SECTION 2-608. EXERCISE OF POWER OF APPOINTMENT uniform probate code. In the absence of a requirement that a power of appointment be exercised by a reference, or by an express or
specific reference, to the power, a general residuary clause in a will, or a will making general
disposition of all of the testator’s property, expresses an intention to exercise a power of
appointment held by the testator only if (i) the power is a general power and the creating
instrument does not contain a gift if the power is not exercised or (ii) the testator’s will manifests
an intention to include the property subject to the power.
Comment
General Residuary Clause. As revised, this section, in conjunction with Section 2-601, provides that a general residuary clause (such as “All the rest, residue, and remainder of my estate, I devise to...”) in the testator’s will or a will making general disposition of all of the testator’s property (such as “All of my estate, I devise to...”) is presumed to express an intent to exercise a power of appointment held by the donee of the power only if one or the other of two circumstances or sets of circumstances are satisfied. One such circumstance (whether the power is general or nongeneral) is if the testator’s will manifests an intention to include the property subject to the power. A simple example of a residuary clause that manifests such an intention is a so-called “blending” or “blanket-exercise” clause, such as “All the rest, residue, and remainder of my estate, including any property over which I have a power of appointment, I devise to....”
The other circumstance under which a general residuary clause or a will making general disposition of all of the testator’s property is presumed to express an intent to exercise a power is if the power is a general power and the instrument that created the power does not contain a gift over in the event the power is not exercised (a “gift in default”). In well planned estates, a general power of appointment will be accompanied by a gift in default. The gift-in-default clause is ordinarily expected to take effect; it is not merely an after-thought just in case the power is not exercised. The power is not expected to be exercised, and in fact is often conferred mainly to gain a tax benefit – the federal estate-tax marital deduction under Section 2056(b)(5) of the Internal Revenue Code or, now, inclusion of the property in the gross estate of a younger- generation beneficiary under Section 2041 of the Internal Revenue Code, in order to avoid the possibly higher rates imposed by the new federal generation-skipping tax. See Blattmachr & Pennell, “Adventures in Generation Skipping, Or How We Learned to Love the ‘Delaware Tax Trap,’” 24 Real Prop. Prob. & Tr. J. 75 (1989). A general power should not be exercised in such a case without clear evidence of an intent to appoint.
In poorly planned estates, on the other hand, there may be no gift-in-default clause. In the absence of a gift-in-default clause, it seems better to let the property pass under the donee’s
Comment
General Residuary Clause. As revised, this section, in conjunction with Section 2-601, provides that a general residuary clause (such as “All the rest, residue, and remainder of my estate, I devise to...”) in the testator’s will or a will making general disposition of all of the testator’s property (such as “All of my estate, I devise to...”) is presumed to express an intent to exercise a power of appointment held by the donee of the power only if one or the other of two circumstances or sets of circumstances are satisfied. One such circumstance (whether the power is general or nongeneral) is if the testator’s will manifests an intention to include the property subject to the power. A simple example of a residuary clause that manifests such an intention is a so-called “blending” or “blanket-exercise” clause, such as “All the rest, residue, and remainder of my estate, including any property over which I have a power of appointment, I devise to....”
The other circumstance under which a general residuary clause or a will making general disposition of all of the testator’s property is presumed to express an intent to exercise a power is if the power is a general power and the instrument that created the power does not contain a gift over in the event the power is not exercised (a “gift in default”). In well planned estates, a general power of appointment will be accompanied by a gift in default. The gift-in-default clause is ordinarily expected to take effect; it is not merely an after-thought just in case the power is not exercised. The power is not expected to be exercised, and in fact is often conferred mainly to gain a tax benefit – the federal estate-tax marital deduction under Section 2056(b)(5) of the Internal Revenue Code or, now, inclusion of the property in the gross estate of a younger- generation beneficiary under Section 2041 of the Internal Revenue Code, in order to avoid the possibly higher rates imposed by the new federal generation-skipping tax. See Blattmachr & Pennell, “Adventures in Generation Skipping, Or How We Learned to Love the ‘Delaware Tax Trap,’” 24 Real Prop. Prob. & Tr. J. 75 (1989). A general power should not be exercised in such a case without clear evidence of an intent to appoint.
In poorly planned estates, on the other hand, there may be no gift-in-default clause. In the absence of a gift-in-default clause, it seems better to let the property pass under the donee’s
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will than force it to return to the donor’s estate, for the reason that the donor died before the
donee died and it seems better to avoid forcing a reopening of the donor’s estate.
Cross Reference. See also Section 2-704 for a provision governing the meaning of a requirement that a power of appointment be exercised by a reference (or by an express or specific reference) to the power.
Cross Reference. See also Section 2-704 for a provision governing the meaning of a requirement that a power of appointment be exercised by a reference (or by an express or specific reference) to the power.
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