SB759: Bill Text

SB759,,547 (7) “General power of appointment” means a power of appointment exercisable in favor of the powerholder, the powerholder’s estate, a creditor of the powerholder, or a creditor of the powerholder’s estate.

SB759,,548 (8) “Gift-in-default clause” means a clause that identifies a taker in default of appointment.

SB759,,549 (9) “Impermissible appointee” means a person that is not a permissible appointee.

SB759,,550 (10) “Instrument” means a writing.

SB759,,551 (11) “Nongeneral power of appointment” means a power of appointment that is not a general power of appointment.

SB759,,552 (12) “Permissible appointee” means a person in whose favor a powerholder may exercise a power of appointment.

SB759,,553 (13) “Person” means an individual, estate, trust, business or nonprofit entity, public corporation, government or governmental subdivision, agency, or instrumentality, or other legal entity.

SB759,,554 (14) “Power of appointment” means a power that enables a powerholder acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of appointment over the appointive property. “Power of appointment” does not include a power of attorney.

SB759,,555 (15) “Powerholder” means a person in which a donor creates a power of appointment.

SB759,,556 (16) “Presently exercisable power of appointment” means a power of appointment exercisable by the powerholder at the relevant time. “Presently exercisable power of appointment” includes a power of appointment that is not exercisable until the occurrence of a specified event, the satisfaction of an ascertainable standard, or the passage of a specified time, and only after the occurrence of the specified event, the satisfaction of the ascertainable standard, or the passage of the specified time, but does not include a power exercisable only at the powerholder’s death.

SB759,,557 (17) “Specific-exercise clause” means a clause in an instrument that specifically refers to and exercises a particular power of appointment.

SB759,,558 (18) “Taker in default of appointment” means a person that takes all or part of the appointive property to the extent the powerholder does not effectively exercise the power of appointment.

SB759,,559 (19) “Terms of the instrument” means the manifestation of the intent of the maker of the instrument regarding the instrument’s provisions as expressed in the instrument or as may be established by other evidence that would be admissible in a legal proceeding.

SB759,,560 702.103 Governing law. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the creation, revocation, or amendment of a power of appointment is governed by the law of the donor’s domicile at the relevant time. The exercise, release, or disclaimer of a power of appointment, or the revocation or amendment of an exercise, release, or disclaimer of a power of appointment is governed by the law of the powerholder’s domicile at the relevant time.

SB759,,561 702.104 Common law and principles of equity. The common law and principles of equity supplement this chapter, except to the extent modified by this chapter or any other state law.

SB759,,562 702.105 Default rules. The terms of a governing instrument prevail over any provision of this subchapter.

SB759,,563 SUBCHAPTER II

SB759,,565 CREATION, REVOCATION, AND AMENDMENT OF POWER OF APPOINTMENT

SB759,,566 702.201 Creation of power of appointment. (1) A power of appointment is created only if the instrument creating the power satisfies all of the following:

SB759,,567 (a) The instrument is valid under applicable law.

SB759,,568 (b) Except as provided in sub. (2), the instrument governs the disposition of the appointive property.

SB759,,569 (c) The terms of the instrument manifest the donor’s intent to create in a powerholder a power of appointment over the appointive property exercisable in favor of a permissible appointee.

SB759,,570 (2) Subsection (1) (b) does not apply to a power of appointment that is created by the exercise of a power of appointment.

SB759,,571 (3) A power of appointment may not be created in a deceased individual.

SB759,,572 (4) A power of appointment may be created in an unborn or unascertained powerholder.

SB759,,573 702.202 Nontransferability. A powerholder may not transfer a power of appointment. If a powerholder dies without exercising or releasing a power of appointment, the power lapses.

SB759,,574 702.203 Presumption of unlimited authority. Subject to ss. 702.204 and 702.205, and unless the terms of the instrument creating a power of appointment manifest a contrary intent, a power of appointment is all of the following:

SB759,,575 (1) A presently exercisable power of appointment.

SB759,,576 (2) An exclusionary power of appointment.

SB759,,577 (3) A general power of appointment.

SB759,,578 702.204 Exception to presumption of unlimited authority. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the power is a nongeneral power of appointment if all of the following apply:

SB759,,579 (1) The power is exercisable only at the powerholder’s death.

SB759,,580 (2) The permissible appointees of the power are a defined and limited class that does not include the powerholder’s estate, the powerholder’s creditors, or the creditors of the powerholder’s estate.

SB759,,581 702.205 Rules of classification. (1) In this section, “adverse party” means a person with a substantial beneficial interest in appointive property that would be affected adversely by a powerholder’s exercise or nonexercise of a power of appointment in favor of the powerholder, the powerholder’s estate, a creditor of the powerholder, or a creditor of the powerholder’s estate.

SB759,,582 (2) If a powerholder may exercise a power of appointment only with the consent or joinder of an adverse party, the power is a nongeneral power of appointment.

SB759,,583 (3) If the permissible appointees of a power of appointment are not defined and limited, the power is an exclusionary power of appointment.

SB759,,584 702.206 Power to revoke or amend. A donor may revoke or amend a power of appointment only to the extent that any of the following applies:

SB759,,585 (1) The instrument creating the power is revocable by the donor.

SB759,,586 (2) The donor reserves a power of revocation or amendment over the power of appointment in the instrument.

SB759,,587 SUBCHAPTER III

SB759,,588 EXERCISE OF POWER OF APPOINTMENT

SB759,,589 702.301 Requisites for exercise of power of appointment. (1) (a) A power of appointment is exercised only if all of the following apply:

SB759,,590 1. The instrument exercising the power is valid under applicable law.

SB759,,591 2. The terms of the instrument exercising the power do all of the following:

SB759,,592 a. Manifest the powerholder’s intent to exercise the power.

SB759,,593 b. Subject to s. 702.304, satisfy the requirements of exercise, if any, imposed by the donor.

SB759,,594 (b) A power of appointment is exercised under par. (a) only to the extent the appointment is a permissible exercise of the power.

SB759,,595 (2)  If the donor requires the consent of the donor or any other person for the exercise of a power of appointment, the consent must be expressed in the instrument exercising the power of appointment or in a separate written instrument, signed in either case by the persons whose consent is required. If any person whose consent is required dies or becomes legally incapable of consenting, the power of appointment may be exercised by the powerholder without the consent of that person unless the terms of the instrument creating the power of appointment manifest a contrary intent.

SB759,,596 (3) (a) Except as provided in par. (b) and unless the terms of the instrument creating a power of appointment manifest a contrary intent, if a power of appointment is vested in 2 or more persons, the joint powerholders may only exercise the power of appointment unanimously.

SB759,,597 (b) If a power of appointment is vested in 2 or more persons and one or more of the joint powerholders die, become incapable of exercising the power of appointment, or renounce, release, or disclaim the power of appointment, the power of appointment may be exercised unanimously by the other powerholders.

SB759,,598 702.302 Intent to exercise: determining intent from residuary clause. (1) In this section:

SB759,,599 (a) “Residuary clause” does not include a residuary clause containing a blanket-exercise clause or a specific-exercise clause.

SB759,,600 (b) “Will” includes a codicil and a testamentary instrument that revises another will.

SB759,,601 (2) A residuary clause in a powerholder’s will, or a comparable clause in the powerholder’s revocable trust, manifests the powerholder’s intent to exercise a power of appointment only if all of the following apply:

SB759,,602 (a) The terms of the instrument containing the residuary clause do not manifest a contrary intent.

SB759,,603 (b) The power of appointment is a general power of appointment exercisable in favor of the powerholder’s estate.

SB759,,604 (c) There is no gift-in-default clause in the instrument creating the power of appointment or the gift-in-default clause in the instrument creating the power of appointment is ineffective.

SB759,,605 (d) The powerholder did not release the power of appointment.

SB759,,606 702.303 Intent to exercise: after-acquired power. Unless the terms of the instrument exercising a power of appointment manifest a contrary intent, all of the following apply:

SB759,,607 (1) Except as otherwise provided in sub. (2), a blanket-exercise clause extends to a power of appointment acquired by the powerholder after executing the instrument containing the clause.

SB759,,608 (2) If the powerholder is also the donor of the power of appointment, a blanket-exercise clause does not extend to the power of appointment unless there is not a gift-in-default clause or the gift-in-default clause is ineffective.

SB759,,609 702.304 Substantial compliance with donor-imposed formal requirement. A powerholder’s substantial compliance with a formal requirement of appointment imposed by the donor, including a requirement that the instrument exercising the power of appointment make reference or specific reference to the power, is sufficient if all of the following apply:

SB759,,610 (1) The powerholder knows of and intends to exercise the power of appointment.

SB759,,611 (2) The powerholder’s manner of attempted exercise of the power of appointment does not impair a material purpose of the donor in imposing the requirement.

SB759,,612 702.305 Permissible appointment. (1) A powerholder of a general power of appointment that permits appointment to the powerholder or the powerholder’s estate may make any appointment, including an appointment in trust or creating a new power of appointment, that the powerholder could make in disposing of the powerholder’s own property.

SB759,,613 (2) A powerholder of a general power of appointment that permits appointment only to the creditors of the powerholder or the creditors of the powerholder’s estate may appoint only to those creditors.

SB759,,614 (3) Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the powerholder of a nongeneral power of appointment may do any of the following:

SB759,,615 (a) Make an appointment in any form, including an appointment in trust, in favor of a permissible appointee.

SB759,,616 (b) Create a general or nongeneral power of appointment in a permissible appointee that may be exercisable in favor of persons other than permissible appointees of the original nongeneral power of appointment.

SB759,,617 (c) Create a nongeneral power of appointment in any person to appoint to one or more of the permissible appointees of the original nongeneral power of appointment.

SB759,,618 702.306 Appointment to a deceased appointee. Subject to s. 854.06, an exercise of a power of appointment is ineffective to the extent it is in favor of a deceased appointee.

SB759,,619 702.307 Impermissible appointment. (1) Except as otherwise provided in s. 702.306, an exercise of a power of appointment is ineffective to the extent it is in favor of an impermissible appointee.

SB759,,620 (2) An exercise of a power of appointment in favor of a permissible appointee is ineffective to the extent the appointment is a fraud on the power.

SB759,,621 702.308 Selective allocation doctrine. If a powerholder exercises a power of appointment in a disposition that also disposes of property the powerholder owns, the owned property and the appointive property must be allocated in the permissible manner that best carries out the powerholder’s intent.

SB759,,622 702.309 Capture doctrine: disposition of ineffectively appointed property under general power. To the extent a powerholder of a general power of appointment, other than a power to withdraw property from, revoke, or amend a trust, makes an ineffective appointment, all of the following apply:

SB759,,623 (1) The gift-in-default clause controls the disposition of the ineffectively appointed property.

SB759,,624 (2) (a) If there is no gift-in-default clause or to the extent the gift-in-default clause is ineffective, the ineffectively appointed property passes to one of the following:

SB759,,625 1. If the powerholder is a permissible appointee and living, the powerholder.

SB759,,626 2. If the powerholder is an impermissible appointee or deceased, the powerholder’s estate if the estate is a permissible appointee.

SB759,,627 (b) If there is no taker under par. (a), the ineffectively appointed property passes under a reversionary interest to the donor or the donor’s transferee or successor in interest.

SB759,,628 702.310 Disposition of unappointed property under released or unexercised general power. To the extent a powerholder releases or fails to exercise a general power of appointment other than a power to withdraw property from, revoke, or amend a trust, all of the following apply:

SB759,,629 (1) The gift-in-default clause controls the disposition of the unappointed property.

SB759,,630 (2) (a) If there is no gift-in-default clause or to the extent the gift-in-default clause is ineffective, except as otherwise provided in par. (b), the unappointed property passes to any of the following:

SB759,,631 1. If the powerholder is a permissible appointee and living, the powerholder.

SB759,,632 2. If the powerholder is an impermissible appointee or deceased, the powerholder’s estate if the estate is a permissible appointee.

SB759,,633 (b) To the extent the powerholder released the power, or if there is no taker under par. (a), the unappointed property passes under a reversionary interest to the donor or the donor’s transferee or successor in interest.

SB759,,634 702.311 Disposition of unappointed property under released or unexercised nongeneral power of appointment. To the extent a powerholder releases, ineffectively exercises, or fails to exercise a nongeneral power of appointment, all of the following apply:

SB759,,635 (1) The gift-in-default clause controls the disposition of the unappointed property.

SB759,,636 (2) (a) If there is no gift-in-default clause or to the extent the gift-in-default clause is ineffective, the unappointed property passes to the permissible appointees if all of the following apply: