A 5-or-5 power is one where a person can appoint to anyone the greater of $5,000 or 5% of the principle. 26 U.S.C. § 2041(b)(2).
If the amount one has power over is greater than the limit, the percentage of the trust principle he had power over that is greater than the limit when it lapsed is included.
- E.g., if someone has power over $75,000 of a million dollar trust when it lapsed, he would have to include 2.5% of the trust when he dies (within 3 years) because $75,000 is 7.5% of $1 million. If it then became worth $2 million before he died, $50,000 would have to be included under 26 U.S.C. § 2041.