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AMERICAN BAR ASSOCIATION
ADOPTED BY THE HOUSE OF DELEGATES
FEBRUARY 10, 2014
RESOLUTION
RESOLVED, That the American Bar Association approves the Uniform Powers of Appointment
Act, promulgated by the National Conference of Commissioners on Uniform State Laws, as an
appropriate Act for those states desiring to adopt the specific substantive law suggested herein.
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REPORT
Uniform Powers of Appointment Act
Summary
Powers of appointment are routinely included in trusts drafted throughout the United
States, but little statutory law governs their use. Instead, estate planning attorneys rely on
a patchwork of common-law decisions. The Uniform Powers of Appointment Act
codifies the law on powers of appointment, relying heavily on the Restatement (Third) of
Property: Wills and Other Donative Transfers, published in 2011 by the American Law
Institute. Therefore, estate planners will be familiar with the provisions of this uniform
act.
Article 1 includes definitions and other general provisions. Article 2 provides rules for
the creation, revocation, and amendment of powers of appointment. Article 3 governs the
exercise of powers by the powerholder and the distribution of appointive property.
Article 4 is concerned with disclaimers, releases, and contracts between a powerholder
and permissible beneficiary to appoint or not to appoint property. Article 5 outlines the
rights of a powerholder’s creditors in appointive property. Finally, Article 6 contains
boilerplate provisions common to uniform acts. The act’s highlights are summarized
below.
Article 1
The Uniform Powers of Appointment Act defines three specific roles: the person who
creates a power of appointment is the “Donor.” The person who may exercise the power
is the “Powerholder” (rather than the more confusing “donee”). A person who may
receive appointive property is a “Permissible appointee” (or just an “Appointee”
following receipt).
The uniform act defines a “power of appointment” as “a power that enables a
powerholder acting in a nonfiduciary capacity to designate a recipient of an ownership
interest in or another power of appoint over the appointive property.” Other definitions
describe the types of powers and the methods of exercising a power.
Article 2
Section 201 provides a permissive standard governing creation of powers of appointment:
the power must be in a valid governing instrument that transfers the appointive property
and must use terms showing the donor’s intent to create a power to appoint property.
Other provisions state that a power is nontransferable and provide rules and presumptions
as to the extent of the power, which are applicable if the terms of the power are not
sufficiently clear. Finally, Section 206 states that a power may not be revoked or
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amended unless either (i) the instrument creating the power is revocable; or (ii) the donor
reserves a power of revocation or amendment.
Article 3
Section 301 sets out the rules for exercising a power of appointment; sections 302 - 304
apply if the powerholder’s intent is unclear. Section 305 clarifies that a powerholder
may, unless otherwise prohibited, make an appointment to a permissible appointee in any
form, including in trust or by creating a general power of appointment. Other sections
govern appointments to deceased or impermissible appointees, disposition of unappointed
property, and a powerholder’s ability to revoke or amend an exercise of power.
Article 4
Section 401 provides that a state’s general law on disclaimers applies to both
powerholders and permissible appointees. Sections 402 gives a powerholder authority to
release a power unless prohibited by the donor, Section 403 provides a method for
releasing powers of appointment, and Section 404 provides rules for revoking or
amending a release. Finally, Sections 405 and 406 govern contracts to exercise, or not to
exercise, a power of appointment.
Article 5
This article governs creditor claims on appointive property. The rules depend on whether
the powerholder also created the power, and whether the powerholder has a power to
withdraw property from a trust.
Conclusion
Nothing in the Uniform Powers of Appointment Act should be new or controversial, as
the provisions will be familiar to estate planning attorneys. Attorneys and their clients
will benefit from the certainty provided by this codification of common law principles.
The act should be considered by the legislature in every jurisdiction as soon as feasible.
The work of the Drafting Committee is available at www.uniformlaws.org, the website of
the Conference. A direct link to the Uniform Powers of Appointment Act is available
here.
Respectfully submitted,
Harriet Lansing
President
National Conference of Commissioners
on Uniform State Laws
February 2014
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GENERAL INFORMATION FORM
Submitting Entity: National Conference of Commissioners on Uniform State Laws
Submitted By: John Sebert, Executive Director
1. Summary of Resolution(s).
The National Conference of Commissioners on Uniform State Laws (NCCUSL)
requests approval of the Uniform Powers of Appointment Act by the American Bar
Association (ABA) House of Delegates.
2. Approval by Submitting Entity.
The National Conference of Commissioners on Uniform State Laws granted final
approval to the Act at its July 2013 Annual Meeting.
3. Has this or a similar resolution been submitted to the House or Board previously?
No
4.
What existing Association policies are relevant to this Resolution and how would
they be affected by its adoption?
There are no existing ABA policies concerning powers of appointment to be
affected.
5. If this is a late report, what urgency exists which requires action at this meeting of the
House?
Not applicable.
6. Status of Legislation. (If applicable)
The Uniform Powers of Appointment Act has not yet been enacted in any state
legislature.
7.
Brief explanation regarding plans for implementation of the policy, if adopted by the
House of Delegates.
The National Conference will present the Act to state legislatures for consideration
and enactment.
8. Cost to the Association. (Both direct and indirect costs)
None
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9. Disclosure of Interest. (If applicable)
None
10. Referrals.
Pursuant to the agreement between the NCCUSL and the ABA, all members of the
House of Delegates and Chairs of all ABA entities were advised of the drafting
project and those that expressed interest were provided with tentative drafts. The
Drafting Committee’s work can be found at www.uniformlaws.org. A direct link to
the Uniform Powers of Appointment Act is available here.
The ABA Advisor for the Uniform Powers of Appointment Act was Amy Morris
Hess of the Section of Real Property, Trust and Estate Law.
11. Contact Name and Address Information. (Prior to the meeting. Please include name,
address, telephone number and e-mail address)
John A. Sebert, NCCUSL Executive Director
111 North Wabash Avenue, Suite 1010
Chicago, IL 60602
(312) 450-6603 (office)
(312) 218-1485 (cell)
john.sebert@uniformlaws.org
Terry Morrow, NCCUSL Legislative Director
111 North Wabash Avenue, Suite 1010
Chicago, IL 60602
(312) 450-6620 (office)
(312) 485-0451 (cell)
terry.morrow@uniformlaws.org
12. Contact Name and Address Information. (Who will present the report to the House?
Please include name, address, telephone number, cell phone number and e-mail
address.)
Harriet Lansing, NCCUSL President
1 Heather Place
Saint Paul, MN 55102-2615
(651) 224-3017
harrietlansing@cs.com
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EXECUTIVE SUMMARY
1.
Summary of the Resolution
That the American Bar Association approves the Uniform Powers of Appointment
Act promulgated by the National Conference of Commissioners on Uniform State
Laws in July 2013 as an appropriate Act for those states desiring to adopt the
specific substantive law suggested therein.
2.
Summary of the Issue that the Resolution Addresses
The Uniform Powers of Appointment Act provides a core device in modern estate
planning practice. Powers of appointment are routinely included in trusts for tax
reasons and to add flexibility to property arrangements.
3.
Please Explain How the Proposed Policy Position will address the issue
Approval of the Uniform Powers of Appointment Act by the American Bar
Association House of Delegates would demonstrate to states that the Act is an
appropriate approach for addressing the issues described above.
4.
Summary of Minority Views
None known.
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