## Facts

- Charles Mifflin Frothingham died testate on August 18, 1967; his estate elected date-of-death valuation.
- A prior family trust arrangement arose from Jane Mifflin’s will: Jane’s residue was held in trust, paying income to her son George Harrison Mifflin for life, with principal payable at George’s death as George appointed by will; absent appointment, principal passed under a default taker provision tied to George’s issue or intestate heirs.
- George died in 1959 leaving instruments offered for probate that, if valid, would exercise the power of appointment over Jane’s trust.
- A will contest ensued; if George’s instruments were disallowed, it was likely that (i) Jane’s trust principal would pass under the default provision, and (ii) George’s remaining estate would pass by Massachusetts intestacy to his only heirs, Frothingham and his sister, equally.
- The will contest was settled by compromise; as part of the settlement Frothingham acquired a general power of appointment over an interest ultimately valued at $856,330.01 at Frothingham’s death.
- Frothingham later exercised the general power of appointment by will; he received no consideration for exercising or relinquishing the power.
- The Commissioner included $856,330.01 in Frothingham’s gross estate under I.R.C. § 2041(a) and determined a federal estate tax deficiency of $103,046.62.
- The estate argued that Frothingham’s compromise of the will contest—including surrender of potential intestacy rights and related claims—was “adequate and full consideration” under I.R.C. § 2043(a), reducing or eliminating inclusion.

## Issues

1. Whether I.R.C. § 2043(a) applies to reduce inclusion under § 2041(a) when the decedent gave consideration to acquire a general power of appointment but received no consideration for exercising or relinquishing that power.
2. Whether the property subject to the general power of appointment must be fully included in the gross estate under § 2041(a) despite the decedent’s earlier settlement concessions.

## Decision

- The Tax Court sustained the Commissioner’s deficiency determination.
- The court held § 2043(a)’s “adequate and full consideration” clause applies only to consideration received by the decedent in connection with property otherwise includable under §§ 2035–2038 or 2041.
- Because Frothingham received no consideration for exercising or relinquishing the general power of appointment, § 2043(a) did not limit inclusion.
- The full $856,330.01 value of the property subject to the general power was includable in Frothingham’s gross estate under § 2041(a).

## Legal Principles

- I.R.C. § 2041(a) requires inclusion in the gross estate of the value of property subject to a decedent’s general power of appointment when the power is held at death and exercised by will (or otherwise triggers the statute).
- I.R.C. § 2043(a) offsets inclusion only to the extent the decedent received “adequate and full consideration in money or money’s worth” for the taxable transfer or relinquishment that otherwise causes inclusion.
- Consideration given by a decedent to acquire a general power of appointment (e.g., settlement of a will contest and surrender of expectancies) does not constitute consideration received for the later exercise or relinquishment of the power for purposes of § 2043(a).

## Conclusion

The Tax Court held that prior settlement concessions used to obtain a general power of appointment do not reduce estate tax inclusion under § 2041, because § 2043(a) applies only where the decedent received consideration for the taxable transfer or relinquishment; therefore, the full value of the property subject to the general power was included in the gross estate.


Estate of Frothingham v. Commissioner, 60 T.C. 211 (1973)