§2041 Powers of Appointment

Summary

Counts in a person’s taxable estate the value of any property linked to a “general power of appointment” that the person had or used. A general power of appointment means the power to name the decedent, the decedent’s estate, the decedent’s creditors, or the creditors of the estate as the recipient. This rule applies to powers made on or before October 21, 1942 if the person used the power by will or by a transfer that would be included under sections 2035–2038, as long as any partial release happened before November 1, 1951 or within six months after the donee’s legal disability that existed on October 21, 1942 ended. It also applies to powers created after October 21, 1942 if the person had the power when they died, or if they ever exercised or released it by a transfer that would be included under sections 2035–2038. A power is treated as existing on the date of death even if using it requires prior notice or takes effect later. A general power is not treated that way when it is limited by an ascertainable standard for the decedent’s health, education, support, or maintenance. Certain joint powers are also excluded, such as powers exercisable only with the creator or only with someone who has a strong adverse interest. If the power can be used in favor of several people, only a fractional share may count. If a post‑October 21, 1942 power lapses during the holder’s life, that lapse counts as a release only to the extent the property exceeded the greater of $5,000 or 5 percent of the assets subject to the power at the time. A power created by 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.