This article deals with trusts. A power of Appointment is the right to appoint or give away or change beneficiaries or one person’s beneficial interest. A non-general, or limited power of appointment lets a person, including the person who set up the trust (the grantor), give the assets to anyone except the grantor or the grantor’s estate or creditors. If the grantor has the power, we say it is a reserved power. Although he can’t give the asset back to himself, he can change the beneficiaries.
If you want to know more about powers of appointment, give Attorney Tom Mullen of Quincy Massachusetts a call.
Limited Powers of Appointment
When you assign someone a limited power of appointment, you are giving them the power to direct the property of your trust among a limited number of people-but never yourself. Unless you give someone a power of appointment, then those people who are named in your trust when you die will be the only ones who can receive your assets. This may or may not be a good thing depending on their circumstances at your death. Giving someone a power of appointment gives them the right to name other beneficiaries to your trust, or change the beneficiaries. Limited powers of appointment limit the beneficiaries the holder of the power can designate.
General Powers of Appointment
When you give someone general powers of appointment, then he or she can name anyone that they choose as the beneficiaries of your trust. There is no limit to who or how many beneficiaries that he or she may choose. If your spouse is given general power of appointment over your trust, then he or she can change all of your beneficiaries and could even name someone whom you may not have chosen as a beneficiary. That is why many choose to give limited powers of appointment.
Why Give Powers of Appointment?
There are many circumstances which may arise that could make giving a power of appointment necessary. One of the named beneficiaries of your trust could be filing a bankruptcy; or getting divorced; or may be sued for running over someone. Or for example, you may have a power of appointment in your will. If you have grandchildren who are born after you die, then the person to whom you gave the power of appointment can name them as your beneficiaries, when otherwise they could not be named. If you think that you may wish to grant someone powers of appointment over your trust, give Attorney Thomas R. Mullen a call today at 617-770-1050.
