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property will or may be returned to the partnership while retaining certain 2035(a), 2036, 2037, or 2038, then only decedent or the decedent’s estate. It distribution rights, or a liquidation, put, a corresponding part of the value of the also includes the possibility that the call, or conversion right. property should be included in the transferred property may become value of the gross estate. If the Section 2702 deals with the transfer subject to a power of disposition by the transferee makes additions or of an interest in a trust while retaining decedent. It does not matter if the right improvements to the property, the any interest other than a qualified arises by the express terms of the increased value of the property at the interest. In general, a qualified interest instrument of transfer or by operation of valuation date should not be included is a right to receive certain distributions law. For this purpose, reversionary on Schedule G. However, if only a part from the trust at least annually, or a interest does not include the possibility of the value of the property is included, noncontingent remainder interest if all that the income alone from the property enter the value of the whole under the of the other interests in the trust are may return to the decedent or become column headed “Description” and distribution rights specified in section subject to the decedent’s power of explain what part was included. 2702. disposition. Attachments. If a transfer, by trust or Section 2703 provides rules for the 5. Revocable transfers (section otherwise, was made by a written valuation of property transferred to a 2038). The gross estate includes the instrument, attach a copy of the family member but subject to an option, value of transferred property in which instrument to Schedule G. If the copy of agreement, or other right to acquire or the enjoyment of the transferred the instrument is of public record, it use the property at less than FMV. It property was subject at decedent’s should be certified; if not of public also applies to transfers subject to death to any change through the record, the copy should be verified. restrictions on the right to sell or use exercise of a power to alter, amend, the property. revoke, or terminate. A decedent’s Schedule H—Powers of Finally, section 2704 provides that in power to change the beneficiaries and certain cases, the lapse of a voting or to hasten or increase any beneficiary’s Appointment liquidation right in a family-owned enjoyment of the property are examples Complete Schedule H and file it with corporation or partnership will result in of this. the return if you answered “Yes” to a deemed transfer. It does not matter whether the power question 13 of Part 4—General was reserved at the time of the transfer, These rules have potential Information. whether it arose by operation of law, or consequences for the valuation of whether it was later created or On Schedule H, include in the gross property in an estate. If the decedent conferred. The rule applies regardless estate: (or any member of his or her family) of the source from which the power was • The value of property for which the was involved in any such transactions, acquired, and regardless of whether the decedent possessed a general power see sections 2701 through 2704 and power was exercisable by the decedent of appointment (defined below) on the the related regulations for additional alone or with any person (and date of his or her death and details. regardless of whether that person had • The value of property for which the How To Complete Schedule a substantial adverse interest in the decedent possessed a general power transferred property). of appointment that he or she exercised G or released before death by disposing The capacity in which the decedent All transfers (other than outright of it in such a way that if it were a could use a power has no bearing. If transfers not in trust and bona fide transfer of property owned by the the decedent gave property in trust and sales) made by the decedent at any decedent, the property would be was the trustee with the power to time during life must be reported on includible in the decedent’s gross revoke the trust, the property would be Schedule G, regardless of whether you estate as a transfer with a retained life included in his or her gross estate. For believe the transfers are subject to tax. estate, a transfer taking effect at death, transfers or additions to an irrevocable If the decedent made any transfers not or a revocable transfer. trust after October 28, 1979, the described in these instructions, the transferred property is includible if the transfers should not be shown on With the above exceptions, property decedent reserved the power to remove Schedule G. Instead, attach a subject to a power of appointment is the trustee at will and appoint another statement describing these transfers by not includible in the gross estate if the trustee. listing: decedent released the power • The date of the transfer, If the decedent relinquished within 3 completely and the decedent held no • The amount or value of the years of death any of the includible interest in or control over the property. transferred property, and powers described above, figure the If the failure to exercise a general • The type of transfer. gross estate as if the decedent had power of appointment results in a lapse actually retained the powers until death. Complete the schedule for each of the power, the lapse is treated as a transfer that is included in the gross Only the part of the transferred release only to the extent that the value estate under sections 2035(a), 2036, property that is subject to the of the property that could have been 2037, and 2038 as described in the decedent’s power is included in the appointed by the exercise of the lapsed Instructions for Schedule G. gross estate. power is more than the greater of For more detailed information on In the “Item number” column, $5,000 or 5% of the total value, at the which transfers are includible in the number each transfer consecutively time of the lapse, of the assets out of gross estate, see the Estate Tax beginning with “1.” In the “Description” which, or the proceeds of which, the Regulations. column, list the name of the transferee exercise of the lapsed power could and the date of the transfer, and give a have been satisfied. complete description of the property. Special Valuation Rules for Transfers included in the gross estate Powers of Appointment Certain Lifetime Transfers should be valued on the date of the A power of appointment determines Sections 2701 through 2704 provide decedent’s death or, if alternate who will own or enjoy the property rules for valuing certain transfers to valuation is adopted, according to subject to the power and when they will family members. section 2032. own or enjoy it. The power must be Section 2701 deals with the transfer If only part of the property created by someone other than the of an interest in a corporation or transferred meets the terms of section decedent. It does not include a power -22- Part Instructions