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General Powers of Appointment and Your Planning

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General Powers of Appointment

Two weeks ago we wrote about powers of appointment, introducing the concept. The basic idea: you can give someone else the power to designate the ultimate recipient of a gift or bequest. We didn’t distinguish between (or describe) general powers of appointment and limited powers of appointment. We saved those concepts for another day. Today.

General powers of appointment

We’ve already established what the power of appointment is about. It gives the recipient of your gift or bequest the authority to designate where it goes on their later death.

But wait. If you leave things to, say, your child (or parent, or neighbor, or anyone) outright, they will own the property. They might not get anything until your death, but if they outlive you the property is theirs. They can do whatever they want to with it.

What if you leave things in trust for your beneficiary? Now you have to make some decisions. If anything is left when your beneficiary dies, where will the remaining assets go? To their children? Maybe to their spouse? As the person establishing this trust, you get to make the decision.

But maybe you’d like to give your beneficiary a lot of flexibility. You could give them a power of appointment — then they can decide where the property ultimately goes. Are you comfortable letting them decide? That’s when general powers of appointment shine.

General powers of appointment can be exercised in favor of (for the moment — we’ll get a little more detail later) anyone, or any organization. And that’s what your power of appointment might say. Imagine something like: “on the death of Dave, the remaining trust assets shall be distributed to any person or entity he might designate in his will” (don’t copy that language, please — we’re trying to stay simple here, not lawyerly).

Limited powers of appointment

Maybe that makes you a little twitchy. You might not want the trust to go to your in-laws, or your child’s spouse’s new spouse and their children (trust us — it’s a thing). Maybe you want to keep the family ranch in the bloodline for as many generations as possible.

Enter the limited power of appointment. Instead of giving your beneficiary carte blanche, you can limit their choices. How? “On the death of Dave, the remaining trust assets shall be distributed to such descendants of mine, or charitable organization, or individual over 2 meters in height, as Dave shall designate in his will.” Again, the language here is intended to be understandable, not legalistic. So you can see: Dave can’t transfer the trust to his spouse or his/her children — unless they are uncommonly tall.

Are there tax considerations?

Of course there are tax considerations. There always are.

Under current income tax law, when you die your assets get a “stepped-up” basis. No one has to pay the capital gains tax on appreciation during your life. But unless Dave has a general power of appointment, at his later death the next round of beneficiaries don’t get a similar stepped-up basis. So there might be an important reason to give your first beneficiaries general powers of appointment. Limited powers of appointment don’t cut it for that purpose.

So is it possible to get the stepped-up basis value from a general power of appointment, but not give the beneficiary too much discretion to make (what you think are) bad decisions about ultimate beneficiaries? For that matter, can you control how your beneficiary exercises their power of appointment? Yes, and yes. But those are topics for another Elder Law Issue.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.