Legal Definitions - general power of appointment

A general power of appointment is a legal mechanism, typically established within a will or a trust, that grants a designated individual (known as the "holder" or "donee") extremely broad authority to decide who will ultimately receive specific property or assets. The key characteristic of a general power is its unrestricted nature: the holder can direct the property to themselves, their creditors, their estate, their estate's creditors, or any other person or entity they choose. This stands in contrast to a "special power of appointment," which limits the holder's choices to a predefined group of beneficiaries.

Here are a few examples to illustrate this concept:

• Estate Planning for a Surviving Spouse: Imagine a husband, Robert, creates a will that establishes a trust for his wife, Susan. Robert's will specifies that upon Susan's death, she will possess a general power of appointment over the remaining principal of that trust. This means Susan, through her own will, has the complete freedom to decide who will inherit those assets – whether it's her children, a new spouse, a beloved charity, or even her own estate to settle debts. Robert has intentionally given Susan ultimate control and flexibility over the final distribution of those specific assets, rather than dictating the recipients himself.

  This illustrates a general power of appointment because Susan's authority to direct the assets is not confined to a specific list of beneficiaries Robert might have chosen; she has the unrestricted ability to appoint them to virtually anyone.

• Trust for a Child with Contingency Planning: Consider a wealthy grandparent, Martha, who establishes a trust for her grandson, Alex, to support his education and future endeavors. The trust document includes a provision stating that if Alex were to pass away before reaching a certain age (e.g., 40) without having created his own will, Alex's mother, Carol, would then hold a general power of appointment over the remaining trust assets. This empowers Carol to make the decision about where those funds should go – perhaps to Alex's siblings, a research foundation in Alex's memory, or even to her own estate if she deems it appropriate to cover any outstanding obligations related to Alex. Carol's discretion is not limited to a specific group of Martha's relatives or other named individuals.

  This demonstrates a general power of appointment because Carol, as the holder, has the unrestricted authority to choose any recipient for the trust assets, rather than being limited to a predetermined list of beneficiaries.