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Florida Law Supporting the Special Power of Appointment Trust (SPA Trust)

National Authorities:

The Restatement (3rd) of Trusts § 56(b)

“[T]he creditors of the donee of a nongeneral power of appointment (one that cannot be exercised for the economic benefit of the power holder), whether or not presently exercisable, cannot reach the property subject to the power for the satisfaction of their claims[.]”


Florida Statutory Law:

Florida Estates and Trusts Law, Florida Statutes § 731.201

 (30) "Power of appointment" means an authority, other than as an incident of the beneficial ownership of property, to designate recipients of beneficial interests in property.

Florida Estates and Trusts Law, Florida Statutes § 732.607

A general residuary clause in a will, or a will making general disposition of all the testator's property, does not exercise a power of appointment held by the testator unless specific reference is made to the power or there is some other indication of intent to include the property subject to the power.

Florida Estates and Trusts Law, Florida Statutes § 739.205

 If a holder disclaims a power of appointment or other power not held in a fiduciary capacity, the following rules apply:

   (1) If the holder has not exercised the power, the disclaimer takes effect as of the time the instrument creating the power becomes irrevocable.

   (2) If the holder has exercised the power and the disclaimer is of a power other than a presently exercisable general power of appointment, the disclaimer takes effect immediately after the last exercise of the power.

   (3) The instrument creating the power is construed as if the power expired when the disclaimer became effective.


Caselaw from the Florida Supreme Court:

Old Port Cove Holdings Inc. v. Old Port Cove Condo. Ass'n. One Inc., 986 So.2d 1279, 1283 (Fla. 2008).

"With eight exceptions, the statute excludes nonvested property interests and powers of appointment arising out of "a nondonative transfer." Id. (codified at § 689.225(5)(a), Fla. Stat. (1989)). The law also added, among other things, a provision through which interests created before October 1, 1988, that violate the rule against perpetuities could be reformed "in the manner that most closely approximates the transferor's manifested plan . . . and is within the limits of the rule against perpetuities applicable when the nonvested property interest or power of appointment was  created." "

Estate of Stewart v. Caldwell, 271 So.2d 754, 756–57 (Fla. 1972).

"The power of appointment given Shea under the Will is a naked power not coupled with an interest, in that he neither has nor acquires, any estate in the interest to be disposed of. The power is also classified, as the Court below correctly held, as a special power of appointment, in that it is a power to appoint among members of a class or classes specified in the Will. Unlike a general power, a special power of appointment cannot be exercised in favor of the donee or his estate."

Phipps v. Palm Beach Trust Co., 142 Fla. 782, 785 (1940).

"We are confronted here with powers of the latter class and the rule is that if a trustee has a general power of appointment, that is a power to appoint anyone he may select including himself, he can effectively appoint one as trustee for himself or for another person. If a trustee has a special power of appointment that is a power to appoint among the members of a specified class, whether he can effectively appoint a trustee for members of the class depends upon the terms of the power vested in him. [cit.]
The exercise of the power of appointment by the creation of a second trust such as is involved here has been upheld many times but an examination of some of the cases shows that all of them turn on the facts of the particular case and the terms of the instrument creating the trust."



Caselaw from other Florida courts:

Richardson v. Richardson, 524 So2d 1126, 1127 (Fla. 5th DCA 1988).

Interpreting a general power of appointment.

Ferrell-French v. Ferrell, 691 So2d 500, 501 (Fla. 4th DCA 1997).

"Although there is a dearth of authority in Florida on the question of whether a power of appointment is exclusive or non-exclusive, the modern trend is that unless the donor manifests a contrary intent, a special power of appointment is exclusive, allowing the donee to exercise it in favor of any of the objects, to the exclusion of others. 62 Am. Jur. 2d, Powers of Appointment § 183 (1990)."

At page 502: "The donee of a power of appointment in exercising the power may exclude one or more of the objects from receiving an interest in the appointive assets unless the donor specifies the share of the appointive assets from which an object may not be excluded. If the donor does not specify any such share, the power is exclusive. . . . We hold that a power of appointment is exclusive, unless the donor expressly manifests a contrary intent.  Applying that principle here, and finding no intent manifested by the language in the testator's will to restrict the power of appointment so that it is non-exclusive, we conclude that appellant could properly be excluded."

In re Knight, 164 BR 372 (S.D. Fla. Bankr. Ct. 1994).

"As in Hicks, Mrs. Knight has the power of appointment as to the corpus of the Part A Trust. As such, the Debtor's interest in the Part A Trust is too remote to have value and does not constitute property of the estate."

Kirschner v. Fromberg, 1989 Fla. App. LEXIS 4933 (Fla. 3d DCA 1989) (unpublished decision).

"We agree  with the trial court that Toby's exercise of her special power of appointment in Max's favor, to the exclusion of Arthur and Norma, was proper. Although the result may appear inequitable, under the express terms of the will Toby could favor Max, her son, over both Norma and Arthur, her husband's natural children."



Related topics:
    SPA Trust