Internal Revenue Code:Sec. 2041. Powers of appointment
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle B - Estate and Gift Taxes
CHAPTER 11 - ESTATE TAX
Subchapter A - Estates of Citizens or Residents
PART III - GROSS ESTATE
Statute
Sec. 2041. Powers of appointment
(a) In general
The value of the gross estate shall include the value of all
property -
(1) Powers of appointment created on or before October 21, 1942
To the extent of any property with respect to which a general
power of appointment created on or before October 21, 1942, is
exercised by the decedent -
(A) by will, or
(B) by a disposition which is of such nature that if it were
a transfer of property owned by the decedent, such property
would be includible in the decedent's gross estate under
sections 2035 to 2038, inclusive;
but the failure to exercise such a power or the complete release
of such a power shall not be deemed an exercise thereof. If a
general power of appointment created on or before October 21,
1942, has been partially released so that it is no longer a
general power of appointment, the exercise of such power shall
not be deemed to be the exercise of a general power of
appointment if -
(i) such partial release occurred before November 1, 1951,
or
(ii) the donee of such power was under a legal disability
to release such power on October 21, 1942, and such partial
release occurred not later than 6 months after the
termination of such legal disability.
(2) Powers created after October 21, 1942
To the extent of any property with respect to which the
decedent has at the time of his death a general power of
appointment created after October 21, 1942, or with respect to
which the decedent has at any time exercised or released such a
power of appointment by a disposition which is of such nature
that if it were a transfer of property owned by the decedent,
such property would be includible in the decedent's gross estate
under sections 2035 to 2038, inclusive. For purposes of this
paragraph (2), the power of appointment shall be considered to
exist on the date of the decedent's death even though the
exercise of the power is subject to a precedent giving of notice
or even though the exercise of the power takes effect only on the
expiration of a stated period after its exercise, whether or not
on or before the date of the decedent's death notice has been
given or the power has been exercised.
(3) Creation of another power in certain cases
To the extent of any property with respect to which the
decedent -
(A) by will, or
(B) by a disposition which is of such nature that if it were
a transfer of property owned by the decedent such property
would be includible in the decedent's gross estate under
section 2035, 2036, or 2037,
exercises a power of appointment created after October 21, 1942,
by creating another power of appointment which under the
applicable local law can be validly exercised so as to postpone
the vesting of any estate or interest in such property, or
suspend the absolute ownership or power of alienation of such
property, for a period ascertainable without regard to the date
of the creation of the first power.
(b) Definitions
For purposes of subsection (a) -
(1) General power of appointment
The term ''general power of appointment'' means a power which
is exercisable in favor of the decedent, his estate, his
creditors, or the creditors of his estate; except that -
(A) A power to consume, invade, or appropriate property for
the benefit of the decedent which is limited by an
ascertainable standard relating to the health, education,
support, or maintenance of the decedent shall not be deemed a
general power of appointment.
(B) A power of appointment created on or before October 21,
1942, which is exercisable by the decedent only in conjunction
with another person shall not be deemed a general power of
appointment.
(C) In the case of a power of appointment created after
October 21, 1942, which is exercisable by the decedent only in
conjunction with another person -
(i) If the power is not exercisable by the decedent except
in conjunction with the creator of the power - such power
shall not be deemed a general power of appointment.
(ii) If the power is not exercisable by the decedent except
in conjunction with a person having a substantial interest in
the property, subject to the power, which is adverse to
exercise of the power in favor of the decedent - such power
shall not be deemed a general power of appointment. For the
purposes of this clause a person who, after the death of the
decedent, may be possessed of a power of appointment (with
respect to the property subject to the decedent's power)
which he may exercise in his own favor shall be deemed as
having an interest in the property and such interest shall be
deemed adverse to such exercise of the decedent's power.
(iii) If (after the application of clauses (i) and (ii))
the power is a general power of appointment and is
exercisable in favor of such other person - such power shall
be deemed a general power of appointment only in respect of a
fractional part of the property subject to such power, such
part to be determined by dividing the value of such property
by the number of such persons (including the decedent) in
favor of whom such power is exercisable.
For purposes of clauses (ii) and (iii), a power shall be deemed
to be exercisable in favor of a person if it is exercisable in
favor of such person, his estate, his creditors, or the
creditors of his estate.
(2) Lapse of power
The lapse of a power of appointment created after October 21,
1942, during the life of the individual possessing the power
shall be considered a release of such power. The preceding
sentence shall apply with respect to the lapse of powers during
any calendar year only to the extent that the property, which
could have been appointed by exercise of such lapsed powers,
exceeded in value, at the time of such lapse, the greater of the
following amounts:
(A) $5,000, or
(B) 5 percent of the aggregate value, at the time of such
lapse, of the assets out of which, or the proceeds of which,
the exercise of the lapsed powers could have been satisfied.
(3) Date of creation of power
For purposes of this section, a power of appointment created by
a will executed on or before October 21, 1942, shall be
considered a power created on or before such date if the person
executing such will dies before July 1, 1949, without having
republished such will, by codicil or otherwise, after October 21,
1942.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 385; Pub. L. 87-834, Sec.
18(a)(2)(H), Oct. 16, 1962, 76 Stat. 1052; Pub. L. 94-455, title
XX, Sec. 2009(b)(4)(A), Oct. 4, 1976, 90 Stat. 1894.)
Miscellaneous
AMENDMENTS
1976 - Subsec. (a)(2). Pub. L. 94-455 struck out provision that a
disclaimer or renunciation of a power of appointment not be deemed
a release of that power.
1962 - Subsec. (a). Pub. L. 87-834 struck out provisions which
excepted real property situated outside of the United States.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable to transfers creating an
interest in person disclaiming made after Dec. 31, 1976, see
section 2009(e)(2) of Pub. L. 94-455, set out as a note under
section 2518 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-834 applicable to estates of decedents
dying after Oct. 16, 1962, except as otherwise provided, see
section 18(b) of Pub. L. 87-834, set out as a note under section
2031 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 2013, 2037, 2043, 2045,
2055, 2106, 2207, 6324 of this title.
