§2041 — Title 26 Internal Revenue Code | U.S. Code

Summary

Adds to a person’s gross estate the value of property tied to a "general power of appointment" when the person who died had that power at death or used or released it in ways that make the property count under the estate-tax rules. If the power was created on or before October 21, 1942, the property counts when the person used it by will or by a transfer that would be included under sections 2035–2038, but only if a partial release happened before November 1, 1951 or the person who held the power was legally disabled on October 21, 1942 and released it within six months after the disability ended. If the power was created after October 21, 1942, the property counts if the person had the general power at death or if they ever exercised or released it by a transfer that would be included under sections 2035–2038. A post-1942 power is treated as existing on the date of death even if exercise needs prior notice or takes effect later. Property also counts to the extent the person by will or certain transfers caused inclusion under sections 2035, 2036, or 2037. A general power of appointment means a power to give property to the person who died, that person’s estate, that person’s creditors, or the creditors of the estate. Exceptions: a power limited by an identifiable standard for health, education, support, or maintenance is not a general power; some powers exercisable only with another person are not general (rules differ for powers made before or after October 21, 1942); if a power after October 21, 1942 is exercisable in favor of several people, only a fraction of the property may count. If a post-1942 power simply lapses during the holder’s life, it is treated as a release only if the property that could have been appointed was worth more than the larger of $5,000 or 5 percent of the assets that could satisfy the power. A power in a will signed on or before October 21, 1942 is treated as created on or before that date if the testator died before July 1, 1949 without republishing the will after October 21, 1942.

Title 26, §2041

Internal Revenue Code — Source: USLM XML via OLRC

(a)The value of the gross estate shall include the value of all property—

(1)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;

(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)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)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,

(b)For purposes of subsection (a)—

(1)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.

(2)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)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.

Notes & Related Subsidiaries

Editorial Notes

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.

Statutory Notes and Related Subsidiaries

Effective Date

of 1976 AmendmentAmendment 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 AmendmentAmendment 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.

§2041 Powers of appointment

Summary

Title 26, §2041

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata