{"data":{"id":"us-ky/krs-140.040","jurisdiction":"us-ky","citation":"KRS 140.040","heading":"Taxation of transfers by power of appointment -- When transfer deemed","body":"to take place -- Date as of which value of property determined -- Remainder\ninterests -- Rates and exemptions.\n(1) As used in this section, \"power of appointment\":\n(a) Means only a general power of appointment that may be exercised in favor of:\n1. The individual holding the power of appointment;\n2. That individual's estate;\n3. That individual's creditors; or\n4. The creditors of that individual's estate;\n(b) Does not include a power that is:\n1. Limited by an ascertainable standard relating to the health, education,\nmaintenance, and support of the individual holding the power of\nappointment; or\n2. Exercisable only by the individual holding the power of appointment in\nconjunction with another person having a substantial interest in the\nproperty subject to the power of appointment which is adverse to the\nexercise in favor of:\na. The individual holding the power of appointment;\nb. That individual's estate;\nc. That individual's creditors; or\nd. The creditors of that individual's estate; and\n(c) Shall be administered by the Department of Revenue as nearly as practicable\nidentical to a general power of app ointment as defined in 26 U.S.C. sec.\n2041(b).\n(2) (a) Whenever any person exercises a power of appointment derived from any\ndisposition of property:\n1. Whether by will, deed, trust agreement, contract, insurance policy or\nother instrument; and\n2. Regardless of when the person exercises the power of appointment;\nthe power of appointment shall be deemed a transfer taxable under the\nprovisions of this chapter in the same manner as though the property to which\nthe appointment relates belonged absolutely to the donee of the power and had\nbeen bequeathed or devised by the donee by will.\n(b) Whenever any person possessing a power of appointment omits or fails to\nexercise the power of appointment, in whole or in part, within the time\nprovided therefor, a transfer taxable under the provisions of this chapter shall\nbe deemed to take place to the person receiving the property as a result of the\nomission or failure to the same extent that the property would have been\nsubject to taxation if it had passed under the will of the donee.\n(c) The time at which a transfer shall be deemed to take place, for the purpose of\ntaxation, shall be governed by the provisions of subsections (3) to (5) of this\nsection.\n(3) (a) In the case of a power of appointment which passes to the done e at the death\nof the donor, under any instrument:\n1. The transfer shall be deemed to take place, for the purpose of taxation,\nat the time of the death of the donor;\n2. The assessment shall be made at that time against the life interest of the\ndonee and the remainder against the corpus;\n3. The value of the property shall be determined as of the date of the death\nof the donor;\n4. The donee of the property shall be taxed at the rates and be subject to\nthe exemptions in effect at the death of the donor; and\n5. The determination of the applicable rates and exemptions, in effect at\nthe death of the donor, shall be governed by the relationship of the\nbeneficiary to the donee of the power of appointment.\n(b) In the event the payment of the tax at the death of the d onor should operate to\nprovide an exemption for any beneficiary of a donee not authorized by KRS\n140.080, then the exemption shall be retrospectively disallowed at the time of\nthe death of the donee.\n(c) The remainder interest passing under the donee's pow er of appointment,\nwhether exercised or not, shall be added to and made a part of the\ndistributable share of the donee's estate for the purpose of determining the\napplicable exemption and rates.\n(4) In all cases other than that described in subsection (3) of this section:\n(a) The transfer shall be deemed to take place, for the purpose of taxation, at the\ntime of the death of the donee;\n(b) The value of the property to which the power of appointment relates shall be\ndetermined as of the date of the death of the donee and shall be taxed at the\nrates and be subject to the exemptions in effect at the death of the donee; and\n(c) The determination of the applicable rates and exemptions, in effect at the\ndeath of the donee, shall be governed by the relationship of the beneficiary to\nthe donee of the power of appointment.\n(5) (a) The provisions of subsection (3) of this section shall not preclude the taxation,\nat the death of the donee, of any transfer made by means of a power of\nappointment if the transfer was not i n fact reported to or a tax assessed by the\nDepartment of Revenue within the period of limitation prescribed by KRS\n140.160.\n(b) If the transfer by the power of appointment is not reported or a tax is not\nassessed, the period of limitation prescribed in KRS 140.160 shall not begin to\nrun until the death of the donee of the power of appointment.","path":["KRS Chapter 140"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=55418","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:33Z","sha256":"4f7df21fcb54883947f3b74927cab5421b6db75123ee6de2bf32fb842e33870b","source_id":"us-ky","stale":false,"prev":"us-ky/krs-140.030","next":"us-ky/krs-140.050"},"notice":"GroundRules: Original legal text. Not legal advice."}