Define: Power Of Appointment

A power of appointment is a legal authority granted to an individual, known as the donor or holder of the power, to designate who will receive certain property or assets at a later date. This authority is typically granted through a legal instrument such as a will, trust, or deed. The holder of the power, referred to as the donee, has the discretion to appoint the property to one or more beneficiaries according to the terms specified in the governing document. Powers of appointment can be general, allowing the donee to appoint the property to anyone, including themselves, or they can be limited or special, restricting the choices of beneficiaries. Powers of appointment provide flexibility in estate planning and can be used to adapt to changing circumstances or to address family dynamics. Properly drafting and executing a power of appointment is crucial to ensure that the donor’s wishes are carried out and to avoid potential disputes or challenges.

The legal authority to decide who will receive someone else’s property, usually property held in a trust. Most trustees can distribute the income from a trust only according to the terms of the trust, but a trustee with a power of appointment can choose the beneficiaries, sometimes from a list of candidates specified by the grantor. For example, Karin creates a trust with power of appointment to benefit either the local art museum, symphony, library or park, depending on the trustee’s assessment of need.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March, 2024.