Also known as: general powers presently exercisable · presently exercisable general power
Written by attorneys · grounded in primary & secondary sources — see below
A power of appointment that the donee may exercise at once to appoint property to the donee, the donee's creditors, the donee's estate, or the creditors of the donee's estate. The power is presently exercisable when the donee holds it without condition or future contingency and may use it for the donee's own benefit. Exclusions apply when the power is held by a trustee and limited by an ascertainable standard or when exercise requires consent of a trustee or adverse party.
Gina Griffin is the sole lifetime beneficiary of a trust holding shares in a startup. The trust instrument permits Gina to demand up to all principal at any time by written notice. Gina's brother serves as trustee but holds no consent right and no adverse interest. A judgment creditor seeks to reach Gina's interest. Because Gina may unilaterally appoint the entire trust corpus to herself immediately, she holds a general power presently exercisable.
Gerald Gibson holds a general power presently exercisable over trust property. Gerald appoints the assets outright to himself and then transfers them to his children. The validity of the children's interests is measured from the date of Gerald's appointment rather than the date the donor created the power. The appointment therefore satisfies the rule against perpetuities because the perpetuities period runs from exercise.
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A beneficiary's unilateral right to demand principal at any time without consent or an ascertainable standard qualifies. The power must allow appointment to the beneficiary, the beneficiary's creditors, estate, or creditors of the estate. Consent requirements or trustee-held powers limited by standards such as health, education, support, or maintenance fall outside the definition.
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A requirement that the beneficiary obtain consent from a trustee or a person holding an adverse interest prevents the power from qualifying. An adverse party is one whose beneficial interest would be diminished by exercise. The statute excludes such conditioned powers even when the beneficiary otherwise could appoint to herself.
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Property subject to a presently exercisable general power is included in the decedent's estate for calculating the surviving spouse's elective share. The rationale is that the power is the practical equivalent of ownership because the donee may appoint to herself at any time before death.
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