A testamentary general power of appointment has which tax consequences?

A testamentary general power of appointment has which tax consequences?

• A. Estate tax consequences
• B. Income tax consequences
• C. Capital gains tax consequences
• D. No tax consequences

Answer: (A)

Estate tax inclusion is triggered because a general power of appointment is broad enough to let the holder benefit from the property, including taking it for their own estate. When someone holds a testamentary general power, the assets subject to that power are treated as part of the power holder’s gross estate for estate tax purposes at death. In other words, the power’s breadth means the property is pulled into the holder’s estate, making estate taxes the primary consequence. Income tax and capital gains aren’t triggered merely by having or exercising this kind of power.

Estate tax inclusion is triggered because a general power of appointment is broad enough to let the holder benefit from the property, including taking it for their own estate. When someone holds a testamentary general power, the assets subject to that power are treated as part of the power holder’s gross estate for estate tax purposes at death. In other words, the power’s breadth means the property is pulled into the holder’s estate, making estate taxes the primary consequence. Income tax and capital gains aren’t triggered merely by having or exercising this kind of power.