Apr 06, 2013 6:35 PM

The POWER OF APPOINTMENT- thread.....

Barron's Law Dictionary 3rd-edition 1991- POWER OF APPOINTMENT: a power or authority given by a DONOR to a DONEE to appoint the beneficiaries of the donor's property, or any interest therein, which is vested in a person other than the donee of the power. The power may be created by DEED or will, id., and it may be reserved by the donor for him or herself. The instrument creating the power delineates the extent to which the donee may choose the beneficiaries of the donor's property. Under a GENERAL POWER, the power may be exercised in favour of any person, including the donee. Under a SPECIAL POWER, the power may be exercised only in favour of a limited group, not including the donee or his or her estate. Present day powers of appointments are more flexible in determining beneficiaries than if a DISPOSITION irrevocably named all takers, a flexibility that allows for unforeseen future events. For example, a father's will may give his daughter the power of appointment over the principal of a trust, with the result that the daughter can allocat e the principal as needed when she exercises the power. Under a more inflexible procedure whereby the father names all the beneficiaries and the amount to which they are entitled, adjustments could not be made for differing needs. If the father wants to insure that only the daughter's children are the beneficiaries, he can so provide by giving a "special power of appointment" to the daughter. The instrument creating the power usually will include a provision disposing of the property if the power is not effectively exercised. TITLE to the property or interest passes directly from the donor of the power to the beneficiary; the donee is merely the conduit through which title passes. Moreover, since a power of appointment does not constitute an ESTATE or interest, it is termed a NAKED POWER. If in the same instrument creating the power of appointment the donee is granted a present or future interest in the property over which the power is to be exercised, the donee is said to have a power coupled with an interest. A general power of appointment for tax purposes (subject to exceptions) is "a power which is exercisable in favour of the DECEDENT, his estate, his creditors, or the creditors of his estate." If that definition is met, the value of the underlying property is includable in the value of the decedent's taxable gross estate. Therefore, special powers of appointment are generally better from a tax viewpoint.

POWER OF APPOINTMENT (Black's 8th)- a power created or reserved by a person having property subject to DISPOSITION, enabling the donee of the power to designate transferees of the property or shares in which it will be received; especially, a power conferred on a donee by will or deed to select and determine one or more recipients of the donor's estate or income. If the power is exercisable before the donee's death, it is exercisable wholly in favour of the donee. If the power is TESTAMENTARY, it is exercisable wholly in favour of the donee's estate. Often shortened to POWER. Also termed ENABLING POWER.

POWER OF APPOINTMENT (The Dictionary of Canadian Law 3rd-edition): 1. the power of a DONEE or APPOINTOR to appoint by will the PEOPLE who will succeed to property after the person to whom the power is given dies. This power is given by a DONOR using an instrument such as a trust INTER VIVOS, marriage settlement or will. (J.G. McLeod, The Conflict of Laws: Carswell) 2. Includes any discretionary power to transfer a beneficial interest in property without the furnishing of valuable consideration.

DONEE: 1. any person who receives or has received the benefit of a GIFT, including a gift deemed, for the purposes of this Act, to have been made. GIFT TAX acts. 2. One to whom a gift is made. 3. a person to whom a power of appointment is given is sometimes called the donee of the power.

APPOINTOR: One given a power; a person who names someone else for an office.

DONOR: 1. One who gives. 2. Any individual who makes or who has made a gift, including a gift deemed, for the purposes of this Act, to have been made. GIFT TAX acts.

INTER VIVOS TRUST: created by writing, a DEED or oral declaration, a trust which is to take effect during the lifetime of the trust's creator. (Waters, The Law of Trusts in Canada: Carswell)

INTER VIVOS GIFT: a GRATUITOUS transfer of property from the owner (donor) to another person (donee) with the intention that the transfer will take effect immediately and the title to the property will rest in the donee.

INTER VIVOS: Between living people. See GIFT INTER VIVOS.

GRATUITOUS: without reward or recompense.

RECOMPENSE (Black's 8th): repayment, compensation, or retribution for something, especially an injury or loss.

GIFT INTER VIVOS (Dictionary of Canadian Law): a gift made by a living person to another living person.

GIFT INTER VIVOS (Black's 8th): See inter vivos gift under GIFT. a gift of personal property made during the donor's lifetime and delivered to the donee with the intention of IRREVOCABLY surrendering control over the property.

IRREVOCABLE: committed beyond recall; unalterable; not able to be revoked.

GIFT INTER VIVOS (Barron's): see inter vivos. Between the living; transactions made "inter vivos" are those made while the parties are living, and not upon death (such as in the case of inheritance) or upon contemplation of death [causa mortis]. A DEED, therefore, is an instrument that CONVEYS inter vivos a present interest in land, or which conveys the CORPUS of a trust to the trustees [a deed of trust]. Gifts are transferred inter vivos, by will, or causa mortis. See also trust [ INTER VIVOS TRUST].