If you are leaving an inheritance in trust, or you're the beneficiary of a trust, you need to know what a Power of Appointment is.
The following is a transcript of the video above:
What is a power of appointment and when do you need to worry about it?
I'm your host, Don Rolfe, the owner and founder of Northwest Legal Planning, and this episode 26 of Estate Planning Weekly.
This week, as I said, we're talking about powers of appointment and when you need to worry about them.
Real quick, if you have any questions about this topic or another estate planning topic, go to myestateplanmeeting.com and you can schedule a complimentary estate planning strategy session with me to get any of those questions answered and to find out what your options for estate planning are.
What is a power of appointment?
A power of appointment is something that's granted to a beneficiary getting an inheritance to decide how the remainder of their inheritance will be split up or passed down when they pass away. Generally, these are included, when you receive an inheritance in a trust, there will be a power of appointment included inside of that trust.
Now, when are the times that you need to worry about a power of appointment, or think about it?
Number one is when you are creating your own estate plan, you need to determine what type of power of appointment you are going to be granting to your beneficiaries, or if you're gonna be granting them a power of appointment at all.
And the second time you need to be thinking about a power of appointment is when you are a beneficiary of a trust, whether or not you have a power of appointment, and to whom you can grant or divvy up the remainder of your inheritance when you pass away.
Now, there's generally three ways that you can exercise your power of appointment, and it's spelled out usually in the trust that you are the beneficiary of. One way is by doing it inside of your own trust and setting up the power of appointment and choosing what you would like to do with it there. The second way is doing that in a will, and the third way is doing it in a separate writing that is not a will or a trust, and the trust that you are a beneficiary of granting you the power of appointment will spell out which of those ways you can do it, and it may be all three of them. Any of those ways will work.
Again, if you have questions about powers of appointment, whether you have one, whether you should be granting them, or if you do have one, whether of not you've executed and done it right, do feel free to reach out to me for a free strategy session. Again, you can do that by going to myestateplannmeeting.com.
This is a very general overview of powers of appointment, but again, a power of appointment is a power that is granted when you give an inheritance to someone, giving that beneficiary the power to decide how the remainder of their inheritance will be divvied up after they're gone. And the times that you need to start thinking about powers of appointment are, one, when you're creating your estate plan and what types of powers of appointments you want to grant, and then the second is if you become the beneficiary of a trust, generally, and you wanna know, you wanna take a look in that trust and find out what type of power of appointment you may have and how you can make that effective.
Until next time, I'm Don Rolfe. Take care. Bye.
Father, husband, entrepreneur, and owner of a trivia filled brain. I help families and individuals plan for the unexpected and end of life. Schedule a Complimentary Strategy Session to chat with me, get answers to your questions, and find out about your Estate Plan options.
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