Powers of Appointment

Question 1

Powers of Appointment

Answer 1

when a testator/settlor gives another person the power to decide where and to whom the property will go

1. Donor = testator/settlor
2. donee = person who has power of appointment

Question 2

General Power of Appointment

Answer 2

donor leaves NO conditions or restrictions for the appointment of property

Question 3

Testamentary Power of Appointment

Answer 3

can only be exercised in donee’s will and according to donor’s conditions

Question 4

Exercising Power of Appointment - power is effectively exercised in an instrument ONLY IF:

Answer 4

1. the instrument is valid under state law;
2. an intent to exercise the power & it’s consistent with any conditions; AND
3. the appointment is permissible (to a person/group authorized by the donor)

Question 5

Exercise of Power (General Residuary Clause)

Answer 5

Most States - NOT exercised unless donee’s intent to exercise power is referenced

UPC - expresses intent to exercise power ONLY IF:

1. will manifests intent to include property subject to the power; OR
2. power is a general power and the creating instrument does NOT contain a gift if the power is NOT exercised

Question 6

Special Power of Appointment

Answer 6

donee may appoint property ONLY TO those limited persons/groups authorized by the donor

CANNOT appoint property to himself, his estate, his creditors, or his estate’s creditors

Question 7

Ineffective Appointments

Answer 7

appointments to non-authorized persons/groups are deemed ineffective

ineffective appointments pass to the taker-in-default (if no taker-in-default was designated by donor the property passes to donee or donee’s estate)