In contrast, a limited or special appointing authority allows the holder to reallocate trust or estate assets only within a specific group (e.g., only grandchildren) in certain circumstances. For example, the group could be limited to descendants of the testator or charities, which could mean that the owner could not allocate the assets to its own children or creditors. Another way to use a limited appointment authority is to allow the holder to give property to himself or herself only if it is intended for the incumbent`s health, education, support and maintenance. In McKelvy v. Terry, 370 Mass. 328, 346 N.E.2d 912 (1976), the donor conferred on the donee a limited testamentary power of appointment, which was to be exercised “by reference [in the donee`s will] to the limited power of appointment granted to him in this case”. The donee`s will provided for the distribution of “all the remains of my estate, including extinguished legacies and inventions (and also all property over which I have power of appointment by any instrument, since I intend to exercise all the powers I may have at my death).” The Court found that this residual provision constituted a sufficient exercise of the power and noted (in Case 332) that “the meaning or form of the relevant clause of [the donee`s] will is sufficiently consistent with all the requirements of [the donor`s] trust indenture. This instrument requires a “reference” to power, not a specific reference, and we believe that. that the residual clause of the will is an appropriate reference, although it includes any power created by an instrument for the benefit of the donee” (emphasis added). Referring to Shine v. Monahan, the court stated (at p.
333): “We considered that it was not necessary to observe exactly the formality specified by the donor if the reconciliation was to achieve its fundamental objective. In this case, less leniency may be required because the donor was not required with respect to a specific reference. These extracts from the McKelvy case imply the specificity of a specific benchmark requirement and emphasise that compliance with such a requirement cannot be easily circumvented. The wording of the Robinson estate – whereby Sylvia bequeathed to her daughter “any other property” over which I may have the power of appointment” – omits the reference in section 2.4 to “my estate and property.” As explained in more detail below, this omitted sentence is significant. (a) The applicant`s reliance on Amory v. Meredith, 7 Allen 397 (1863), is moved. The Amory provision provides that a general testamentary power of appointment is deemed to have been exercised by a general residual clause in the donee`s will, unless a contrary intent is proved. The rule does not apply if the donor requests that the power be exercised by special reference.
See McKelvy v. Terry, 370 Mass. At 331-332, 346 N.E.2D 912. See also National Shawmut Bank v. Joy, 315 Mass., pp. 462, 53 N.E.2d 113. It is important to identify the parties to the transaction. The donor is the original owner of the property. In the case of a trust, the founder is the settlor or testator. The person who receives the power of attorney for appointment is the donee.
The donor retains ownership of the property until the donee exercises its authority to name and appoint a new owner of the property. Power objects are the pool of potential new owners of the property. The persons whom the donee designates as the new owners are called agents. Even if the donee designates the agents as the new owners of the property, these persons take over from the donor as the owner. Defaulting purchasers are the persons who assume ownership if the donee does not exercise the power of appointment. The property is called the naming property. Consider the following example. In her will, Mandy explained, “I leave my house to my son William for life. When William dies, the house will go to one of my children, who will appoint William as the new owner. If William does not appoint a new owner of the house, the house will go to my cousin Janice. In the example, Mandy is the recipient; William is the donor; Mandy`s children are the objects of power; and Janice is the standard taker. If the donor does not designate a defaulting beneficiary and the donee does not exercise power, ownership reverts to the donor`s estate.
As soon as ownership reverts to the donor`s estate, it reverts to the beneficiaries of the donor`s remaining estate. Most appointing powers are contained in wills and allow a person to modify the gift within a small group of people, taking into account events that occur after the testator`s death. As a rule, the power states that the person who holds the power can adjust what goes to the children or grandchildren taking into account certain subsequent events, but limits the donation to children and grandchildren and often limits the scope of the authorized change, for example, only half of a person`s share can be changed, etc. If Sylvia could not assign a trust to herself or her estate, then the remaining clause in section 2.4, which bequeathed to Beverly “all the rest, the remainder and the rest” of Sylvia`s “estate” and Sylvia`s “property”, could not cover the trust. If the remaining clause of section 2.4 could not cover the trust, this clause cannot be read in conjunction with section 2.1 of Sylvia`s will to bequeath to Beverly “any other property over which I have the power to name.” Such an interpretation impermissibly violates the clear limits of sections 3.4 and 4.3 of John`s will on Sylvia`s exercise of the power of appointment. See Krause, 430 p.W.2d, p. 48. (“William H. Wilson`s will authorized Mrs. Wilson to determine her own estate..”). Therefore, Robinson`s estate cannot legally rely on the two-step mechanism exemplified by Krause and Wright to establish that section 2.1 of Sylvia`s will, in conjunction with the remaining clause of section 2.4, worked together to obtain a valid exercise of Sylvia`s appointing authority in favour of Beverly. Even with this threshold assumption, Robinson`s estate must still demonstrate that the reference in section 2.1 to “any other property over which I have appointing authority” can be read in conjunction with the remainder of section 2.4 in order to obtain a valid exercise of the appointing authority in favour of Beverly.
The evaluation of the latter proposal requires careful consideration of the phrase “my estate and property,” as this is what Sylvia Beverly gave to section 2.4 “everything else, rest and rest.” In the United States of America, a general appointing authority for federal estate tax purposes is defined in Internal Revenue Code § 2041. [1] A general power of attorney is a power of attorney that allows the holder of the power to transfer to himself, his estate, his creditors or the creditors of his estate the right to make beneficial use and enjoyment of certain property covered by the power of appointment. For inheritance tax purposes, the holder of a general power of appointment is treated as if he or she were the owner of the property subject to that power, whether or not that power is exercised. Thus, property subject to the power to include in the estate of the electricity holder for inheritance tax purposes. In addition to general and special powers, donors may restrict when power can be exercised by donees. Testamentary powers of attorney are usually indicated by the inclusion of restrictive language in the act of issue, such as: “B for life, rest of the persons that B calls “by will”. The general powers that can currently be exercised do not contain such limitations on power. Phrases such as “B for life and after B`s death to those whom B will appoint” indicate a power of attorney currently exercisable, not testamentary authority. These principles underlie two Supreme Court decisions over the past fifteen years that, while not directly relevant, provide an instructive discussion of the issue of the successful exercise of appointment powers. The power of appointment dates back to British common law.