Legal Definitions - Presently exercisable power of appointment

A presently exercisable power of appointment refers to a legal right given to an individual (often called the "donee" or "holder of the power") that allows them to decide who will receive certain property or assets. The key characteristic is that this power can be used immediately by the donee during their own lifetime, rather than only upon their death through a will. It grants the donee the flexibility to direct the distribution of assets while they are still alive.

Here are some examples to illustrate this concept:

• Family Trust for Education: A grandmother establishes a trust for the benefit of her grandchildren's education. She names her son, David, as the trustee and grants him the power to direct the distribution of trust funds to any of his children (the grandchildren) for their college expenses at any time during David's life. David can assess his children's educational needs as they arise and release funds accordingly.

  Explanation: David holds a presently exercisable power of appointment because he can make decisions and direct the distribution of funds from the trust *now*, while he is alive, whenever his children have qualifying educational needs. He doesn't have to wait until his death to exercise this authority.

• Spousal Lifetime Access Trust: A husband creates a trust for his wife, Eleanor, upon his passing. The trust agreement specifies that Eleanor has the power to withdraw any amount of the trust's principal for her own health, maintenance, support, or even to gift to their children, at any point during her lifetime.

  Explanation: Eleanor possesses a presently exercisable power of appointment because she can choose to use or distribute the trust assets *immediately* and whenever she deems appropriate during her life, without needing to include instructions in her own will. This provides her with significant financial flexibility.

• Real Estate Succession Planning: A property owner, Mr. Chen, wants to ensure his vacation cabin remains in the family but wants his daughter, Mei, to have the flexibility to decide which of his grandchildren ultimately receives it. He creates a deed that transfers the cabin to a trust, naming Mei as the trustee and giving her the power to appoint the property to any of his grandchildren *at any time* during her life.

  Explanation: Mei holds a presently exercisable power of appointment. She can decide *right now*, during her lifetime, which grandchild or grandchildren will receive the vacation cabin, based on their circumstances or interest, rather than having to specify it in her own will.