Understanding Trusts and Powers of Appointment
Classified in Philosophy and ethics
Written at on 
English with a size of 2.23 KB.
What is a Trust?
A trust is a relationship where a trustee is legally obligated to hold property (real or personal) for the benefit of beneficiaries or for a legally permitted purpose. The trustee manages the property, but the benefits accrue to the beneficiaries.
A trust is a legal relation in which a trustee (an individual or a qualified trust company) holds property for the benefit of a beneficiary. The property can be any kind of real or personal property.
Public vs. Private Trusts
The key difference lies in the beneficiaries. In a public trust, the beneficiaries are an uncertain and fluctuating group, often the public at large. In a private trust, the beneficiaries are definite and ascertained individuals.
- Public Trust: Managed by a board of trustees. Must be charitable in the legal sense, benefit the public, and be exclusively charitable.
- Private Trust: Managed by a managing trustee or appointed trustees. Can be express, implied, or constructive.
Power of Appointment (POA)
A POA is a legal document authorizing someone to handle your financial matters. Standard POAs terminate upon your disability. A durable POA, where permitted by state law, remains effective even if you become disabled. No POA is effective after your death.
Key Roles in a Power of Appointment
- Donee: The recipient of a gift or the person in whose favor a power of appointment is created.
- Appointer: The person given the power to nominate individuals to receive property.
- Objects of the Power: The potential new owners of the property.
- Appointees: The individuals designated by the donee as the new property owners. They take title from the donor.
Donee's Power to Modify Interests
If a donee has a present interest in property, the possibility of that interest being diminished by the transfer of a greater interest to the donee through the exercise of a power is disregarded when calculating the value of the present interest, provided no part of that interest will pass to another person.