Legal Definitions - enabling power

An enabling power, also widely known as a power of appointment, is a legal right or authority granted by one person (the "donor") to another person (the "donee") to decide who will receive certain property or assets at a future time. Essentially, it *enables* the donee to "appoint" or designate the ultimate recipients (the "appointees") of the donor's property, rather than the donor making that decision directly. This power can be very broad, allowing the donee to choose anyone, or it can be limited, restricting the donee's choice to a specific group of people or organizations.

Here are some examples illustrating enabling power:

• Estate Planning Through a Will:

  Mr. Thompson, a wealthy art collector, creates a will. Instead of directly naming which of his grandchildren will inherit his valuable collection of antique maps, he includes a clause stating: "I grant my daughter, Sarah, the power to decide which of my grandchildren, John, Emily, or Michael, shall receive my antique map collection upon my death, and in what proportions, as she deems best."

  This illustrates an enabling power because Mr. Thompson (the donor) has given his daughter Sarah (the donee) the authority to make a future decision about the distribution of his property. Sarah is *enabled* to appoint the specific grandchildren (the appointees) who will receive the maps, giving her flexibility to consider their interests or needs after her father's passing.

• Charitable Trust Distribution:

  A philanthropic couple establishes a perpetual charitable trust with a significant endowment. The trust document specifies: "The trustee, Evergreen Bank, shall have the power to distribute up to 15% of the trust's annual income to any qualified non-profit organization focused on environmental conservation within the Pacific Northwest, as the trustee determines most impactful each year."

  Here, the philanthropic couple (the donors) has granted Evergreen Bank (the donee/trustee) an enabling power. This power *enables* the bank to select specific environmental charities (the appointees) from a defined category and distribute funds to them. This allows the trust to adapt its giving to current needs and effective organizations without the donors having to name every potential charity upfront.

• Life Insurance Policy in a Divorce Settlement:

  As part of a divorce agreement, Mr. Rodriguez is required to maintain a $750,000 life insurance policy for the benefit of his two minor children. To ensure flexibility as the children grow, the settlement states: "Mr. Rodriguez shall maintain the policy, and his former spouse, Ms. Lee, shall have the power to designate the beneficiaries of this policy among their two children, ensuring an equitable distribution as she deems appropriate when the children reach adulthood."

  In this scenario, the divorce settlement (or implicitly, Mr. Rodriguez as the policyholder/donor) grants Ms. Lee (the donee) an enabling power over the life insurance proceeds. This power *enables* Ms. Lee to decide how the $750,000 will be divided between their children (the appointees) in the future, allowing for adjustments based on their individual circumstances without needing to modify the policy or court order repeatedly.