Virginia Law

Article 3. Exercise of Power of Appointment.

A power of appointment is exercised only:

1. If the instrument exercising the power is valid under applicable law;

2. If the terms of the instrument exercising the power:

a. Manifest the powerholder's intent to exercise the power; and

b. Subject to § 64.2-2716, satisfy the requirements of exercise, if any, imposed by the donor; and

3. To the extent that the appointment is a permissible exercise of the power.

2016, c. 266.

A. As used in this section:

"Residuary clause" does not include a residuary clause containing a blanket-exercise clause or a specific-exercise clause.

"Will" includes a codicil and a testamentary instrument that revises another will.

B. 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:

1. The terms of the instrument containing the residuary clause do not manifest a contrary intent;

2. The power is a general power exercisable in favor of the powerholder's estate;

3. There is no gift-in-default clause or the clause is ineffective; and

4. The powerholder did not release the power.

2016, c. 266.

Unless the terms of the instrument exercising a power of appointment manifest a contrary intent:

1. Except as otherwise provided in subdivision 2, a blanket-exercise clause extends to a power acquired by the powerholder after executing the instrument containing the clause; and

2. If the powerholder is also the donor of the power, the clause does not extend to the power unless there is no gift-in-default clause or the gift-in-default clause is ineffective.

2016, c. 266.

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:

1. The powerholder knows of and intends to exercise the power; and

2. The powerholder's manner of attempted exercise of the power does not impair a material purpose of the donor in imposing the requirement.

2016, c. 266.

A. 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.

B. A powerholder of a general power of appointment that permits appointment only to the creditors of the powerholder or of the powerholder's estate may appoint only to those creditors.

C. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the powerholder of a nongeneral power may:

1. Make an appointment in any form, including an appointment in trust, in favor of a permissible appointee;

2. Create a general power or a nongeneral power in a permissible appointee; or

3. Create a nongeneral power in an impermissible appointee to appoint to one or more of the permissible appointees of the original nongeneral power.

2016, c. 266.

An appointment to a deceased appointee is ineffective.

2016, c. 266.

A. An exercise of a power of appointment in favor of an impermissible appointee is ineffective.

B. An exercise of a power of appointment in favor of a permissible appointee is ineffective to the extent that the appointment is a fraud on the power.

2016, c. 266.

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 shall be allocated in the permissible manner that best carries out the powerholder's intent.

2016, c. 266.

To the extent that 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:

1. The gift-in-default clause controls the disposition of the ineffectively appointed property; or

2. If there is no gift-in-default clause or to the extent that the clause is ineffective, the ineffectively appointed property:

a. Passes to:

(1) The powerholder if the powerholder is a permissible appointee and living; or

(2) If the powerholder is an impermissible appointee or deceased, the powerholder's estate if the estate is a permissible appointee; or

b. If there is no taker under subdivision 2 a, passes under a reversionary interest to the donor or the donor's transferee or successor in interest.

2016, c. 266.

To the extent that 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:

1. The gift-in-default clause controls the disposition of the unappointed property; or

2. If there is no gift-in-default clause or to the extent that the clause is ineffective:

a. Except as otherwise provided in subdivision 2 b, the unappointed property passes to:

(1) The powerholder if the powerholder is a permissible appointee and living; or

(2) If the powerholder is an impermissible appointee or deceased, the powerholder's estate if the estate is a permissible appointee; or

b. To the extent that the powerholder released the power, or if there is no taker under subdivision 2 a, the unappointed property passes under a reversionary interest to the donor or the donor's transferee or successor in interest.

2016, c. 266.

To the extent that a powerholder releases, ineffectively exercises, or fails to exercise a nongeneral power of appointment:

1. The gift-in-default clause controls the disposition of the unappointed property; or

2. If there is no gift-in-default clause or to the extent that the clause is ineffective, the unappointed property:

a. Passes to the permissible appointees if:

(1) The permissible appointees are defined and limited; and

(2) The terms of the instrument creating the power do not manifest a contrary intent; or

b. If there is no taker under subdivision 2 a, passes under a reversionary interest to the donor or the donor's transferee or successor in interest.

2016, c. 266.

Unless the terms of the instrument creating or exercising a power of appointment manifest a contrary intent, if the powerholder makes a valid partial appointment to a taker in default of appointment, the taker in default of appointment may share fully in unappointed property.

2016, c. 266.

If a powerholder makes an appointment to a taker in default of appointment and the appointee would have taken the property under a gift-in-default clause had the property not been appointed, the power of appointment is deemed not to have been exercised and the appointee takes under the clause.

2016, c. 266.

A powerholder may revoke or amend an exercise of a power of appointment only to the extent that:

1. The powerholder reserves a power of revocation or amendment in the instrument exercising the power of appointment, and if the power is nongeneral, the terms of the instrument creating the power of appointment do not prohibit the reservation; or

2. The terms of the instrument creating the power of appointment provide that the exercise is revocable or amendable.

2016, c. 266.