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created or held on property transferred power, the second power is considered the gross estate even if the surviving by the decedent. as created at the time of the exercise of spouse receives benefits. the first. An annuity or other payment that is A power of appointment includes all not includible in the decedent’s or the powers which are, in substance and Attachments survivor’s gross estate as an annuity effect, powers of appointment If the decedent ever possessed a may still be includible under some other regardless of how they are identified power of appointment, attach a certified applicable provision of the law. For and regardless of local property laws. or verified copy of the instrument example, see Powers of Appointment For example, if a settlor transfers granting the power and a certified or and the Instructions for Schedule property in trust for the life of his wife, verified copy of any instrument by G—Transfers During Decedent’s Life, with a power in the wife to appropriate which the power was exercised or above. See also Regulations section or consume the principal of the trust, released. You must file these copies 20.2039-1(e). the wife has a power of appointment. even if you contend that the power was If the decedent retired before Some powers do not in themselves not a general power of appointment, January 1, 1985, see Annuities Under constitute a power of appointment. For and that the property is not otherwise Approved Plans, below, for rules that example, a power to amend only includible in the gross estate. allow the exclusion of part or all of administrative provisions of a trust that certain annuities. cannot substantially affect the beneficial Schedule I—Annuities enjoyment of the trust property or Part Includible You must complete Schedule l and file income is not a power of appointment. it with the return if you answered “Yes” If the decedent contributed only part of A power to manage, invest, or control to question 15 of Part 4—General the purchase price of the contract or assets, or to allocate receipts and Information. agreement, include in the gross estate disbursements, when exercised only in only that part of the value of the annuity Enter on Schedule I every annuity a fiduciary capacity, is not a power of receivable by the surviving beneficiary that meets all of the conditions under appointment. that the decedent’s contribution to the General, below, and every annuity General power of appointment. A purchase price of the annuity or described in paragraphs (a) through (h) general power of appointment is a agreement bears to the total purchase of Annuities Under Approved Plans, power that is exercisable in favor of the price. even if the annuities are wholly or decedent, the decedent’s estate, the partially excluded from the gross estate. For example, if the value of the decedent’s creditors, or the creditors of survivor’s annuity was $20,000 and the For a discussion regarding the QTIP the decedent’s estate, except: decedent had contributed three-fourths treatment of certain joint and survivor 1. A power to consume, invade, or of the purchase price of the contract, annuities, see the Schedule M, line 3 appropriate property for the benefit of the amount includible is $15,000 (3/4 × instructions. the decedent that is limited by an $20,000). ascertainable standard relating to General Except as provided under Annuities health, education, support, or These rules apply to all types of Under Approved Plans, contributions maintenance of the decedent. annuities, including pension plans, made by the decedent’s employer to 2. A power exercisable by the individual retirement arrangements, the purchase price of the contract or decedent only in conjunction with: purchased commercial annuities, and agreement are considered made by the a. the creator of the power or private annuities. decedent if they were made by the b. a person who has a substantial In general, you must include in the employer because of the decedent’s interest in the property subject to the gross estate all or part of the value of employment. For more information, see power, which is adverse to the exercise any annuity that meets the following section 2039. of the power in favor of the decedent. requirements: Definitions A part of a power is considered a • It is receivable by a beneficiary general power of appointment if the following the death of the decedent and Annuity. An annuity consists of one or power: by reason of surviving the decedent; more payments extending over any • The annuity is under a contract or period of time. The payments may be 1. May only be exercised by the agreement entered into after March 3, equal or unequal, conditional or decedent in conjunction with another 1931; unconditional, periodic or sporadic. person and • The annuity was payable to the 2. Is also exercisable in favor of the Examples. The following are decedent (or the decedent possessed other person (in addition to being examples of contracts (but not the right to receive the annuity) either exercisable in favor of the decedent, necessarily the only forms of contracts) alone or in conjunction with another, for the decedent’s creditors, the decedent’s for annuities that must be included in the decedent’s life or for any period not estate, or the creditors of the the gross estate: ascertainable without reference to the decedent’s estate). 1. A contract under which the decedent’s death or for any period that decedent immediately before death was The part to include in the gross did not in fact end before the receiving or was entitled to receive, for estate as a general power of decedent’s death; and the duration of life, an annuity with appointment is figured by dividing the • The contract or agreement is not a payments to continue after death to a value of the property by the number of policy of insurance on the life of the designated beneficiary, if surviving the persons (including the decedent) in decedent. decedent. favor of whom the power is exercisable. Note. A private annuity is an annuity 2. A contract under which the issued from a party not engaged in the Date power was created. Generally, decedent immediately before death was business of writing annuity contracts, a power of appointment created by will receiving or was entitled to receive, typically a junior generation family is considered created on the date of the together with another person, an member or a family trust. testator’s death. annuity payable to the decedent and A power of appointment created by An annuity contract that provides the other person for their joint lives, an inter vivos instrument is considered periodic payments to a person for life with payments to continue to the created on the date the instrument and ceases at the person’s death is not survivor following the death of either. takes effect. If the holder of a power includible in the gross estate. Social 3. A contract or agreement entered exercises it by creating a second security benefits are not includible in into by the decedent and employer -23- Part Instructions