NORTH CAROLINA GENERAL ASSEMBLY

1963 SESSION

 

 

CHAPTER 942

SENATE BILL 213

 

 

AN ACT TO DETERMINE THE APPLICATION OF GIFT TAXES TO THE CREATION, EXERCISE AND RELINQUISHMENT OF POWERS OF APPOINTMENT.

 

The General Assembly of North Carolina do enact:

 

Section 1.  Article 6 of Subchapter I of Chapter 105 of the General Statutes of North Carolina, entitled "Schedule G. Gift Taxes", is hereby amended by inserting therein immediately after G.S. 105-188 a new Section to be designated as G.S. 105-188.1 to read as follows:

"§ 105-188.1.  Powers of Appointment. (a) The term 'general power of appointment' as used in this Article means any power of appointment exercisable in favor of the person possessing the power, his estate, his creditors, or the creditors of his estate, except that a power to consume, invade or appropriate property for the benefit of the possessor which is limited by an ascertainable standard relating to the health, education, support, or maintenance of the possessor shall not be deemed a general power of appointment. The term 'special power of appointment' shall mean any other power of appointment.

(b)        Any person having a general power of appointment with respect to any interest in property shall for gift tax purposes be deemed to be the owner of such interest, and accordingly:

(1)        If in connection with any gift of property the donor shall give to any person a general power of appointment with respect to any interest in such property, the donor shall be deemed to have given such person such interest in such property.

(2)        If any person holding a general power of appointment with respect to any interest in property shall exercise such power in favor of any other person or persons, he shall be deemed to have made a gift of such interest to such person or persons.

(3)        If any person holding a general power of appointment with respect to any interest in property shall relinquish such power, he shall be deemed to have made a gift of such interest to the person or persons who shall benefit by such relinquishment.

(c)        Neither the exercise nor the relinquishment of a special power of appointment with respect to an interest in property shall be deemed to constitute a gift of such interest in such property.

(d)        If in connection with any gift of property the donor shall give to any person a special power of appointment with respect to any interest in such property, the donor shall be deemed for gift tax purposes to have given such interest in equal shares to those persons, not more than two (2), among the possible appointees and takers in default of appointment whom the donor or his executor or administrator may designate in the gift tax return filed with respect to such gift. But the tax shall be computed according to the relationship of the donee of the power to the person designated if:

(1)        The possible appointees and takers in default of appointment include any persons more closely related to the donee of the power than to the donor, and

(2)        Such computation would produce a higher tax."

Sec. 2.  All laws and clauses of laws in conflict with this Act are hereby repealed.

Sec. 3.  This Act shall be in full force and effect on and after July 1, 1963.

In the General Assembly read three times and ratified, this the 18th day of June, 1963.