- 16 - the benefit of his wife, Mrs. Bryan. The trust gave Mrs. Bryan a general power of appointment by will. Mrs. Bryan died in 1993 and left a will in which she exercised her power of appointment in favor of her grandchildren. The Commissioner determined the transfer to the grandchildren was subject to GST tax, and the District Court granted the Commissioner’s motion for summary judgment, holding TRA 1986 section 1433(b)(2)(A) did not apply to relieve the taxpayer of liability. On appeal, the Court of Appeals for the Eighth Circuit reversed, holding the transfer to the grandchildren constituted a “transfer under a trust which was irrevocable on September 25, 1985” within the plain meaning of the language of TRA 1986 section 1433(b)(2)(A). The Court of Appeals stated: Trust A, having been created by Mr. Simpson’s will in 1966, was of course irrevocable on September 25, 1985. Was the transfer made by Mrs. Simpson a transfer ‘under’ this trust? We do not see how an affirmative answer can be avoided. The power of appointment that made the transfer possible was created by the trust. Language has to mean something, and the argument that this particular transfer was not ‘under’ trust A is simply untenable. [Simpson v. United States, supra at 814-815.] In so holding, the Court of Appeals rejected the Commissioner’s argument that the relevant action for purposes of TRA 1986 section 1433(b)(2)(A) was Mrs. Bryan’s exercise of her power of appointment (after October 22, 1986). In particular, the Court of Appeals concluded the relevant action under the express language of TRA 1986 section 1433(b)(2)(A) was whether the trustPage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
Last modified: May 25, 2011