Also known as: discretionary powers of appointment · power of appointment
Written by attorneys · grounded in primary & secondary sources — see below
A power of appointment granted to a non-fiduciary holder who may select among a class of permissible appointees without any fiduciary duty to exercise it or to act in the best interests of potential recipients.
Deborah Dunn created a trust allowing her daughter Diana Delgado to withdraw parcels of farmland only with written consent from co-trustee Dominic Drake, who also held the remainder interest. Diana sought to take land immediately for her own use. Because the consent of an adverse party was required, the arrangement did not qualify as a discretionary power of appointment held by a non-fiduciary.
Dorothy Daniels established a trust naming her son Diego Duarte as beneficiary. The instrument granted Diego, acting outside any trustee role, authority to appoint trust assets among designated family members. The grant gave Diego a discretionary power of appointment because he held it in his individual capacity rather than as trustee.
Select any source to read its text and confirm it supports the definition.
Dominic Drake devised a future interest in partnership assets to his first grandchild who met an engineering-degree condition. He simultaneously granted his son Dominic Drake an unreviewable right to extinguish that interest at any time for his own benefit. The son's authority operated as a discretionary power of appointment held without fiduciary duty.
A settlor granted his adult child an unreviewable right to redirect trust assets among named relatives. The child exercised the right to favor one sibling. The court treated the right as a discretionary power of appointment because it was held in a non-fiduciary capacity without any duty to the class.
A husband created an inter vivos trust retaining a discretionary power of appointment over the corpus. After his death the surviving spouse sought to include the trust property in the elective-share calculation. The retained power did not convert the trust into a testamentary disposition subject to the spouse's claim.
A widow exercised a discretionary power of appointment created by her husband's will. A state probate court later characterized the exercise. Federal tax authorities refused to treat the state decree as conclusive on the question of whether the power had been effectively exercised for estate-tax purposes.
A beneficiary's right qualifies as a power of withdrawal only if it is a presently exercisable general power of appointment that the beneficiary can exercise unilaterally. The definition expressly excludes any power exercisable only with the consent of a trustee or a person holding an adverse interest. When consent of an adverse remainder beneficiary is required, the right fails to meet the statutory test.
Supporting sources
A discretionary power held by a non-fiduciary is valid unless the class of permissible appointees is so indefinite that no person can be identified as within the donor's intended group. The absence of fiduciary duties means the holder need not justify selections by any objective standard, so validity turns solely on whether at least one intended appointee can be named.
Supporting sources
No. When the trust instrument itself grants the beneficiary an unconditional right to withdraw principal on written request, the power is presently exercisable and general. A trustee's later assertion that withdrawals are limited to support needs cannot override the plain terms of the instrument.
Supporting sources
…provided that the income from the corpus was to be paid to his wife during her lifetime. The instrument also gave her a general power of appointment, in default of which it provided that half of the corpus was to go to his heirs and the remaining half was to go to those of his wife. In 1951 the wife executed an instrument purporting to…