Keep future options open with powers of appointment

Description

Abstract: A power of appointment is an important tool that gives an estate plan flexibility to react to changing situations, because it gives the “holder” of the power — often a beneficiary — the ability to decide how, when and to whom specified assets in a trust or estate will be distributed. This article explains the distinction between a general and limited power of appointment, along with the tax implications. A sidebar explains how a creator of an irrevocable trust can use a limited power to authorize a family member or other trusted person to transfer assets to the creator, as well as to the trust beneficiaries.