An authority granted to a person (the donee or appointor) to designate who will receive property or benefit from property, typically from a trust or estate. May be general (exercisable in favor of anyone, including the donee) or limited/special (exercisable only in favor of a defined class, excluding the donee). Used to provide flexibility in estate planning.
When someone gives you the right to decide who gets certain property, even though it's not your property. Example: Your mother's will creates a trust and gives you a power of appointment over the trust assets. When you die, you get to decide (through your own will) which of your children receive the trust property. Your mother is letting you make that decision because you'll know your children's circumstances better than she could predict.
⏱ When you'll encounter this term
- Reviewing trusts where you're given authority over distributions
- Planning for multi-generational wealth transfer
- Complex family trusts
- Estate tax planning (in jurisdictions with estate taxes)
- Making your will when you hold a power of appointment
"When Grandad set up his trust, he gave Dad a power of appointment over the trust assets. Dad can benefit from the trust during his life, and when he dies, he gets to decide which of us grandchildren receive the remaining trust property."
💡 Did you know?
Powers of appointment provide flexibility for future circumstances you can't predict. A general power (can appoint to anyone including yourself) gives you broad control but may cause tax issues in some jurisdictions. A limited power (can only appoint to specific people, not yourself) provides flexibility while keeping assets outside your taxable estate.