Internal Revenue Code:Sec. 2514. Powers of appointment

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle B - Estate and Gift Taxes
       CHAPTER 12 - GIFT TAX
        Subchapter B - Transfers
      

Statute

    Sec. 2514. Powers of appointment
 
    (a) Powers created on or before October 21, 1942
      An exercise of a general power of appointment created on or
    before October 21, 1942, shall be deemed a transfer of property by
    the individual possessing such power; 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
    subsequent exercise of such power shall not be deemed to be the
    exercise of a general power of appointment if -
        (1) such partial release occurred before November 1, 1951, or
        (2) 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 six months after the termination of such
      legal disability.
    (b) Powers created after October 21, 1942
      The exercise or release of a general power of appointment created
    after October 21, 1942, shall be deemed a transfer of property by
    the individual possessing such power.
    (c) Definition of general power of appointment
      For purposes of this section, the term ''general power of
    appointment'' means a power which is exercisable in favor of the
    individual possessing the power (hereafter in this subsection
    referred to as the ''possessor''), his estate, his creditors, or
    the creditors of his estate; except that -
        (1) A power to consume, invade, or appropriate property for the
      benefit of the possessor which is limited by an ascertainable
      standard relating to the health, education, support, or
      maintenance of the possessor shall not be deemed a general power
      of appointment.
        (2) A power of appointment created on or before October 21,
      1942, which is exercisable by the possessor only in conjunction
      with another person shall not be deemed a general power of
      appointment.
        (3) In the case of a power of appointment created after October
      21, 1942, which is exercisable by the possessor only in
      conjunction with another person -
          (A) if the power is not exercisable by the possessor except
        in conjunction with the creator of the power - such power shall
        not be deemed a general power of appointment;
          (B) if the power is not exercisable by the possessor 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 possessor - such power shall not
        be deemed a general power of appointment.  For the purposes of
        this subparagraph a person who, after the death of the
        possessor, may be possessed of a power of appointment (with
        respect to the property subject to the possessor'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 possessor's power;
          (C) if (after the application of subparagraphs (A) and (B))
        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 possessor) in favor of whom such
        power is exercisable.
      For purposes of subparagraphs (B) and (C), 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.
    (d) Creation of another power in certain cases
      If a power of appointment created after October 21, 1942, is
    exercised 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 the property which was
    subject to the first power, 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, such
    exercise of the first power shall, to the extent of the property
    subject to the second power, be deemed a transfer of property by
    the individual possessing such power.
    (e) 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 rule of 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 exceeds in value
    the greater of the following amounts:
        (1) $5,000, or
        (2) 5 percent of the aggregate value of the assets out of
      which, or the proceeds of which, the exercise of the lapsed
      powers could be satisfied.
    (f) 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. 407; Pub. L. 94-455, title XX,
    Sec. 2009(b)(4)(F), Oct. 4, 1976, 90 Stat. 1894.)
 

Miscellaneous

                                 AMENDMENTS
      1976 - Subsec. (b). Pub. L. 94-455 struck out ''A disclaimer or
    renunciation of such a power of appointment shall not be deemed a
    release of such power.''
                      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.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 2503, 2513 of this title.