Two Species of Power

Powers of Appointment Special PoA: Limited power to appiont;

General PoA: Donee has unrestricted
Generally, not exercisable in favor of (a)
PoA basically gives somebody access to a pile of power to appoint a new owner--may
donee; (b) donee's estate; (c) donee's
money/property to "consume" (read: use) and/or even appoint himself.
creditors; (d) creditors of donee's estate.
"appoint" (read: spend) but just not power to give
to CREDITORS? lmao. And beneficial tax -Underlying prop owned by and taxable "Relation Back Doctrine" Power is both
Ownership
treatment? Whoever thought of this must have to donee @ reciept. owned and taxable to donor. (ie relates back
Interest
been laughing his way home from the courthouse. -Upon exercise taxable as GIFT. pre-transfer, considered to have never left)
Maj: Creditors may NOT (1) acquire " Rltn Back" Applies Again. Donee's
Technically you can also use these to pick new beneficiaries power; (2) compel exercise; nor (3) reach creditors can NEITHER reach nor force the
in a trust/life estate, but the implications here are way property post-conveyace. Also -> power. --> Theory: Not considered to be the
more valuable than that. EXEMPT from forced share of spouse donee's property. Also, free from elective
Creditors' share.
Donee: Holder of power; has ability to exercise. Exception1: Self-Donated. If donee is Interests Exception: Self-Exercise. If donee appoitns
Donor: Creator of power; also donor, creditors MAY reach power to himself, property becomes his in fee
'Object of the Power': People in whose favor the underlying assets. simple and creditors may access
power may be exercised [prospective new owners]; Exception2: Federal bankruptcy trustee [But at least this gives you the option of
Appointee: New owner of the property, per the will reach this power. passing shit to family, instead of creditors]
power;
Default Takers: Recipients of power IFF donee
fails to exercise. Not a Fiduciary. PoA Donee owes no duties; merely must follow the
limits (if any) of the power.

(1) Creation: Donor must manifest intent to (2) Use of Power: Donee may either (a) release; (b) exercise; or (c) fail to or IN exercise.
create a power either EXPRESSLY or Although there is expectation that donee will appoint property in entirety (if this is being used as trust inheirtance
IMPLICITLY. device, not awesome loopholing), he does NOT have to do that. May appint property in trust, or even to a new
Note: No magic words, however -> precatory PoA, & just whittle away (subject to donor's original manifest intetn)
language is never sufficeint.

Designation of Parties: (b) Exercise: Two elements to exercise (1) donee intends to exercise (c) Failure
Donee may be (1) trustee, (2) beneficiareis, (a) Release: If (i) Failure to Exercise
AND (2) limitations on the power are satisfied [note: this has innate
or (3) person w/o interest in the trust/power. released, power by death; (ii) Failure
temporal limiation; cannot be exerciesed/ promised b4 given]
may NEVER be in Attempted
exercised. Lapse/Antilapse: What if donee appoints to a predeceased or Exercise
Timing: Permissible both inter vivos and disclaiming individual?
testamentarily. [Testamentary TRIGGER @ Release may be Gen PoA: Apply jur's antilapse law.
death, see box below in FULL or in Special PoA: Antilapse only if appointee is eligible taker under (i) Failure to
Part. Note: Tech. orignal terms ("object") Exercise: Default
its the powers and MODERN: Trend to always apply antilapse. takers receive the
not the res which property.
Creation of the Power: In additon to limiting
is being released. Limits on Exercise: (1) disp limits; (2) contract limits; (3) exclusivity;
apointment and gen/specic --> must ensure PROPERTY DOES
(4) fraud on the power
Rule of Repugnancy compliance. NOT DEVISE. (Maj)
(1) Gen PoA: No limits: give outright, in trust, in new PoA or Theory: This is a
otherwise. power of specific
Life Estate w/ Power to Consume. Full Release: Special PoA: (Maj) Donee may appoint outright or in trust;
GOOD inter vivos exercise.
Power to Consume: Express unless PoA limits it. Courts split on
provision to the donee, allowing Takers in Default [Note: Traditionally, NO ability for new PoA w/ speci PoA.
ability to invade the principal. recieve property whether extrinsic
Modern:Spec PoA donee may create a general power in an evidence of intent.
[Eliminates Life Tenant concerns re: interest objectof original Power; OR a special PoA, which is limited to
waste, etc.] immediately the original objects] Minority: Residuary
PRESUMPTION of PoA: B/c this is (2)(i) Contract to Future Exercise of Non-Present RoA: clause for GENERAL
preferred structure, if donor grants (BAD) Power of
(1) life estate w/ power to consume NOTenforcable. K never had the rights to convey. Appointemtn, but
(2) without ascertainable support (e.g. "Life estate w/ testamentary PoA to A." -> cannot be not specific, unless
standard limiting power to Partial: exercised until death of donor) contrary language
(health/education/support/maint) -> May release any Exception: IF donee is also donor; may contract to otherwise (in either).
Presumed to be General PoA. aspect of the But see future right of exercise (he owns it) (GOOD) Deflt. Taker Rule:
power--to ensure
(2)(ii) Contract to Release/ NOT Exercise (GOOD) Prsmpt. if no Def.
preservation of
Enforceable. If person K w/ poa could be harmed by its Taker list, but small #
No Estate, No Consumption: Mere remaining, be
WORK exercise, PoA is released to extent of contract. of objects -> SAME.
appointment. Permitted. Essentially sure to specify:
"I am letting you choose how to (1) property that (3) Exclusive v. Non-Exclusive.
dispose of this property of mine, but may still be Exclusive: Donee may appoint ALL property to one of the
appointed [ie still objects, at complete exclusion of the others. [Magic Words Failure OF Attempt: If
I still own it"
subject to power]; "to any" or "to such of"]. by fraud, invalid, or
(2) to whom the Non-Exclusive: Donee MUST appoint SOME amt to every other reason, power fails
property may be singe object. ["To each and every one"] -> default takers (if not
BAD Fee Simple: Power of appoiontment avail) -> donor's estate;
FAILS if completely conveyed to the appoitned to [ie (4) Fraud on a Power/Exercise. Exercise must be per terms
which Objects unless
donee. MUST ENSURE THIS of PoA AND to its objects. Strict.
DOES NOT HAPPEN are still viable]; Rule: An appointment "in favor of" a non-object of a special Capture Doctrine: If
Effect: Becomes his property &/or (3) when power is INVALID. donee's falied exercise
immediately, lose benefits of remaining power of general power
may be exercised. "In Favor Of" -> Where donee adn appointee CONSPIRE to
creditor protection. INDICATED intent to
exercise for (& poss. in cahoots w/) permissible object,
manifest control,
on condition that SOME of benefit goes to 3rd partie.
REVERTS TO DONEE
ENITRE exercise void to extent motivated by improper
in fs
intetn.