Ch 9: Powers of Appointment Flashcards
(17 cards)
What is a power of appointment? (T)
A power of appointment describes the ability of the testator (donor) to select an individual (donee) who may be given the authority to dispose of certain property under the will, similar to an agent.
Can donees transfer their powers of appointment? (T)
No. The power is personal to the donee, meaning the donee cannot transfer the power to anyone else.
What kind of powers may the powers of appointment be? (T)
The power may be (1) testamentary (i.e., exercisable only by the donee’s will) or (2) presently exercisable (i.e., the donee may exercise the power during his lifetime).
What are the two categories of powers of appointment? (T)
There are two categories of powers of appointment: general powers and special powers of appointment.
What is a general power of appointment? (T)
A general power of appointment is one in which there are no restrictions or conditions on the donee’s exercise of the power.
Who may the donee appoint as a new owner in a general power of appointment? (T)
Accordingly, the donee may appoint himself, his estate, his creditors, or the creditors of his estate as a new owner.
What happens to creditors if the donee exercises a general power? (T)
If the donee exercises a general power, his creditors can reach the appointive property. The same holds true if the donee is also the donor of the power.
What happens if a person fails to exercise a general power of appointment? (T)
Failure to exercise a general power of appointment causes the appointive property to revert back to the donor’s estate.
What is a special power of appointment? (T)
A special power of appointment is more limited than a general power of appointment, allowing the donor to specify certain individuals or groups as the objects of the power, to the exclusion of others.
Unlike with a general power, what happens to creditors under a special power of appointment? (T)
Unlike with a general power, creditors are prevented from reaching the appointive property—even if the donee exercises the power—unless the transfer of property was intended to defraud the creditors.
What is a nonexclusive special power of appointment? (T)
A nonexclusive special power of appointment allows the donee to exercise the power to appoint among a class of individuals (e.g., grandchildren).
Why is the power in a nonexclusive special power of appointment nonexclusive? (T)
The power is nonexclusive because the donee cannot exclude a member of the class. He must appoint an equitable share to all appointees to prevent favoring one or two appointees over all others.
If the donee fails to exercise the power in a nonexclusive special power of appointment nonexclusive, what happens? (T)
If the donee fails to exercise the power, and if no gift in default of appointment is provided for in the will, the court will imply a gift to the objects of the special power and direct a distribution.
What may be used to exercise a power of appointment? (T)
Unless the donor directs otherwise, any instrument may be used to exercise a power of appointment.
If a power is testamentary, what instrument may exercise it? (T)
If the power is testamentary, then it may be exercised only by a will.
What do most jurisdictions hold regarding residuary clauses and powers of appointment? (T)
Most jurisdictions hold that a residuary clause alone is insufficient to exercise any power of appointment held by the testator as donee.
What happens if there is a blanket power of appointment included in the residuary clause? (T)
If there is a blanket power of appointment included within the residuary clause, then the courts will give effect to the power. A phrase such as “including any power of which I may have a power of appointment” constitutes a blanket power of appointment.
