power of appointment

Also found in: Dictionary, Thesaurus, Financial, Wikipedia.
Related to power of appointment: General Power Of Appointment

Appointment, Power of

A power that is conferred upon a donee to dispose of the donor's property by nominating and selecting one or more third-parties to receive it. The property may consist of tangible items like cars, boats, and household items, or it may consist of an intangible interest in property, such as the right to receive dividend income from stocks.

A power of appointment may be transferred only in writing, such as by deed, trust, or will. Donees who receive an oral promise to be given a power of appointment, however, may bring an action for Promissory Estoppel if they have relied to their detriment on that promise. In no case will a court find that a power of appointment had been created unless the donor's intent to create the power is demonstrated; the person who would hold the power is indicated; the circumstances under which the power could be exercised are identified; and the property that is subject to the power is specified.

No particular semantic formula is necessary for the creation of a power of appointment. Any written expression, however informal, will suffice so long as it clearly indicates an intention to create such a power. Thus, a power of appointment may be created by implication. For example, a devise or bequest of property to a person as he or she may designate to receive it or subsequently transfer it gives that person a power of appointment. A testamentary gift to a donee for life, to be at his or her disposal, or with a right to dispose of it at the donor's death, confers a power of appointment. For example, if a donor gives the donee an automobile to use as the donee sees fit during the donee's lifetime, the donor has given the donee a power of appointment over the automobile. Similarly, if a donor gives the donee authority to dispose of the automobile upon the donor's death, the donor has given the donee a power of appointment over the automobile.

There are three classes of powers of appointment. General powers of appointment give donees the power to dispose of the property in any way they see fit. Limited powers of appointment, also known as special powers of appointment, give donees the power to transfer the property to a specified class of persons identified in the instrument creating the power. Testamentary powers of appointment are powers of appointment that typically are created by wills.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

power of appointment

n. the right to leave property by will, transfer, gift or distribution under a trust. Such a power is often found in a trust in which each of the trustors (the creators of the trust, usually a husband and wife) is empowered to write a will leaving his or her share (or some part) to someone. If the power of appointment is not used then it expires on the death of the person with the power.

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.

power of appointment

in property law, authority to appoint persons either from a particular class ‘special power’ or selected by the donee of the power ‘general power’ to take an estate or interest in property.
Collins Dictionary of Law © W.J. Stewart, 2006
References in periodicals archive ?
(26) The court framed the issue presented as whether a special power of appointment could be exercised so as to appoint property in trust.
In the past, a number of letter rulings have determined that a beneficiary who has the power to remove a trustee will be treated as holding any powers held by the trustee for purpose of determining whether the beneficiary holds a general power of appointment. (3) However, for purposes of IRC Sections 2036 or 2038, the Service will no longer include trust property in a decedent grantor's estate where the grantor retains the right to replace the trustee but can replace the trustee with only an independent corporate trustee.4 More recently, the power to remove a trustee and replace the trustee with an independent corporate trustee was not treated as the retention of powers held by the trustee for purposes of IRC Section 2041.
If the estate owner's primary objective is to be sure children or someone other than the surviving spouse receives the principal, rather than a power of appointment, he should consider a qualifying terminable interest property (QTIP) trust, a trust that provides the surviving spouse with income for life, and then passes principal to the designated remainder persons.
If this power is so attributed, the beneficiary will be considered to have a general power of appointment. If the beneficiary has a general power of appointment, then the trust assets will be included in the beneficiary's estate.
Representation by the Holder of a Power of Appointment
Though most statutes preclude a trustee from using decanting to add new beneficiaries, many statutes indirectly permit the addition of beneficiaries by allowing the second trust to include a limited power of appointment that theoretically could be used by the power holder to expand the class of beneficiaries.
10-6.2 Exercise of a power of appointment; conformity to directions of donor
The spokesman while giving the factual position said that Federal Cabinet, in its decision of February 7, 2017, had delegated Federal Government's Power of Appointment to the Finance Minister with the concurrence of the Prime Minister whereby Finance Minister and Prime Minister can appoint CEOs of corporations, statutory bodies, autonomous and semi-autonomous bodies attached with the Finance Division.
A limited power of appointment is a powerful tool for building flexibility into an ILIT.
A current beneficiary is any person who at any time during the tax year is entitled to, or at the discretion of any person may receive, a distribution from the principal or income of the trust (determined without regard to any power of appointment to the extent that such power remains unexercised at the end of the tax year).
While this may solve the grantor trust issue, practitioners had been concerned about whether having certain powers creates adverse transfer tax consequences as to members of the distribution committee--specifically whether there might be a taxable gift by the members back to the grantor when trust distributions are made to the grantor and/or whether having such powers would be considered a general power of appointment that would cause estate tax inclusion in their respective estates under [section]2041.
The terms of the trust confer upon the beneficiary a testamentary limited power of appointment (LPOA).