Definitions; Classification Of Powers Of Appointment - Powers Of Appointment - Probate - CA

Section § 610

This section defines various terms related to the 'power of appointment' in estate planning. A 'power of appointment' lets someone (the 'powerholder') decide who gets an interest in certain property (the 'appointive property'). The 'donor' is the person who creates this power, often through a legal document like a will or trust, known as the 'creating instrument'. An 'appointee' is the person chosen to receive the property, while a 'permissible appointee' is someone who could potentially be chosen. The terms clarify who has the authority and who can be beneficiaries under different estate arrangements.

As used in this part:

(a) “Appointee” means the person in whose favor a power of appointment is exercised.

(b) “Appointive property” means the property or interest in property that is the subject of the power of appointment.

(c) “Creating instrument” means the deed, will, trust, or other writing or document that creates or reserves the power of appointment.

(d) “Donor” means the person who creates or reserves a power of appointment.

(e) “Permissible appointee” means a person in whose favor a power of appointment can be exercised.

(f) “Power of appointment” means a power that enables a powerholder acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of appointment over the appointive property. The term does not include a power of attorney.

(g) “Powerholder” means the person to whom a power of appointment is given or in whose favor a power of appointment is reserved.

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Section § 611

This law explains the concept of 'powers of appointment,' which is a legal authority one person (the powerholder) has to decide who will receive certain property. A 'general' power of appointment means the powerholder can choose to benefit themselves, their estate, or their creditors.

If the power is restricted to needs like health or education or if it must be exercised with someone who has an opposing interest, it is not considered 'general.' Such powers are called 'special.'

Interestingly, a power of appointment can be 'general' for some property and 'special' for other property at the same time.

(a) A power of appointment is “general” only to the extent that it is exercisable in favor of the powerholder, the powerholder’s estate, the powerholder’s creditors, or creditors of the powerholder’s estate, whether or not it is exercisable in favor of others.

(b) A power to consume, invade, or appropriate property for the benefit of a person in discharge of the powerholder’s obligation of support that is limited by an ascertainable standard relating to the person’s health, education, support, or maintenance is not a general power of appointment.

(c) A power exercisable by the powerholder only in conjunction with a person having a substantial interest in the appointive property that is adverse to the exercise of the power in favor of the powerholder, the powerholder’s estate, the powerholder’s creditors, or creditors of the powerholder’s estate is not a general power of appointment.

(d) A power of appointment that is not “general” is “special.”

(e) A power of appointment may be general as to some appointive property, or an interest in or a specific portion of appointive property, and be special as to other appointive property.

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Section § 612

This section explains different types of powers of appointment, which are legal permissions to decide who will receive certain property. A 'testamentary' power can only be used through a will. When a power is 'presently exercisable,' it means you can make an irrevocable decision about it now. If a power is 'not presently exercisable,' it is 'postponed' until a specific event occurs or condition is met, as described in the legal document that created the power. This postponement happens if either the exercise of the power is only allowed after an event or condition, or if it is revocable until that event or condition happens.

(a) A power of appointment is “testamentary” if it is exercisable only by a will.

(b) A power of appointment is “presently exercisable” at the time in question to the extent that an irrevocable appointment can be made.

(c) A power of appointment is “not presently exercisable” if it is “postponed.” A power of appointment is “postponed” in either of the following circumstances:

(1) The creating instrument provides that the power of appointment may be exercised only after a specified act or event occurs or a specified condition is met, and the act or event has not occurred or the condition has not been met.

(2) The creating instrument provides that an exercise of the power of appointment is revocable until a specified act or event occurs or a specified condition is met, and the act or event has not occurred or the condition has not been met.

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Section § 613

This law section talks about two types of powers of appointment. An 'imperative' power means that the person who can make decisions (the powerholder) must benefit certain people named in a document, even if they don’t actively use their power to do so. In other words, the document itself shows intent to benefit specific people regardless of the powerholder's actions. The powerholder can still choose who benefits among the listed people.

On the other hand, a 'discretionary' power allows the decision-maker to choose freely whether or not to use their power and benefit anyone at all. They have complete flexibility.

A power of appointment is “imperative” where the creating instrument manifests an intent that the permissible appointees be benefited even if the powerholder fails to exercise the power. An imperative power can exist even though the powerholder has the privilege of selecting some and excluding others of the designated permissible appointees. All other powers of appointment are “discretionary.” The powerholder of a discretionary power is privileged to exercise, or not to exercise, the power as the powerholder chooses.

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