Protecting Your Wealth One Piece At A Time

Power of Appointment

Some Trusts or Wills may include a “power of appointment.” A person who signs a will or trust today cannot predict what his family’s economic or personal situation will be twenty years from now. Under a power of appointment, a person can give his or her beneficiaries power to direct where their share goes at their death. In this way, the holder of the power is permitted to alter the distribution plan in a will or trust to accommodate changed family situations and the best possible outcome for the assets.

What Is a Power of Appointment?

Power of appointment allows a person of your choice to make decisions for your estate.

The most common form of power of appointment is a limited power of appointment, which allows a beneficiary to distribute their portion of the estate to a designated list of recipients, like your heirs or specific organizations. It does not, however allow them to allocate an estate to themselves, their own estate or to creditors.

The other form of a power of appointment is called a general power of appointment. This power is broader and allows a greater range of powers to the beneficiary.

Tax Consequences

The two types of powers of appointment have very different tax consequences. Having a general power of appointment over trust property will cause the power holder to be subject to gift tax or estate tax on that property whether or not the general power of appointment is exercised. In most cases, the possession of a limited power of appointment does not subject the power holder to a gift or estate tax.

To be sure that a power is a limited power rather than a general power, specific wording must be used to comply with Internal Revenue Code requirements.

Call the Law Offices of David A. Straus to Schedule a Complimentary Initial Consultation

Powers of appointment can be an effective and cost-efficient tool to add flexibility to wills and trusts. I am committed to crafting estate plans that are customized for my clients’ specific needs. I can help you make use of all effective estate planning techniques available to you, including powers of appointment.

I have been drafting trusts and estate plans for clients in Las Vegas for over thirty years. I have an LL.M. (Master of Laws) in Taxation in addition to a LL.M in Entertainment and Media Law, and I am a Certified Public Accountant (CPA), only licensed in Illinois. Discover what a comprehensive estate plan can do for your peace of mind.

If you have questions about Power of Appointment please give me a call at 702-474-4500. A lot of my clients are out of the area or reside in a different state other than Nevada. I’ve helped clients who live in neighboring states like California.

Please e-mail or call today to speak directly with me about your matter.

David A. Straus is the author or co-author of many publications.

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