Future Interests

Question 1

What are the basic categories of future interests?

Answer 1

Future Interests Retained by the Transferor and Future Interests Held by Someone Other Than the Transferor

These categories include Reversion, Possibility of Reverter, Power of Termination, Remainder (Vested or Contingent), and Executory Interest (shifting or springing).

Question 2

What is a power of appointment?

Answer 2

A power created by the donor of property enabling another individual (the donee) to designate transferees of the property and their shares

The donor may limit the donee’s power by specifying conditions for its exercise.

Question 3

What qualifies as a power of appointment?

Answer 3

A power of attorney qualifies as a power of appointment

Powers of appointment are commonly used in trusts and wills.

Question 4

What happens if a power of appointment is exercised impermissibly?

Answer 4

Any property thus appointed passes to the taker in default

Question 5

Define a general power of appointment.

Answer 5

The donee may appoint to anyone, including themselves, their estate, or creditors

This type of power provides broad flexibility.

Question 6

Define a special power of appointment.

Answer 6

The donee is limited by the donor’s selection of the ultimate takers

The donee must exercise it in compliance with the donor’s expressed intention.

Question 7

What is a testamentary power?

Answer 7

A power only exercisable by will

Question 8

What is an inter vivos power?

Answer 8

A power exercisable at any time by deed

Question 9

What is required for the exercise of a power of appointment?

Answer 9

The power must be exercised in the manner specified by the donor

A testamentary power exercised by inter vivos conveyance will be ineffective.

Question 10

What does it mean to release a power of appointment?

Answer 10

A donee may release, or destroy, a power of appointment in most circumstances

This is different from failure to exercise a power.