Supplemental Power of Appointment

A Supplemental Power of Appointment is a legal provision that allows a person, often referred to as the "powerholder," to designate who will receive certain assets held in a trust or estate after their death or during their lifetime. This type of power is typically included in a trust document or will, providing the powerholder with the flexibility to adjust the distribution of assets based on changing circumstances or relationships.

The Supplemental Power of Appointment can be categorized into two types: a general power of appointment and a special (or limited) power of appointment. A general power allows the powerholder to appoint assets to anyone, including themselves, their estate, or their creditors. In contrast, a special power restricts the powerholder to appointing assets only to a specified group of individuals or entities.

For example, if a trust grants a beneficiary a Supplemental Power of Appointment, that beneficiary can decide how to distribute the trust assets among their descendants, potentially altering the course of asset distribution based on their personal preferences or circumstances at the time of their decision. Such a feature can be advantageous for estate planning, as it accommodates changes in family dynamics or financial situations, ensuring that the trust remains relevant and effective over time.

In Texas, including Houston and surrounding areas, the use of a Supplemental Power of Appointment must adhere to state laws governing trusts and estates. Proper drafting and execution are crucial to ensure that the powerholder’s rights and the intentions of the trust creator are respected and legally enforceable.