Court Opinion

ID: 9686078
Source: CourtListenerOpinion
Date Created: 2023-08-24 15:25:37.622723+00
Date Added: 2024-06-11T18:18:14.361606
License: Public Domain

Wright, J.,
dissenting.
I respectfully dissent from the majority decision, which reverses the judgment of the county court. The issue before us is whether the wife’s failure to exercise her general power of appointment as to part I of the trust was a nontaxable transfer at her death and, therefore, not taxable as a part of the wife’s estate upon her death. The majority determined that pursuant to Neb. Rev. Stat. § 77-2008.03 (Reissue 1996), the only time this asset could be taxed was at the husband’s death. I respectfully disagree.
I agree with the majority’s determination that the testamentary power of appointment over part I of the trust regarding the asset in question was a general power of appointment. 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.
In this case, the devise was a general power of appointment that passed to the donee (the wife) at the donor’s (the husband’s) death. No tax was assessed on the husband’s estate upon this transfer because the transfer to a surviving spouse was exempt. However, because the property passed to the wife’s estate via a general power of appointment, it would be subject to inheritance tax upon her death whether or not she exercised the general power of appointment. If the wife exercised the general power of appointment, the inheritance tax would be determined on the basis of how that power of appointment was exercised. To the extent that the wife failed to exercise the power of appointment, the tax is determined on the basis of how the property passed and would be distributed in accordance with the husband’s last will and testament.
*423Being a general power of appointment, the interest is deemed to have been transferred from the husband to the wife at the husband’s death. However, since the transfer is to the spouse of the decedent, the interest in the assets of the trust is exempt from inheritance tax under Nebraska law. This does not mean that the transfer to the ultimate beneficiaries of the power of appointment is not subject to inheritance tax upon the death of the wife. When the wife died, her interest in part I of the trust (the general power of appointment) was included in her estate whether or not she exercised the power of appointment. Upon her death, this asset was subject to inheritance tax. Once the determination was made that the power of appointment was general rather than special, it became an asset of the donee’s (the wife’s) estate, which, upon her death, was subject to inheritance tax regardless of whether the power was exercised or not.
The majority’s opinion concludes that because of Neb. Rev. Stat. § 77-2008.04 (Reissue 1996), a general power of appointment is never subject to inheritance tax payable on the estate of the donee. I am unable to reach this conclusion, and therefore, I dissent.
Gerrard, J., joins in this dissent.