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beginning with “1.” In the “Description”

exercise of the lapsed power could

persons (including the decedent) in

column, list the name of the transferee

have been satisfied.

favor of whom the power is exercisable.

and the date of the transfer, and give a

Date power was created. Generally,

Powers of Appointment

complete description of the property.

a power of appointment created by will

Transfers included in the gross estate

A power of appointment determines

is considered created on the date of the

should be valued on the date of the

who will own or enjoy the property

testator’s death.

decedent’s death or, if alternate

subject to the power and when they will

A power of appointment created by

valuation is adopted, according to

own or enjoy it. The power must be

an inter vivos instrument is considered

section 2032.

created by someone other than the

created on the date the instrument

decedent. It does not include a power

If only part of the property

takes effect. If the holder of a power

transferred meets the terms of section

created or held on property transferred

exercises it by creating a second

2035(a), 2036, 2037, or 2038, then only

by the decedent.

power, the second power is considered

a corresponding part of the value of the

as created at the time of the exercise of

A power of appointment includes all

property should be included in the

the first.

powers which are, in substance and

value of the gross estate. If the

effect, powers of appointment

transferee makes additions or

Attachments

regardless of how they are identified

improvements to the property, the

and regardless of local property laws.

If the decedent ever possessed a

increased value of the property at the

power of appointment, attach a certified

For example, if a settlor transfers

valuation date should not be included

property in trust for the life of his wife,

or verified copy of the instrument

on Schedule G. However, if only a part

with a power in the wife to appropriate

granting the power and a certified or

of the value of the property is included,

verified copy of any instrument by

or consume the principal of the trust,

enter the value of the whole under the

the wife has a power of appointment.

which the power was exercised or

column headed “Description” and

released. You must file these copies

explain what part was included.

Some powers do not in themselves

even if you contend that the power was

constitute a power of appointment. For

Attachments. If a transfer, by trust or

not a general power of appointment,

example, a power to amend only

otherwise, was made by a written

and that the property is not otherwise

administrative provisions of a trust that

instrument, attach a copy of the

includible in the gross estate.

cannot substantially affect the beneficial

instrument to Schedule G. If the copy of

enjoyment of the trust property or

the instrument is of public record, it

Schedule I—Annuities

income is not a power of appointment.

should be certified; if not of public

You must complete Schedule l and file

A power to manage, invest, or control

record, the copy should be verified.

it with the return if you answered “Yes”

assets, or to allocate receipts and

Schedule H—Powers of

to question 15 of Part 4 — General

disbursements, when exercised only in

Information.

a fiduciary capacity, is not a power of

Appointment

appointment.

Enter on Schedule I every annuity

Complete Schedule H and file it with

that meets all of the conditions under

General power of appointment. A

the return if you answered “Yes” to

General, below, and every annuity

general power of appointment is a

question 13 of Part 4 — General

described in paragraphs (a) through (h)

power that is exercisable in favor of the

Information.

of Annuities Under Approved Plans,

decedent, the decedent’s estate, the

below, even if the annuities are wholly

On Schedule H, include in the gross

decedent’s creditors, or the creditors of

or partially excluded from the gross

estate:

the decedent’s estate, except:

•

estate.

The value of property for which the

1. A power to consume, invade, or

decedent possessed a general power

For a discussion regarding the QTIP

appropriate property for the benefit of

of appointment (defined below) on the

treatment of certain joint and survivor

the decedent that is limited by an

date of his or her death and

annuities, see the Schedule M, line 3

ascertainable standard relating to

•

The value of property for which the

instructions.

health, education, support, or

decedent possessed a general power

maintenance of the decedent.

General

of appointment that he or she exercised

2. A power exercisable by the

or released before death by disposing

decedent only in conjunction with:

These rules apply to all types of

of it in such a way that if it were a

a. the creator of the power or

annuities, including pension plans,

transfer of property owned by the

b. a person who has a substantial

individual retirement arrangements,

decedent, the property would be

interest in the property subject to the

purchased commercial annuities, and

includible in the decedent’s gross

power, which is adverse to the exercise

private annuities.

estate as a transfer with a retained life

of the power in favor of the decedent.

In general, you must include in the

estate, a transfer taking effect at death,

gross estate all or part of the value of

or a revocable transfer.

A part of a power is considered a

any annuity that meets the following

With the above exceptions, property

general power of appointment if the

requirements:

subject to a power of appointment is

power:

•

It is receivable by a beneficiary

not includible in the gross estate if the

1. May only be exercised by the

following the death of the decedent and

decedent released the power

decedent in conjunction with another

by reason of surviving the decedent;

completely and the decedent held no

•

person and

The annuity is under a contract or

interest in or control over the property.

2. Is also exercisable in favor of the

agreement entered into after March 3,

other person (in addition to being

If the failure to exercise a general

1931;

•

exercisable in favor of the decedent,

power of appointment results in a lapse

The annuity was payable to the

the decedent’s creditors, the decedent’s

of the power, the lapse is treated as a

decedent (or the decedent possessed

estate, or the creditors of the

release only to the extent that the value

the right to receive the annuity) either

decedent’s estate).

of the property that could have been

alone or in conjunction with another, for

appointed by the exercise of the lapsed

the decedent’s life or for any period not

power is more than the greater of

The part to include in the gross

ascertainable without reference to the

$5,000 or 5% of the total value, at the

estate as a general power of

decedent’s death or for any period that

time of the lapse, of the assets out of

appointment is figured by dividing the

did not in fact end before the

which, or the proceeds of which, the

value of the property by the number of

decedent’s death; and

-22-

Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 22

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