What a General Power of Appointment Means and How It Works

A general power of appointment lets one person give another the right to decide who gets their money or property

A general power of appointment is a legal tool that lets you hand someone else the power to decide what happens to your money or property after you die — or sometimes while you're still alive. The person who gets this power (called the appointee) can give those assets to almost anyone they choose, including themselves, their own estate, or their creditors. It's different from other powers of appointment because it's the broadest kind: the appointee has almost no restrictions on who can receive what you leave behind.

You create a general power of appointment through a will, a trust, or sometimes a deed. The person holding the power doesn't have to use it — they can let the assets go to whoever you named as the backup recipient. But if they do use it, they have wide freedom to redirect those assets. This matters because it changes who actually controls the money, and it can affect taxes and creditor claims after someone dies.

Key Takeaways

• A general power of appointment gives the appointee the right to decide who receives your assets, including themselves or their own creditors.
• You create this power through a will, trust, or deed, and you name who holds it and what assets it covers.
• The appointee can choose to use the power or let assets pass to the backup recipients you named instead.
• A general power of appointment affects estate taxes and may be treated as part of the appointee's taxable estate, even if they don't use it.
• If the appointee dies without using the power, the assets usually go to whoever you named as the default recipient in your original document.

How a general power of appointment differs from a limited one

The main difference comes down to freedom. With a limited power of appointment (also called a special power), you restrict who the appointee can choose. You might say "my daughter can decide which of my grandchildren get the money, but not herself." With a general power, you place almost no restrictions — the appointee can pick anyone, including themselves.

This distinction matters for taxes and for creditor protection. A general power is treated more like the appointee's own property for federal estate tax purposes, which can increase what their heirs owe in taxes. A limited power usually isn't taxed that way. If you're trying to protect assets from creditors or keep taxes lower, a limited power is often the better choice. But if you want to give someone maximum flexibility to handle unexpected situations, a general power does that.

Who you name as the appointee and what they can do

You choose the appointee — the person who gets the power to decide. This is often a spouse, adult child, or trusted family member, but it can be anyone you name. The appointee doesn't have to accept the power, and they don't have to use it if they do accept it.

If the appointee chooses to use the power, they can direct the assets to themselves, to other family members, to charities, or to their own creditors. They can give everything to one person or split it among many. They can do this in their own will, in a separate document called a "deed of appointment," or sometimes through a trust amendment. The only real limit is that they must act during their lifetime or in their will — they can't give the power to someone else (unless you specifically allowed that in the original document).

If the appointee never uses the power, the assets pass according to the backup plan you wrote into your original will or trust. This is called the "default" or "in default" distribution, and it's your safety net if the appointee decides not to exercise the power.

Tax consequences of holding a general power of appointment

This is where a general power gets complicated. For federal estate tax purposes, if someone holds a general power of appointment at the time they die, the assets covered by that power are usually included in their taxable estate — even if they never used the power. This can significantly increase the size of their estate and the taxes their heirs owe.

The tax treatment depends on when the power was created and what the appointee actually did with it. If the appointee exercised the power during their lifetime, those assets are definitely taxable in their estate. If they held the power but never used it, the assets may still be taxable depending on the exact language in your original document and current tax law. This is why people with general powers of appointment often work with a tax professional or estate attorney to understand their obligations.

A limited power of appointment usually avoids this tax problem, which is one reason many people choose that route instead. If tax planning is important to you, discuss the difference with an attorney before you decide which type of power to create.

When you might use a general power of appointment

A general power of appointment makes sense when you want to give someone maximum flexibility to handle your assets after you die. Common situations include giving a spouse broad authority to redirect property if circumstances change, or giving a trusted adult child the power to adjust distributions among younger siblings if needs shift over time.

You might also use a general power if you're uncertain about future family situations and want one person to have the authority to adapt. For example, if you have grandchildren but expect more to be born, you could give your child a general power to decide how to divide assets among all grandchildren — born and unborn — rather than trying to name them all now.

However, a general power also means you're giving up some control. Once you create it, you can't take it back, and the appointee can use it in ways you didn't anticipate. If you want to keep tighter control over who gets what, a limited power or no power at all might be a better fit.

What happens if the appointee dies without using the power

If the person holding the general power of appointment dies without ever exercising it, the assets don't automatically become theirs. Instead, they pass according to the backup instructions you included in your original will or trust. You would have written something like "if the appointee doesn't use this power, the assets go to my children in equal shares" or "go to my designated charity."

This is why the backup plan matters: it's your safety net if the appointee chooses not to use the power or dies before they can use it. Make sure your will or trust document clearly spells out what should happen in that scenario. If your document doesn't address it, state law will decide, and the result may not match what you wanted.

How to set up a general power of appointment

You create a general power of appointment by including it in your will, revocable living trust, or sometimes a deed. The document must clearly name the appointee, describe which assets the power covers, and explain what restrictions (if any) apply. You also need to state what happens if the appointee doesn't use the power — this is your default distribution clause.

Because a general power has tax and legal consequences, it's worth having an attorney draft or review the language. A poorly worded power can create confusion about whether it's general or limited, which can cause problems later. An attorney can also help you decide whether a general power or a limited power better matches your goals, and can explain the tax impact before you commit.

If you already have a will or trust with a general power of appointment in it, review it periodically — especially if your family situation changes, if tax law changes, or if the appointee's circumstances shift. You can amend or revoke the power if you change your mind.

Frequently Asked Questions

Can the appointee use a general power of appointment to give assets to themselves?

Yes. That's what makes it "general" — the appointee can direct assets to themselves, their spouse, their estate, or their creditors. This is the main difference from a limited power, which usually restricts who can receive the assets.

What's the difference between a general power and a limited power for tax purposes?

A general power is usually included in the appointee's taxable estate at death, even if they never use it. A limited power typically isn't taxed that way. This can make a significant difference in estate taxes owed by the appointee's heirs, which is why many people choose a limited power instead.

Can I take back a general power of appointment after I create it?

If you created the power in a revocable will or revocable trust, you can amend or revoke it during your lifetime. If it's in an irrevocable trust or a deed, you usually cannot take it back. Check your original document or talk to an attorney about your specific situation.

What happens if the appointee doesn't want the power?

The appointee can refuse to accept the power. If they do, the assets pass according to the backup plan you wrote into your original document. You should have a clear default distribution clause for exactly this reason.

Does the appointee have to tell anyone if they use the power?

There's no legal requirement to announce it, but it's good practice. If the appointee exercises the power, they should document it clearly in their will or a separate deed of appointment so there's no confusion about what they intended. This also helps their own heirs understand what happened to the assets.