power of appointment

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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.

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.

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.
References in periodicals archive ?
18) Part VI recommends statutes involving the exercise of powers of appointment (19) while Part VII addresses the importance of creditors' right.
As a result of Max's grant of powers of appointment to Erla, however, the Feinberg grandchildren did not receive vested interests in Max's trusts when he died.
The place to start is to classify powers of appointment for federal income, estate, gift, and generation-skipping transfer tax consequences in the following categories:
The former statute left in place a USRAP provision that contingent non-general powers of appointment could be validly exercised only within the USRAP period.
Permissible Appointments Under General Powers of Appointment
S corp simplifications include: (1) All members of a family (up to six generations) are treated as one shareholder; (2) the number of shareholders permitted increases from 75 to 100; (3) IRAs may be shareholders of bank S corps; (4) unexercised powers of appointment will be disregarded for determining the potential current beneficiaries of ESBTs; and the IRS may waive inadvertent invalid qualified subchapter S subsidiary elections and terminations.
Its anticipated possible use after death permits some premortem planning as well, when drafting wills, trusts, and powers of appointment.
If parliament takes away the powers of appointment of judges from president and transfers them to chief justice then he will have no objection.
The AJCA provided that, in determining an ESBT's PCBs for any period, powers of appointment will be disregarded to the extent they are not exercised by the end of that period.
This is largely because the newly-given power to Tracy Brown is not actually a power of appointment, based on definitions of powers of appointment, legislative history, and the statutory heading, and thus is not covered by provisions under article 10 which would allow creditors to reach the trust.
15) The Treasury Regulations under both [section] 2041 and [section] 2514 state that a general power of appointment includes "all powers which are in substance and effect powers of appointment regardless of the nomenclature used in creating the power and regardless of local property law connotations.
While a discussion of powers of appointment is beyond the scope of this article, it's important to keep in mind that close reading of such powers may offer assistance even when the trust is irrevocable.