
under TRA 1986 section 1433(b)(2)(A).
The facts in Simpson are as follows. Mr. Simpson died in
1966 and left a will creating a testamentary trust primarily for
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