Making the Case for the General Power of Appointment
By: Joshua Caswell, Esq.
In the not so distant past, when the estate tax exemption was significantly lower than it is today, one of the main focuses of the estate planning practitioner was minimizing or avoiding estate taxes. A significant emphasis was also placed on keeping inherited assets out of a beneficiary’s estate in an effort to avoid estate taxes being owed by later generations.
Since allowing a beneficiary a general power of appointment over inherited property causes the assets over which the power is held to be included in the beneficiary’s estate, the use of general powers of appointment was quite limited. The exception to the practice of not granting a general power of appointment came when estate tax inclusion was necessary to avoid a generation-skipping taxable termination.
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