Opinion ID: 1813911
Heading Depth: 1
Heading Rank: 5

Heading: general or limited power of appointment

Text: The question at issue is whether the part I trust assets valued at the wife's death are includable in her estate and therefore subject to inheritance tax. The county court found that the assets included in the part I trust were to be included in the inheritance tax calculation. We disagree. Whether inheritance tax is imposed on a power of appointment as an asset of an estate is controlled by Neb.Rev.Stat. §§ 77-2008.03 and 77-2008.04 (Reissue 1996). Section 77-2008.03 provides: Whenever any person or corporation shall be given a power of appointment over any property by a transfer which is subject to the provisions of sections 77-2001 to 77-2008.02, whether such power is created before or after June 13, 1955, such power of appointment shall be deemed a transfer of the interest in the property which is subject to such power from the donor to the donee of such power at the date of the donor's death; Provided, if at the date of the donor's death, the power of appointment is limited, in whole or in part, to be exercised in favor of one or more specific beneficiaries or classes of beneficiaries, then, to the extent it is so limited, such power of appointment shall not be deemed a transfer from the donor to the donee of the power, but shall be deemed a transfer of the interest in the property which is subject to the power from the donor of the power to the specific beneficiary or class of beneficiaries, as of the date of the donor's death. Section 77-2008.04 provides: The exercise or failure to exercise any power of appointment by the donee thereof, shall not be deemed a transfer which is subject to the provisions of sections 77-2001 to 77-2008.02. The first question to be addressed in this case is whether the wife's power of appointment is general or limited. A general power of appointment means that an interest in the property passes to the donee at the donor's death. A limited power of appointment means that an interest in the property passes not to the donee, but, rather, to a specific class of beneficiaries at the donor's death. This court recently addressed the issue of general versus limited powers of appointment in In re Estate of Muchemore, supra . In In re Estate of Muchemore, 252 Neb. at 123, 560 N.W.2d at 480, the trust in question stated: On the death of the [appellee], the Trustee shall pay the then remaining principal... to ... such person or persons or the estate of the [appellee], in such amounts and proportions ... as the [appellee] shall appoint by a Will.... ... On the death of the [appellee], if, or to the extent that, the [appellee] doesnot [sic] exercise her power to appoint by Will, the Trustee shall dispose of the then remaining principal ... according to the terms and conditions ... of the CREDIT SHELTER TRUST.... This court determined from the above language that the appellee received a general power of appointment because the appellee was given a virtually unlimited power of disposition. Similar to the appellee in In re Estate of Muchemore, the wife was also given a virtually unlimited power of disposition. She alone had the power in her last will and testament to appoint the entire trust estate of this trust, free from trust, in favor of her estate, or such person or persons, or institution or institutions as she may in her Last Will and Testament appoint. The wife was given a general power of appointment because she was able to devise the property to whomever she wished or refrain from devising to allow a devise in accordance with the husband's will. According to § 77-2008.03, a general power of appointment shall be deemed a transfer of the interest in the property which is subject to such power from the donor to the donee of such power at the date of the donor's death .... (Emphasis supplied.) Therefore, under a general power of appointment, the transfer of the interest in the property to the donee, the wife, occurred at the date of the donor husband's death, making the property subject to inheritance tax at that time. Because the wife was the husband's spouse, however, her interests in the part I trust were exempt from the inheritance tax at the husband's death, pursuant to Nebraska law. See Neb.Rev.Stat. § 77-2004 (Reissue 1996).