Power of appointment Flashcards
(14 cards)
What is a power of appointment?
Ability to give property away. Is not subject to a fiduciary duty.
- The reason this is the only definition, is because if we give another person responsibility, it turns into a trustee
This power allows the donee to decide how to allocate trust assets.
Who is the donor of power?
A person who creates a power of appointment.
The donor establishes the terms under which the power can be exercised.
What is a donee?
Powerholder/A person who holds a power of appointment.
The donee has the authority to exercise the power of appointment.
What are the objects of power?
People to whom property is appointed according to the trust.
also known as permissible appointess
These individuals are identified in the trust document as potential beneficiaries.
What is appointive property?
Property subject to power of appointment.
This refers to the assets that can be distributed by the donee.
What is an appointee?
A person who becomes an appointee when a power is exercised in favor of an object.
This means they are the actual recipients of the property when the donee makes an appointment.
Who are takers in default?
The persons who will receive the property if a donee fails to exercise a power of appointment.
They are the fallback beneficiaries designated in the trust.
What is a general power of appointment?
Treats holders as if they own the property (relevant for taxes)
CAN give to oneself
This power allows the donee to distribute property in a broad manner, similar to ownership.
What is a nongeneral power?
(specific-limited)
A power that is not exercisable in favor of the donee, his estate, his creditors, or the creditors of his estate.
not equivilent to ownership
CANNOT give to oneself
This type of power limits the donee’s ability to distribute property.
Fill in the blank: A _______ power allows the donee to give property to himself.
General
General powers provide a wider range of distribution options.
Fill in the blank: A _______ power cannot give to oneself.
Nongeneral
This limitation distinguishes it from general powers.
Tax considerations general POA
The income from the appointive property is taxable to the donee
POA subject to “acertainable standards” execption to general POA tax considerations
HELMS accounts and other General powers subject to an ascertainable standard
are treated as nongeneral for creditor rights and tax law.
Holding in Irwin Union Bank v. Long as to creditors and power of appointment
Creditors may not reach property subject to a general power of appointment if power has not been exercised.
“lapse of power of appointment is considered a realease of such power”
