Legal Definitions - appointive asset

An appointive asset refers to property or funds over which an individual (known as the "holder" or "donee") has been granted the legal authority to decide who will ultimately receive it, or how it will be distributed. This authority, often called a "power of appointment," is typically established by another person (the "donor" or "settlor") through a legal document such as a will or a trust. The holder of the power does not own the asset themselves but acts as a designated decision-maker for its ultimate disposition, usually within specific guidelines set by the original owner.

Here are some examples to illustrate this concept:

• Example 1: Family Trust Distribution
  A wealthy grandparent sets up a trust fund for their three grandchildren. Instead of specifying exact amounts for each grandchild, the grandparent includes a provision in the trust that grants their daughter (the grandchildren's mother) the power to decide how the trust's principal will be divided among her children when the youngest grandchild turns 25. The trust funds are the appointive asset.

  Explanation: The daughter does not own the trust funds, but she has been given the "power of appointment" to determine the specific share each of her children will receive. She can "appoint" the assets to her children in proportions she deems appropriate, as per the grandparent's wishes.

• Example 2: Art Collection Bequest
  In their will, an art collector leaves their extensive collection of antique maps to their spouse for the spouse's lifetime. The will also states that upon the spouse's death, the spouse has the power to designate which of their two children will inherit specific maps from the collection. The antique map collection is the appointive asset.

  Explanation: The spouse enjoys the collection during their lifetime. However, they have the legal authority to "appoint" specific maps to specific children, rather than the entire collection being divided equally or randomly. This power allows the spouse to make thoughtful decisions about the final recipients of the individual pieces.

• Example 3: Charitable Foundation Grants
  A philanthropist establishes a charitable foundation with a substantial endowment. The foundation's charter specifies that the board of trustees has the power to annually designate a portion of the foundation's investment income to various non-profit organizations working in environmental conservation. The annual portion of the investment income available for grants is an appointive asset.

  Explanation: The board of trustees does not own the foundation's income. Instead, they hold the power to "appoint" which specific environmental charities will receive funding each year, aligning with the foundation's mission. This allows flexibility in responding to current needs and effective organizations.