A son used his dying mother's power of attorney to move $10 million into a partnership and a charity trust a week before she died, and the Tax Court undid it

Nancy Powell was terminally ill and incapacitated in August 2008. Her son Jeffrey held her power of attorney, which allowed gifts only up to the federal annual exclusion. On 8 August 2008 Jeffrey, acting for her, moved cash and securities into a new limited partnership, NHP Enterprises, with himself as general partner, in exchange for a 99 percent limited partner interest for her. The general partner had sole discretion over distributions. The same day Jeffrey transferred her 99 percent interest to a charitable lead annuity trust. The trust would pay a charity an annuity for the rest of her life, and at her death the property would be split between her two sons. She died on 15 August 2008, one week later. The IRS valued the property moved into the partnership at $10,022,570; the estate tax return reported a net transfer of $1,661,422 after discounts. The IRS assessed about $5.88 million in estate tax and $2.96 million in gift tax. On 18 May 2017 the Tax Court ruled that the power of attorney did not authorise the gift, so the transfer to the trust was void or revocable and the partnership interest was still hers at death. It also held that her right, with the other partners, to dissolve the partnership put the assets back in her estate under section 2036(a)(2). It limited the amount included under section 2043 so the same value was not counted twice.