- 32 -
The only relevant transfer of property that occurred “under”
the trust was effectively made to the surviving spouse upon
creation of the trust and the grant to her of a general power of
appointment. Thereafter, the surviving spouse made a separate,
independent, discretionary, and subsequent skip transfer of
property to grandchildren, which transfer was made and occurred
under the general power of appointment, not under the trust.
Under a proper understanding of TRA 1986 section
1433(b)(2)(A) of the general power of appointment transferred to
Mrs. Gerson, and of the property transfer that occurred when Mrs.
Gerson exercised her general power of appointment, the result
reached by the majority herein is correct and should be reached
even if the regulations at issue had never been promulgated.
(2) The Second Circuit’s Opinion in Peterson Marital Trust
In Peterson Marital Trust v. Commissioner, supra, the Court
of Appeals for the Second Circuit held that the mere lapse of a
general power of appointment held by a surviving spouse and the
resulting transfer of property to a skip generation triggered a
post-September 25, 1985, taxable generation-skipping transfer.
If the mere lapse of a general power of appointment triggers a
taxable generation-skipping transfer of property, certainly it
should follow that the affirmative exercise of a general power of
Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 NextLast modified: May 25, 2011