Powers of Appointment

Question 1

What is the power of appointment?

Answer 1

A power of appointment describes the ability of the testator (aka donor) to select an individual (aka donee) who may be given the authority to dispose of certain property under the will.

Question 2

What are the two types of powers of appointment?

Answer 2

General power of appointment
-> no restrictions or conditions on the exercise of the power

Special power of appointment
-> places limitations on the holder’s exercise of the power

Question 3

What is the scope of authority while exercising the power?

Answer 3

Any instrument, unless the donor directs otherwise, may be used to exercise the power.

Testamentary power of donee can only be exercised via will
-> mere residuary clause in a will is not sufficient to exercise a power, but use of the phrase “including any power of appointment I may possess” is generally effective

Question 4

Can the donee contract the power of appointment to another?

Answer 4

If the power is a testamentary power of appointment
-> no because it would defeat the donor’s purpose of having the donee exercise the power of appointment at the donor’s death

If the power is a presently exercisable power of appointment
-> yes it would be valid