A power of appointment is an estate planning device, used in a will, with which many people in the greater Chicago area may not be familiar.
Basically, a power of appointment confers on another person the ability to give to a third party some portion of a decedent’s property. To give an example, the most basic power of appointment might specify that “my wife Jane shall distribute my baseball card collection as she so desires.” Unless the power of appointment explicitly prevents Jane from doing so, Jane can even choose to give the baseball card collection to herself.
A more specific power of appointment may put restrictions as to whom, or on what terms, the person appointed can distribute property. To go back to the first example, the power of appointment may read, “My baseball cards shall be divided equally among my children. My wife Jane, shall decide which child gets which cards.”
While this is an overview of powers of appointment, it is important for people to realize that they can be useful estate planning devices in a number of different ways. On the most basic level, a power of appointment can help a person divvy up personal effects and the like fairly, simply by giving a trustworthy person the ability to make final decisions when the time comes. Powers of appointment can also in some cases have useful tax benefits.
An Illinois resident who is interested in incorporating a power of appointment into his or her estate plan should consider speaking with an experienced estate planning attorney in their local area. An attorney can help them evaluate this option and also help with other aspects of their estate plan.