Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Property Tax Annotations

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Annotation 625.0230

625.0230 Trusts. Husband and wife create a testamentary "A/B" trust. Each trust is funded with 1/2 of the community property and with 1/2 of the wife's separate property. Upon the death of the first spouse the survivor becomes entitled to all the income from both trusts with a general power of appointment of all the assets in one trust and an annual, non-cumulative, right to receive payment of $5,000 or 5 percent of the aggregate value of the other. Upon the death of the second spouse all assets are to be administered together and all are to be transferred to their son.

In determining the amount of the $1,000,000 parent/child exclusion available to each trust, it is necessary to ascertain the parent responsible for the son obtaining a particular property. Since the survivor had a general power appointment in both trusts, that person is considered owner of all property subject to the power. To the extent the power was not exercised and property transferred to the son, said transfer must be regarded as from the holder of the power. Likewise, any property placed in either trust after the death of the first spouse cannot be considered a transfer by that spouse since he/she never owned an interest in the property. C 4/6/1992.