Sometimes it is hard to decide who should receive your property after your death. This can be made more difficult by the fact that when many people make wills and trusts, they do not know what property they will own when they die. While some individuals have very strong opinions about who should receive their property, others would rather leave the decision to someone else. A
power of appointment allows you to do that.
A power of appointment in a will can be used to appoint another person to decide whom shall receive your property and in what amounts after you die. In a power of appointment, the donor grants power to the holder of the power of appointment and the holder, also called the donee, has the right to choose the appointee who shall receive the property.
A power of appointment may be general or limited. If you grant a general power of appointment, you give the holder much more authority than if you grant a limited power of appointment. A general power of appointment is one in which the holder of the power has the authority to appoint the property to the holder, his creditors, his estate or the creditors of his estate.
Before granting a general power of appointment, be aware the holder can give your property to anyone, even someone of whom you would disapprove. If you want to limit the class of beneficiaries to whom the holder can distribute your property, you may want to grant a limited power of appointment instead.
A limited power of appointment is also called a special power of appointment. A limited power of appointment is one which must be exercised in favor of a limited class of beneficiaries, which cannot include the holder, his creditors, his estate or the creditors of his estate. For example, if you want to ensure your estate ultimately goes to your children, but wish your surviving spouse to decide in what proportions or amounts, you can give your spouse a limited power of appointment and limit the class of appointees to your children.
There are several ways to use a power of appointment in a will or trust, all of which may have estate tax and gift tax ramifications to your estate and the holder or donee. If you are considering using a power of appointment in your estate plan, consult an estate planning attorney. Do not attempt to draft provisions regarding a power of appointment without an attorney. See finding an attorney.
Deciding How to Distribute Your Estate
While you may want to leave an inheritance for your spouse, partner, children or other heirs, you may be unsure about the specifics, such as how much to leave each person, the best way to divide your estate, or the most tax efficient methods for transferring your property. The starting point is to develop a vision of how you would like to distribute the property you have accumulated during your lifetime and what type of legacy you would like to leave behind. The free estate planning forms and guides on Pennyborn.com will help you develop that vision and use the appropriate estate planning methods to carry out your plan.You may have questions about what type of inheritance to leave your children or grandchildren versus your surviving spouse or partner. This is a common dilemma for parents, especially in second or subsequent marriages. If you donít have children, you may struggle over whether to leave your estate to your siblings, parents or favorite charities. One of the most neglected issues in estate planning is how to prepare your children or other beneficiaries for receiving an inheritance.
Estate Planning Tips on What Not to Do
We all know we can learn from the mistakes of others. When it comes to estate planning, the mistakes made by celebrities often have disastrous financial consequences. You may think your estate is much different than that of a celebrity. In fact, the concerns celebrities have about making a last will and the issues they face in deciding how to distribute their property are actually the same as those faced by the rest of us. One of the only differences is the dollar amount involved.The author of The 101 Biggest Estate Planning Mistakes is an estate planning lawyer who has represented numerous celebrities. In this entertaining estate planning book, author Herbert E. Nass shares estate planning errors of the rich and famous and how you can avoid them. He includes surprising information about many public figures who died without a valid last will.The book The 101 Biggest Estate Planning Mistakes covers a wide range of estate planning issues, including guardianship of minor children, inheritance rights of stepchildren,
disinheriting an heir, wills, codicils, living trusts, probate, estate taxes, gift taxes, no-contest clauses, greedy heirs, executors, trustees, funerals, burials, cremation, disposition of remains, life insurance, charitable gifts, leaving money for your pets, intestate succession, holographic wills, and much more. It is suggested reading for tips on how to avoid errors in your estate plan.