Tips From the Pros: The Specter of Double Inclusion in the Gross EstateTips From the Pros: The Specter of Double Inclusion in the Gross Estate

Estate of Powell v. Commissioner¹ is well-known among estate-planning professionals for having staked out new ground in its Internal Revenue Code Section 2036(a)(2) analysis. The decedent, Nancy Powell, a week before her death, conveyed about $10 million in cash and securities to a family limited partnership (FLP) in exchange for a 99% limited partner interest. The Tax Court held that IRC Section 2036(a)(2) applied because, at the moment of her death, the decedent had the power, along with her sons, to terminate the FLP and, through her attorney-in-fact, had the ability to control FLP distributions. Thus, according to the court, the decedent had the right, in conjunction with all the other partners (her sons), “to designate the persons w...