Legal Definitions - capture doctrine: trusts

The capture doctrine in trust law is a principle that helps determine what happens to property when a person (called the "donee") tries to give it away using a "power of appointment," but their attempt fails for some reason. A power of appointment is a legal right, granted by someone else (the "donor"), to decide who will receive certain property from a trust or estate.

Under the capture doctrine, if the donee of a general power of appointment attempts to give away property, but that specific appointment is ineffective or invalid, the property can still be "captured" and become part of the donee's own estate. This occurs if there is clear evidence that the donee intended to treat that property as if it were their own, fully withdrawing it from the original trust that created the power, even if their specific attempt to appoint it failed.

The most common and compelling evidence of this intent is when the donee "blends" the property subject to the power of appointment with their own personal assets, treating them as a single pool of wealth. If such an intent is found, the property is "captured" and redirected to the donee's estate, rather than reverting to the original donor's estate or going to default beneficiaries. If the donee's failed attempt was to place the property into a new trust, the captured property would then form a "resulting trust" for the benefit of the donee's estate.

Here are some examples illustrating the capture doctrine:

• Example 1: Blending in a Will with a Failed Beneficiary

  Imagine Aunt Clara's will gives her nephew, David, a general power of appointment over a trust fund. In his own will, David states, "I give all my property, including any property over which I have a power of appointment, to my beloved friend, Emily." However, Emily tragically passes away before David, and David's will does not name an alternate beneficiary for this specific gift.

  How it illustrates the doctrine: David clearly demonstrated an intent to blend the appointive property with his own assets by treating them as one pool ("all my property, including any property over which I have a power of appointment"). Even though the specific appointment to Emily failed because she predeceased him, his intent to fully control and dispose of the appointive property as his own is evident. Under the capture doctrine, this property would be "captured" and become part of David's estate, to be distributed according to the residuary clause of his will or by intestacy laws, rather than reverting to Aunt Clara's original trust.

• Example 2: Attempted Appointment to an Invalid Trust

  Mr. Henderson's father established a trust giving Mr. Henderson a general power of appointment over its assets. In his own estate plan, Mr. Henderson creates a new living trust for his grandchildren, stating that "all my assets, including the property from my father's trust over which I hold a power of appointment, shall be transferred into this new trust." However, due to a technical drafting error, the new trust instrument fails to meet a specific legal requirement for validity in that jurisdiction, making the entire new trust invalid.

  How it illustrates the doctrine: Mr. Henderson demonstrated a clear intent to "capture" the appointive property by attempting to combine it with his personal assets and transfer it into a single, unified new trust. Despite the failure of the new trust itself, his actions show he intended to fully withdraw the appointive property from his father's original trust and treat it as his own. The capture doctrine would apply, causing the appointive property to become part of Mr. Henderson's estate, rather than reverting to his father's estate or original trust beneficiaries.

• Example 3: Specific Failed Appointment with General Residuary Intent

  Sarah has a general power of appointment over a significant portion of her deceased mother's trust. In her will, Sarah specifically directs that "$500,000 from the trust over which I have a power of appointment shall go to my cousin, Mark." The rest of her estate, including any remaining appointive property, is directed to her alma mater. However, Mark is later found to have committed fraud against Sarah, and a state law prevents beneficiaries who commit certain crimes against the testator from inheriting.

  How it illustrates the doctrine: While the specific appointment of $500,000 to Mark fails due to legal disqualification, Sarah's will demonstrates a broader intent to control and dispose of the appointive property as her own. By specifically allocating a portion and then including the "remaining appointive property" in her residuary clause alongside her own assets, she has blended it and shown an intent to fully integrate it into her estate plan. The capture doctrine would apply, meaning the $500,000 intended for Mark would not revert to her mother's trust but would instead be "captured" into Sarah's estate and pass to her alma mater as part of her residuary estate.