Short Summary
A “power of appointment” gives someone authority over who inherits property from your estate or trust. In Florida, this tool can simplify your plan or cause major issues if misused. Understanding how it works helps you keep control of your assets, avoid tax problems, and prevent family disputes.
One provision of a Last Will and Testament (“Will”) that is not often talked about is a power of appointment.
What a power of appointment is, and what it can do, is critical to understand.
Why?
Because it may be an estate planning tool you wish to use. In the right hands, a power of appointment can make your estate plan run smoothly.
But in the wrong hands, it can be disastrous, thwarting your wishes, causing intense family conflict, and eating up your estate in costly legal fees.
What is a Power of Appointment?
Fundamentally, a power of appointment is a power given by one person (in a Will or trust instrument by the testator or settlor) to allow another person the right (i.e., the authority or “power”) to decide who will receive a particular asset or set of assets.
This may sound simple and straightforward, but the situations that can arise out of a power of appointment are not always so simple.
For example, a settlor might give his son a power of appointment to decide who should get the assets of a revocable living trust at the parent’s death. Or a testator may give his spouse a power of appointment to decide who should get certain property after the testator’s death.
What the power of appointment does, essentially, is it allows the person making the Will or trust to put off deciding who will get his or her property and let someone else make that decision.
As might be expected, this can be a good thing or it can cause family strife and conflict.
It all depends on who has the power and what they do with it.
For example, a settlor of a trust may give his son a general power of appointment to decide who among his children should get the trust assets including the trust principal after the settlor’s death. If the son is honest and trustworthy, the power will be used to enhance the father’s estate plan. If not, the son could simply appoint himself to get everything, thwarting the father’s intent, causing family conflict, and drawing a lawsuit into the bargain.
Florida Law on Powers of Appointment
Under Florida law, a power of appointment is only valid if clearly stated in a Will or Trust. It cannot be implied or assumed. This ensures the power holder’s authority is limited to what the document allows.
The relevant statute is Florida Statutes §736.0302, which addresses representation by the holder of a power of appointment.
Florida estate planners include these powers to provide flexibility. When used correctly, they help minimize taxes and protect assets from creditors. When misused, they can lead to litigation, especially in blended families or large estates.
Types of Powers of Appointment
Florida recognizes two types of powers of appointment:
- General power of appointment
- Special (limited) power of appointment
A general power of appointment gives the holder the power to appoint estate assets to himself, to his estate, to his creditors, or to creditors of his estate.
A special or nongeneral power of appointment, on the other hand, gives the holder less flexibility. The holder of a special power of appointment cannot appoint the assets to himself or herself. Instead, they must appoint them to a limited class of people (as specified in the estate plan) or for limited purposes (such as health, education, or maintenance of a beneficiary).
General vs. Special Powers: Key Differences
| Type | Who Can Benefit | Tax Consequences | Common Use |
| General | Holder, their estate, or creditors | Included in taxable estate under IRS §2041 | Asset control for spouse or primary beneficiary |
| Special | Specific individuals or groups | Often excluded from taxable estate | Protect beneficiaries or reduce estate taxes |
A general power of appointment allows the holder to benefit personally (or have their creditors benefit), so the property subject to the power is usually included in the holder’s gross estate under 26 U.S.C. §2041.
The Treasury regulations under 26 CFR §20.2041-1 further explain how powers are included, how lapses or releases of powers are treated, and the exceptions for powers limited by “ascertainable standards.”
Second Marriages and Family Conflict
Second marriages often create tension when it comes to powers of appointment.
For example, a surviving spouse might be given a power of appointment and could use it to disinherit the decedent’s children or grandchildren by favoring his or her own family.
When this happens, disputes and probate litigation often follow. To prevent conflict, careful drafting is critical. Florida estate planners often limit the scope of who the power holder can benefit or require co-trustee approval for asset transfers.
Should You Use a Power of Appointment?
So, if they can be abused by the holder of the power, are powers of appointment a bad idea?
No.
There are several reasons to use a power of appointment. Tax considerations are one. Beneficiary protection is another.
For example, if a grandchild has creditors or a substance abuse problem, it may be better to allow a parent to decide when and how much of a grandparent’s assets the child should receive, rather than leave money outright or disinherit them completely.
A properly structured special power of appointment can reduce estate taxes and protect family wealth.
Benefits include:
- Flexibility to adapt to tax law changes.
- Asset protection from a beneficiary’s creditors.
- Long-term wealth preservation across generations.
Because the IRS treats general and special powers differently, your estate planner will draft language carefully to avoid unintended tax exposure.
Frequently Asked Questions About Powers of Appointment
- What is a power of appointment in a Florida trust?
It gives someone the authority to decide who receives trust assets, as authorized in a written trust or Will under Florida law. - How is a power of appointment created in a Will?
It must be clearly written into the Will by the testator, identifying who holds the power and what property it applies to. - Can a power of appointment be revoked?
Yes, if the trust or Will includes language allowing revocation before death. - What is the difference between general and special powers?
A general power allows assets to be appointed to oneself; a special power limits choices to specific beneficiaries. - Does a power of appointment affect estate taxes?
Yes. General powers typically include assets in the holder’s taxable estate under IRS §2041. - Who should be given a power of appointment?
Only someone you trust completely, since they control how your property is distributed. - What happens if the power of appointment holder dies?
If unused, the power usually expires unless the document allows a successor to act. - Can a power of appointment be challenged in court?
Yes. Disputes arise when the power is used to favor certain heirs or conflict with the estate’s intent. - Are powers of appointment common in Florida estate planning?
They are common in trusts to provide flexibility and control for family estates. - How can an estate planning attorney help with this?
An attorney drafts powers of appointment that align with your goals and ensure compliance with Florida law.
Customized Estate Plans in Fort Lauderdale, Florida That Protect You and Your Family
As trusted probate and estate planning lawyers, we serve families in the vibrant communities of Plantation, Fort Lauderdale, Boca Raton, West Palm Beach, and Miami, FL. We also offer both in-person and virtual appointments throughout Florida.
Our team at SJF Law Group works hard to ensure your wishes are followed and your loved ones are taken care of when you are gone. Our estate planning lawyers guide individuals and families through the complex probate process and handle all aspects of creating, administering, and settling estates and trusts.
When you work with our Florida estate planning attorneys, you get more than an estate plan. You get peace of mind.
To discuss your specific situation, contact our law firm at 954-580-3690 or fill out our contact form.