Estate of Vissering v. Commissioner
990 F.2d 578 (1993)
Vissering died and left a testamentary
trust. The trust appointed her son,
Norman and a bank as co-trustees. Norman was to receive income for life
from the trust (aka a life income trust), and upon his death, the money would pass to
his two children.
In addition to getting
income from the trust, the trust agreement also gave the trustee the
authorization to use the trust principle to pay for Norman's required support, maintenance, and education.
That's known as a power
So, in a way, Norman had
the power to appoint the money to either himself or his children. That
could be construed as a general power of appointment.
Norman died. The IRS stepped
in and said that since Norman had a general power of appointment, the assets in the trust were considered his
property and his estate would have to pay estate taxes.
Under the Internal
Revenue Code § 2041, a person has general
power of appointment if they posses at the time of death a
power over assets that permits them to benefit themselves, their estate,
their creditors, or creditors to their estate.
The Tax Court found that the
trust assets should be taxed as part of Norman's gross estate. Norman's
The Federal Appellate Court
The Appellate Court focused
on the word required and found
that Norman didn't have the power over the trust principle, because he
couldn't have taken what he didn't require. Therefore he did not have a general
power of appointment and the trust
assets should not be considered to be part of his greater estate.