North Carolina § 31D-5-503 - Power to withdraw.

§ 31D-5-503. Power to withdraw.

For purposes of this Article, a power to withdraw property from a trust is treated as a presently exercisable general power of appointment to the extent of the property subject to the power to withdraw. The lapse, release, or waiver of a power to withdraw property from a trust shall not be deemed to be an exercise of the power. History (2015-205, s. 3(a).) NORTH CAROLINA COMMENT By providing in subsection (a) that a power of withdrawal is to be treated as a presently exercisable power of appointment, the rule in G.S. 31D-5-502 that appointive property is subject to a creditor claim only when and to the extent that the power is exercised is also applicable to a power of withdrawal. See the North Carolina Comment to G.S. 31D-5-502. This brings forward generally the rule in G.S. 36C-5-505(b)(1) regarding powers of withdrawal in a trust exercisable by a powerholder other than the settlor of the trust. The drafters also omitted the provisions of subsection (b) of the Uniform Powers of Appointment Act to substitute in their place and bring forward the provisions in G.S. 36C-5-505(b)(2) that the lapse, release or waiver of the power to withdraw property from a trust should not be deemed to be an exercise of power. In contrast, subsection (b) of the Uniform Powers of Appointment Act provides that the lapsed release or waiver of the power to withdraw property from a trust is treated as a presently exercisable power of appointment only to the extent that the value of the property affected by the lapsed release or waiver exceeds the greater of the amount specified in section 2041(b)(2) or 2514(e) of the Internal Revenue Code, as amended. Because of the modifications made in this section of the Uniform Powers of Appointment Act the Official Comment was deleted, except for the following comment which applies to this section: Subsection (a) treats a power of withdrawal as the equivalent of a presently exercisable general power of appointment, because the two are ownership-equivalent powers.