U.S. Code » Title 26 » Subtitle Subtitle B— Estate and Gift Taxes › Chapter CHAPTER 12— GIFT TAX › Subchapter Subchapter B— Transfers

26 U.S.C. § 2514

Powers of appointment

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(a) Powers created on or before October 21, 1942An 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 appointmentFor 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 powerThe 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.

(Aug. 16, 1954, ch. 736, 68A Stat. 407; Pub. L. 94–455, title XX, § 2009(b)(4)(F), Oct. 4, 1976, 90 Stat. 1894.)Editorial NotesAmendments

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 SubsidiariesEffective 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.

Notes of Decisions
Cited in 10 cases (1 in the last 5 years), 1969–2021 · leading case: Jewett v. Comm'r, 455 U.S. 305 (1982).
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Jewett v. Comm'r, 455 U.S. 305 (1982). · cites it 2× “26 U. S. C. § 2514 . As the Commissioner notes in response, however, a disclaimant's control over property more closely resembles a general power of appointment, the exercise of which is a taxable transfer.”
E. Norman Peterson Marital Trust, Chem. Bank, Tr. v. Comm'r of Internal Revenue, 78 F.3d 795 (2d Cir. 1996). “See 26 U.S.C. § 2514 (b). When the Treasury regulations were promulgated, the Department examined — and rejected — precisely the interpretation of 26 U.”
Bandy v. Clancy, 144 A.3d 802 (Md. 2016). · cites it 4× “26 U.S.C. §§ 2514 (e), 2041(b)(2). Section 2514 of Title 26 entitled Powers of Appointment provides: 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.”
Ahern v. Thomas, 733 A.2d 756 (Conn. 1999). “§ 2041 (b) (same); 26 U.S.C. § 2514 (c) (same); J. Price, Contemporary Estate Planning (1992) §§ 10.”
Pearl M. Kennedy v. Comm'r of Internal Revenue, 804 F.2d 1332 (7th Cir. 1986). “26 U.S.C. § 2514 (b). The disclaimer in 1972 would have allowed George to assure his access to the wealth for an extended period and then to bypass a generation of transfer taxation, had it not been taxed as a gift.”
Est. of Timken v. United States, 630 F. Supp. 2d 823 (N.D. Ohio 2009). · cites it 2× “Pursuant to 26 U.S.C. § 2514 (e), "[t]he lapse of a power of appointment created after *826 October 21, 1942, during the life of the individual possessing the power shall be considered a release of such power.”
Bishop v. United States, 338 F. Supp. 1336 (N.D. Miss. 1970). “The Internal Revenue Code of 1954, 26 U.S.C.A. § 2514 , deals with powers of appointment and concerns transfers under the Gift Tax Chapter of the Code.”
Monroe v. United States, 301 F. Supp. 762 (E.D. Wash. 1969). “If these contentions are correct no gift resulted from the transaction of February 2 and 3, 1963 because the power of appointment was one created prior to October 21, 1942, the release of which is excepted from gift taxation by 26 U.S.C. § 2514 . Neither would the income taxes…”
Sanborn v. Kale (W.D. Wash. 2021). “26 U.S.C. § 2514 (powers of appointment).”
Cornelius A. Ross, & Effie H. Ross v. Comm'r of Internal Revenue, 652 F.2d 1365 (9th Cir. 1981). “” 26 U.S.C. § 2514 (c). If “heirs at law” is equivalent to “estate,” then failing to appoint the donees under these trusts could cause trust corpus to vest in their estates.”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.