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.
109) trustees powers of appointment to anyone in the world (apart from excepted persons) have been held valid in some first instance decisions.
6(a) governs the exercise of all powers of appointment, including general powers of appointment:
Other Powers--There are also potential tax consequences with the power to exercise the principal's powers of appointment and the power to exercise the principal's incidents of ownership over life insurance policies insuring the life of the agent.
2514(c)(3)(A) a power exercisable only in conjunction with the creator of the power is not a general power of appointment, the IRS ruled that the members of the Distribution Committee did not possess general powers of appointment on account of the Grantor's consent power.
64) The section goes on to explain that powers that are not powers of appointment include, though are not limited to, "a power to revoke a disposition previously made, a power during minority to manage property vested in an infant, a power to disburse the principal of a trust, a power to sell in a mortgage and a power in a life tenant to make leases.
So as not to confuse the agent in this regard, it might be a good idea to specifically state in the durable power of attorney that the power to exercise testamentary special and general powers of appointment is one of those powers that the agent is expressly prohibited from exercising.
Unfortunately, this 25% rule can make contingent reversions and powers of appointment prohibitive when a grantor reaches his mid-60s, just when such instruments are most needed.
Trust provisions frequently targeted for modernization through decanting include adding or changing beneficiaries, granting limited powers of appointment, accelerating or postponing distributions, changing trust situs, and extending the terms of trusts or terminating old trusts.
Chaudhry Brothers must accept the decisions of the majority party and powers of appointment of new President must be handed over the General Council, which is the Supreme Body, he held.
Valuation problems may arise in the situation of simultaneous deaths, and with life estate interests, interests in discretionary trusts, and powers of appointment.