§2514 — Title 26 Internal Revenue Code | U.S. Code

Summary

Counts using or giving up a "general power of appointment" as a transfer of property. A general power of appointment is a power that lets the holder give property to themselves, their estate, their creditors, or their estate’s creditors. If the power was created on or before October 21, 1942, using it is treated as a transfer, but simply not using it or fully letting it go is not treated as using it. If such an old power was partly given up so it is no longer "general," then later use is not treated as a general power if the partial give-up happened before November 1, 1951, or if the holder was legally unable to give it up on October 21, 1942 and the partial give-up happened within six months after that disability ended. For powers made after October 21, 1942, using or giving them up is treated as a transfer. Small exceptions apply: a power limited by clear standards for health, education, support, or maintenance is not "general." Powers exercisable only together with certain other people may also not be "general" under rules about who joins. If a post‑1942 use creates a new power that can lawfully delay ownership or sale, the first use counts as a transfer for the part subject to the new power. If a post‑1942 power simply lapses while the holder is alive, that lapse counts as a release only for the year when the value affected exceeds the greater 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, stays treated as created then if the testator dies before July 1, 1949 without republishing the will after October 21, 1942.

Title 26, §2514

Internal Revenue Code — Source: USLM XML via OLRC

(a)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)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)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.

(d)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)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)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. (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.”

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.

§2514 Powers of appointment