Also known as: power of appointment · power of appointments · powers of appointments · appointment power
Written by attorneys · grounded in primary & secondary sources — see below
A power created by one person the donor in another the donee or reserved by the donor to determine the transferees of property or the shares the appointees are to take. Instruments creating such powers commonly designate takers in default who receive the property if the power is not exercised. The power may be general or special and presently exercisable or testamentary.
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Lena demanded the entire principal of the family trust by written request to her brother Kai the trustee. The instrument granted her this right without any support limitation or consent requirement. Because the withdrawal right met the criteria for a presently exercisable general power the court recognized it as a power of withdrawal.
The operations director who was not a trustee received authority to redirect profit distributions among siblings according to their contributions. The trust instrument granted this authority over trust property. The director therefore qualified as a beneficiary under the definition that includes persons holding a power of appointment.
A Florida resident executed powers of appointment under a trust created in Delaware. Beneficiaries claimed the appointments republished the trust in Florida. The court examined whether the execution of the powers supplied sufficient contacts for Florida to apply its own validity rules.
A wife executed a release converting her general testamentary power of appointment into a special power. The estate later sought a marital deduction on the theory that the original general power remained intact. The federal court determined whether the state probate judgment controlled the character of the power.
A husband created an inter vivos trust retaining substantial powers including a power of appointment. After his death the surviving spouse sought to include the trust assets in the elective share calculation. The court decided whether the retained powers rendered the trust assets reachable despite the valid inter vivos transfer.
A donee holding a general power failed to appoint and no takers in default were named. The property therefore passed to the donee's estate rather than reverting to the donor. The court applied the default rule that channels the assets through the donee's estate.
A general power permits appointment to the donee the donee's creditors the donee's estate or creditors of the donee's estate. A special power limits appointment to a narrower class of permissible objects. The distinction affects inclusion in the donee's gross estate and the application of the rule against perpetuities.
Supporting sources
A power of withdrawal is a presently exercisable general power of appointment unless it is held by a trustee and limited by an ascertainable standard or exercisable only with consent of the trustee or an adverse party. The definition excludes those two categories so that only unrestricted beneficiary withdrawal rights trigger the special treatment.
…647-649; Doherty & Co. v. Goodman, 294 U. S. 623, 627; Hess v. Pawloski, 274 U. S. 352. The execution in Florida of the powers of appointment under which the beneficiaries and appointees claim does not give Florida a substantial connection with the contract on which this suit is based. It is the validity of the trust agreement,…
…U. S. 84 (1978); and over a trustee whose only connection with the forum resulted from the settlor's decision to exercise her power of appointment there, Hanson v. Denckla , 357 U. S. 235 (1958). In such instances, the defendant has had no "clear notice that it is subject to suit" in the forum and thus no opportunity to "alleviate…
…her a general testamentary power of appointment
…situate, of which I shall die seized or possessed or to which I shall be in any way entitled, or over which I shall possess any
…his or her life to direct the disposition of those trust assets for his or her benefit, as, for example, by the exercise of a power of appointment
Supporting sources
A general inter vivos power must become presently exercisable within the perpetuities period or it is void. General testamentary powers and special powers are valid if the donee cannot exercise them after the period. Interests created by exercise of a valid power are tested separately under the rule.
Supporting sources
If no takers in default are named or the default gift fails the property passes to the donee's estate. This rule channels the failed appointment to the donee's estate rather than creating a reversion in the donor. The absence of an express default clause triggers the default disposition to the donee's estate.
Supporting sources
Yes. The Uniform Trust Code includes within the definition of beneficiary any person other than a trustee who holds a power of appointment over trust property. That person therefore receives the rights and protections afforded beneficiaries including standing to seek information or accounting.
Supporting sources