Purpose of Powers of Appointment

A power of appointment allows the person who holds the power to change who will get the property. By giving the power to appoint property, the person who creates the power postpones and delegates the decision about who will benefit from the property. Deferring a decision on designating beneficiaries serves several purposes: (1) It provides flexibility in the event of changed circumstances, such as a change in the law or in the beneficiaries (e.g., a death, birth, divorce, or lawsuit). (2) It creates an incentive for intended beneficiaries to comply with the wishes of the power holder because the power holder can remove any beneficiaries.