A follow-up question from my last LISTEN TO LAWRENCE LETTER on powers of appointment:
I have a technical question about the power of appointment. If you are saying children and their issue without naming them specifically, then how can we leave any of our children out? Unless you are including a paragraph specifically excluding someone; is that how the issue is remedied?
You will start out your trust by naming anyone you want as a beneficiary. You will also start out the trust having the power to change the beneficiaries at any time. Usually, you can name a different configuration of beneficiaries among your issue (children, grandchildren, great-grandchildren).
Example: “Upon the death of the grantor, the grantor names his two children, per stirpes as beneficiaries.” That means both children would inherit, but if one is predeceased, their children will take the share of the predeceased child. The trust will also say that you retain a power of appointment to change the beneficiaries among your children and their issue, in any way you want. As a result, you may later decide that child number one should not get his amount outright, but rather in a trust…and child number two was naughty, so her share will go to her children instead. You cannot give a portion to someone who is not mentioned, like your new boyfriend…any beneficiary must be mentioned up front in the trust.
The bottom line is that with careful drafting, you can change the beneficiaries of your trust among the choices you give yourself, usually between your children and their issue. A power of appointment is a powerful tool in our arsenal to help make you comfortable with future changes.
I hope this helps! Please forward this information to your friends and relatives to share these informative answers to some very commonly asked questions.