Power Of Appointment Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Power Of Appointment, written in plain English, along with examples of how it is used.

What is Power Of Appointment?

It is the right given by one person(creator of will) to the other (eg. Trust) to distribute, transfer or gift his assets upon his death.The two types of power of appointment are 1) General – Where the holder of the will creators property can distribute his assets to anyone and 2) Specific – where the holder or custodian of the property is designated to transfer or distribute the assets only to the specified class or group of people.

History and Meaning of Power Of Appointment

A power of appointment is a legal term that refers to the right granted to one person to transfer, distribute, or dispose of another person's property or assets. In the context of estate planning or wills, it empowers the original owner of the asset to select how the property or assets should be distributed after their death. In most cases, the power of appointment is given by the creator of the will or trust, who designates another party to manage the distribution of the assets.

A power of appointment may be either general or specific. With a general power of appointment, the holder of the property can distribute the assets to anyone, including themselves or their creditors. A specific power of appointment, on the other hand, limits the holder or custodian of the property to transfer or distribute the assets only to the specified class or group of people.

Examples of Power Of Appointment

  1. Mary creates a trust fund with a life insurance policy and gives her sister Sarah a general power of appointment. After Mary's death, Sarah decides to distribute the trust funds to her children equally.

  2. John Smith creates a will with a specific power of appointment, giving his estate trustee the power to distribute his assets to his grandchildren when they reach the age of 25.

  3. James asks his attorney to create an irrevocable trust with a special power of appointment, enabling his wife to use the assets to pay for his minor children's education.

Legal Terms Similar to Power Of Appointment

  • Executor: A person named in a will who is responsible for carrying out the instructions of the will after the testator's death.
  • Trustee: A person or entity who manages a trust and is responsible for its assets' distribution to the beneficiaries.
  • Beneficiary: A person or entity who receives benefits from a trust or a will.
  • Guardian: A person appointed to protect the interests of a minor or incapacitated person in legal matters.