Question

Paul’s will creates a General Power of Appointment Trust (GPOA) that distributes income to his wife annually for life and gives his wife a general power of appointment over the assets in the trust. Which of the following statements is true regarding a GPOA Trust? A. The GPOA Trust only qualifies for the unlimited marital deduction if the trustee agrees to make distributions of principal to Paul’s trust. B. The unlimited marital deduction cannot be elected over the property transferred to the trust because Paul’s wife cannot appoint assets to herself, her creditors, or to anyone on her behalf. C. The unlimited marital deduction is not available because Paul’s wife does not have the current right to the assets in the trust. D. The GPOA Trust automatically qualifies for the unlimited marital deduction because Paul’s wife has a general power of appointment over the trust’s assets.

Answer 1

Answer: D. The GPOA Trust automatically qualifies for the unlimited marital deduction because Paul's wife has a general power of appointment over the trust's assets.

Explanation:

General Power of Appointment Trust (GPOA) refers to a power of appointment which is a legally binding provision that's contained in a trust such that the beneficiary possess the authority to alter the beneficiaries of the trust.

In this case, Paul's wife possess the power of appointment to anyone on her behalf. Therefore, The GPOA Trust automatically qualifies for the unlimited marital deduction because Paul's wife has a general power of appointment over the trust's assets.