Limited Power of Appointment Fails to Avoid Completed Trust Gifts

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Trustees cannot depend on giving donors a testamentary limited power of appointment as a way of making sure that a transfer to a trust is not a completed gift, trust managers tell an ABA Real Property, Trust and Estate Law section teleconference. In the wake of a February IRS memorandum, Bessemer Trust officials say using retained testamentary limited powers of appointment are no longer an absolute way of avoiding having a transfer to a trust treated as a completed gift if the grantor is not the sole beneficiary.

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