Updated: May 12
A power of appointment in a Will or Trust allows the testator (the person making the will) to give someone else the power to decide how some or all of their property will be distributed after their death. The person given this power is known as the "appointee," and they can be given the power to direct the property to whomever they choose.
There are two main types of appointments in a Will or Trust. A general power of appointment allows the appointee to direct the property to anyone, including themselves or their creditors. A special power of appointment, on the other hand, is more limited in scope and only allows the appointee to direct the property to certain individuals or groups.
A power of appointment can be useful in a number of situations particularly when you wish to relieve the Executor or Trustee from having to exercise judgment in an area where he lacks special expertise to dispose of an estate asset in a way that maximizes the value of that asset. For example, a testator may want to give a power of appointment to his or her literary agent who will know how to maximize the value of that asset. Or, a testator might give a power of appointment to his or her children so that they may decide among themselves how such asset should be divided. By giving an appointee this power, the testator can provide greater flexibility and control over the distribution of his or her estate.