Also known as: takers in default of appointment · default taker
Written by attorneys — see sources below.
A person who takes part or all of the appointive property to the extent that the power is not effectively exercised. The clause identifying such persons is called the gift-in-default clause.
Theresa Tucker created a trust giving her son Talia Torres a power to appoint trust principal among her grandchildren. The instrument named Talia Torres's children as takers in default. In her will Talia Torres appointed the principal to her daughter Tori Taylor, who was already a taker in default. Tori Taylor receives the property under the gift-in-default clause rather than under the appointment.
Tristan Thompson held a testamentary power over family trust assets with no named takers in default. His attempted appointment to a nonexistent entity failed. The appointive property passed to Tristan Thompson's estate as the default taker under the governing rule for an ineffective exercise of a general power.
Joseph W. Sefton, Jr. executed his will on September 7, 1955. The will created a testamentary trust for the benefit of his son Thomas W. Sefton during the son's lifetime. Upon the son's death the trust was to terminate and its assets were to be distributed according to the will's terms. Three quarters of the trust estate was to be distributed to the son's then living issue as the son should appoint by his last will and testament, or in default of appointment to the issue on the principle of representation. Joseph died in 1966. Thomas W. Sefton died in 2006 after executing a will on August 26, 1994. At the time of his death his then living issue included Thomas Jr. from his first marriage, Harley K. Sefton and Laurie Sefton from his second marriage, and several grandchildren. His will allocated the appointive property to two irrevocable trusts, one benefiting Harley and his children and the other benefiting Laurie and her child, with no allocation to Thomas Jr. The trustee distributed approximately $37.8 million in cash, securities, and related income to the Harley Family Trust and $18.8 million to the Laurie Family Trust, along with loss carryovers, but made no distribution to Thomas Jr. In 2010 Thomas Jr. filed a petition in the probate court challenging the distribution from his grandfather's trust. Harley as trustee of the Harley Family Trust filed a response and objection to the petition. Wells Fargo as trustee of the Laurie Family Trust filed a demurrer. The probate court sustained the demurrer and dismissed the petition. Thomas Jr. appealed the dismissal. This court issued its opinion in Sefton I in 2012, concluding that Father's power of appointment was nonexclusive. On remand the parties stipulated to allow Thomas Jr. to file a supplement to his petition and Harley and Wells Fargo to file supplements to their responses. Thomas Jr. sought one third of the appointive property as a taker in default. After a trial the probate court awarded Thomas Jr. $565,350 plus interest representing seven percent of a one seventh share and directed that one third of the award be paid from the Laurie Family Trust and two thirds from the Harley Family Trust. Thomas Jr. appealed the judgment.
View caseThe property passes to the donee or the donee's estate under the default rule for general powers. This outcome follows because the donor did not provide an effective gift-in-default clause to redirect the property elsewhere.
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The appointee takes under the gift-in-default clause rather than under the appointment to the extent the appointee would have received the property without the appointment. This rule prevents the appointment from altering the donor's disposition in that limited respect.
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The persons identified in the gift-in-default clause take the appointive property. If the clause names a class, members of that class receive the property according to the clause terms.
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