Powers of Appointment
A power of appointment is a power vested in a person (including a body corporate) to control the exercise of discretionary powers.
In a discretionary trust or will (testamentary trust) the person holding a power of appointment has the power to replace the trustee and appoint a new trustee.
As such, whilst the trustees of a trust may exercise the day to day powers conferred on them under the trust deed (for as long as they hold the position of trustee), the appointor nominated in the trust deed has ultimate power to replace the trustees and appoint a new trustee.
Such powers of appointment can usually be transferred under your will subject to the terms of the discretionary trust or will trust that created the power of appointment.
Fiduciary like obligations
The holder of a power of appointment may have fiduciary obligations in the exercise of their powers (eg to ensure the power is exercised for the benefit of the trust, to act in interests of the beneficiaries as a whole etc).
An example of a power conferring fiduciary like obligations on an appointor is where as appointor you are required to give your consent to an act or exercise of a power of the trustee in circumstances where the trustee has a conflict of interest in the exercise of its discretion.
The role of the appointor can therefore be an important tool in the exercise of control when preparing an Estate plan.
Attorney replacing an appointor who has suffered loss of capacity
An appointor losing capacity is an event not commonly anticipated. If the trust deed does not provide for disqualification on the grounds of loss of capacity, the incumbent appointor (the defacto controller of the trust) may wish to appoint their attorney as the replacement appointor in the event of loss of capacity.
