Cal. Code Regs. tit. 18 § 13692
A transfer subject to inheritance tax includes the value of property in respect of which the decedent by taxable inter vivos gift or by transfer at death created, possessed, exercised or released certain powers of appointment. A power may be generally defined as a power or authority given (by a donor, creator of the power) to a person (donee of the power) to designate the person or persons (appointees under the exercise of the power) who shall own, possess or enjoy the property or interest therein. If the donee of the power does not exercise the power the persons who otherwise receive the property or interest therein are generally termed the "takers in default" of the exercise of the power. In general, the creation or gift of the power is a taxable transfer from the donor to the donee of the power and the exercise or nonexercise of a general power is a taxable transfer from the donee to the appointees or takers in default. With certain exceptions (see Revenue and Taxation Code Section 13695 and Section 13693 of this Article) the exercise or nonexercise of limited powers by a donee is not taxable.
NOTE: Rules of general application are contained in Section 13692.1.
As to rules applicable to general powers of appointment possessed by a deceased donee whose death occurred on or after September 17, 1965, see Sections 13696 and 13697.
For rules applicable to the creation of powers of appointment see Section 13694.
Special provisions regarding limited powers of appointment are dealt with in Section 13693.
For treatment of limited powers of appointment exempted as being for charitable purposes see Revenue and Taxation Code Sections 13699 through 13701.
As to computation of the tax where a person receives both an independent transfer and a power of appointment, see Sections 13408.1 and 13801.3.
NOTE: Reference: Section 13692, Revenue and Taxation Code.
Cal. Code Regs. Tit. 18, § 13692