Legal Definitions - Special Power of Appointment

A Special Power of Appointment is a legal provision, often included in a will or trust, that grants a designated individual (known as the "donee") the authority to decide who will receive certain assets or property from the original owner (the "donor"). The defining characteristic of this power is that the donee's choice is restricted to a specific, predefined group of beneficiaries. Crucially, the donee is expressly prohibited from appointing the assets to themselves, their own estate, their creditors, or the creditors of their estate. This mechanism allows the donor to maintain some control over the ultimate distribution of their wealth while entrusting a trusted person with the flexibility to make final selections within specific boundaries.

• Example 1: Family Trust for Future Generations

  A wealthy individual establishes a trust for the benefit of their future descendants. The trust document names their eldest child, Sarah, as the donee of a special power of appointment over a portion of the trust's assets. The terms state that Sarah can distribute these funds among her own children (the donor's grandchildren) as she deems appropriate, considering their education and specific needs, but she cannot give any of the money to herself, her husband, or her creditors. This is a special power because Sarah's discretion is limited exclusively to her children, and she cannot personally benefit from the appointment.

• Example 2: Charitable Bequest with Flexibility

  A philanthropist's will includes a clause granting their executor, Mr. Davies, a special power of appointment over a significant sum of money. The will specifies that Mr. Davies must distribute this sum among a list of five pre-approved environmental conservation organizations. He has the discretion to decide how much each of the five organizations receives, but he cannot choose any other charity, nor can he keep any portion of the funds for himself or use them to settle his own debts. This illustrates a special power as the donee (Mr. Davies) must choose from a limited, specified group of beneficiaries (the five charities) and cannot benefit personally.

• Example 3: Distribution of a Unique Collection

  An avid antique car collector leaves a will stating that their prized collection of vintage automobiles should be distributed by their trusted mechanic and friend, Maria. The will grants Maria a special power of appointment, allowing her to select which specific cars go to which of the collector's three nieces and two nephews, based on their individual interests and ability to care for the vehicles. Maria cannot, however, claim any of the cars for her own garage, sell them to pay her business expenses, or give them to anyone outside the specified group of nieces and nephews. This demonstrates a special power because Maria's authority is confined to a particular set of assets and a defined group of family members, with no personal benefit allowed.