Trusts and Estates
Ca. Trs. & Estates Quarterly VOLUME 30, ISSUE 3, 2024
Content
- Chairs of Section Subcommittees
- Editorial Board
- Inside This Issue
- Is Probate Dying? a Look At Ab 2016 and a Survey of Probate Administration Statutes For California Practitioners Preparing For the Future
- Letter From the Chair
- Letter From the Editor
- Litigation Alert
- McLe Self-study Article: Combining Trusts To Reduce Complexity and Costs Can Be Harder Than You Think
- Tax Alert
- Tips of the Trade: Training Wheels Money
- McLe Self-study Article: Creation, Exercise, and Transfer Tax Considerations of Powers of Appointment
MCLE SELF-STUDY ARTICLE: CREATION, EXERCISE, AND TRANSFER TAX CONSIDERATIONS OF POWERS OF APPOINTMENT
Written by Matthew Perotti, Esq.* and James Dunn, Esq.**
I. SYNOPSIS
Powers of appointment are versatile and powerful estate planning tools that shift control over the disposition of trust assets to the powerholder. They also play a pivotal role in transfer tax planning for clients who wish to create long-term trusts, particularly those designed to continue for multiple generations. This article begins with a basic introduction to the types of powers of appointment available, as well as the requirements and drafting considerations when creating and exercising such powers under California law. Next, consideration is given to the strategies involved in optimizing powers of appointment for estate, gift, and generation-skipping transfer ("GST") tax (collectively referred to in this article as "transfer tax"), and drafting recommendations designed to accomplish the client’s intent.
II. BACKGROUND