Estate of Kurz v. Commissioner 68 F.3d 1027 (1995) Mrs. Kurz was the beneficiary of two trusts left by her husband. The first trust, the 'Marital trust', allowed her to take as much $$$ as she wanted per year. The second trust, the 'Family Trust', could not be touched by Kurz until the first trust was drained, and even then, she could only take 5% of the principle per year. The Marital Trust had enough money in it that Kurz never drained it during her lifetime. The Marital Trust was large enough that Mr. Kurz never expected Mrs. Kurz could ever drain the whole thing (barring some emergency) Mrs. Kurz died. The estate filed tax returns that included 100% of the Marital Trust, but 0% of the Family Trust as assets. The IRS sued, claiming that the estate owed taxes on the value of the Family Trust, since Kurz owned it. The Tax Court found for the IRS. The Tax Court found that Kurz held a general power of appointment over 5% of the Family Trust and should pay taxes on 5% of the value of the Family Trust. The Appellate Court affirmed, and found that Kurz owed taxes on 5% of the value of the Family Trust. Kurz argued that the power to appoint 5% of the Family Trust was not exerciseable, since the Marital Trust was never drained. The Appellate Court found that exercising of the Family Trust was within Kurz's power. She could have drained the Marital Trust at will. At that point she could have taken 5% of the Family Trust. Therefore she did control the Family Trust and therefore 'owned' it as far as the IRS was concerned.