Definition of "Special Testamentary Power of Appointment"

A special provision in an irrevocable trust that allows you to minimize the gift tax consequences to which the remainder interest in your trust would ordinarily be subject upon your death. With the special testamentary power, you include a provision in your trust reserving the right to name in your will those people (children, for example) who will receive the balance of the trust upon your death. According to federal gift tax regulations, you have not made a completed gift of the property at the time of the transfer into trust if you reserve the right to determine at some later time who will receive the property in your trust.

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