## Facts

- Two unmarried sisters, Ada Lee Jenkins and Martha O. Jenkins, lived together in Georgia and owned substantial property.
- In 1958, each sister executed a will with similar provisions giving the other sister a life estate in specified property plus broad authority to consume or dispose of the property during life.
- Ada died on September 24, 1962.
- Under Ada’s will, Martha received a life estate in certain property with “full and unlimited power and authority to dispose of the same in fee simple, by gift, or otherwise, at any time during her life without accountability to any one,” with any remaining property at Martha’s death passing to other named beneficiaries.
- Martha renounced her appointment as executrix under Ada’s will on October 4, 1962, but did not disclaim the beneficial interest granted to her under the will.
- Martha suffered a heart attack on October 10, 1962 and died the next day—17 days after Ada—without having sold or otherwise disposed of the property.
- Ada’s will had not been admitted to probate before Martha’s death; both sisters’ wills were later admitted to probate on October 25, 1962, and their nephews qualified as executors.
- The property that Martha could have disposed of during life passed to the remainder beneficiaries named in Ada’s will because Martha died without disposing of it.
- The IRS treated Martha’s authority under Ada’s will as a “general power of appointment” under I.R.C. § 2041, included the property’s value in Martha’s gross estate, and assessed about $27,000 in additional federal estate tax.
- Martha’s executors paid the assessment and sued for a refund; the district court ruled for the estate, concluding Martha lacked a taxable general power of appointment at death because the power was exercisable only during life and was not exercisable before probate.
- The United States appealed.

## Issues

1. Whether a life estate coupled with an unrestricted power to dispose of the property during the life tenant’s lifetime constitutes a “general power of appointment” includable in the life tenant’s gross estate under I.R.C. § 2041.
2. Whether the power escapes § 2041 because it was exercisable only inter vivos and not by the donee’s will.
3. Whether the power was not taxable because the donor’s will had not been probated before the donee’s death, allegedly making the power not yet exercisable.

## Decision

- The Fifth Circuit reversed the district court’s refund judgment.
- The court held that Martha held a taxable general power of appointment at her death over the property subject to Ada’s will provisions and that the property’s value was includable in Martha’s gross estate under I.R.C. § 2041.
- The court rejected the arguments that § 2041 applies only to powers exercisable by will and that the absence of probate before Martha’s death prevented the power from coming into existence or being exercisable for federal estate tax purposes.

## Legal Principles

- A power is a “general power of appointment” under I.R.C. § 2041 when it permits the holder to appropriate or dispose of property for her own benefit (including by consuming, giving away, or selling) without restriction to an ascertainable standard such as health, education, support, or maintenance.
- A general power of appointment may be taxable even if it is exercisable only during life; § 2041 is not limited to testamentary powers.
- The federal estate tax focuses on whether the decedent held the power at the moment of death; nonexercise of the power does not prevent inclusion.
- Probate timing does not control whether a power created by a will is treated as existing for federal estate tax purposes when state law treats the will as operative at death subject to later probate.

## Conclusion

The Fifth Circuit held that Ada’s will gave Martha a general power of appointment because it authorized Martha, as life tenant, to dispose of the property in fee simple by gift or otherwise at any time during her life without limitation or accountability; that power was taxable under I.R.C. § 2041 even though Martha died 17 days later without exercising it and even though Ada’s will had not yet been probated, so the property’s value was properly included in Martha’s gross estate.


Jenkins v. United States, 428 F.2d 538 (1970)