Laws, Regulations & Annotations

P

625.0000 PARENT-CHILD TRANSFER

Annotation 625.0234.005

625.0234.005 Trusts—Powers of Appointment. A surviving trustor executed a notice of exercise of a general power of appointment and specifically granted real property 50 percent to her daughter and 50 percent to her granddaughter and grandson (children of trustor's predeceased child). The residue of the trust was to be distributed to daughter. After the death of the surviving trustor, the successor trustee entered into a distribution agreement with the beneficiaries that granted the entire real property to daughter and cash and securities to granddaughter and grandson. Because the document exercising the trustor's power of appointment states that a specific parcel of property was to be divided among the three beneficiaries in specific percentages, this was a specific gift and not subject to discretionary non pro rata distribution. Once property becomes distributable pursuant to a power of appointment, the exercise of the power of appointment becomes irrevocable. Thus, daughter is eligible for the parent-child exclusion on the 50 percent interest that was granted to her pursuant to the power of appointment. The 50 percent interest that daughter received from the distribution agreement was subject to reassessment as there is no exclusion between aunt and niece and nephew. C 10/10/2012.