Beals v. State Street Bank & Trust Co

Brief Fact Summary. Isabella Dexter created a will that disposed all of her property to the issue of her sister who predeceased her. Dexter also held a power of appointment over her father’s trust. However, Dexter did not specifically exercise a power of appointment to her father’s trust before her death.

Synopsis of Rule of Law. A general power is closer to a property interest while a special power is one where a person decided who will share in the trust property. A person having a general power of appointment is not expected to distinguish his own property from the property subject to the appointment.

Facts. Dexter was the beneficiary of a trust created by her father where she received a certain portion of the income during her lifetime. Dexter had the power to pay and dispose of the property as she may direct and appoint by her last will and testament in favor of persons who would be entitled to such estate under the laws then governing the distribution of intestate estates. During her lifetime, Dexter requested that the trustees make principal payments by transferring almost all of her share to her husband’s family. In her will, Dexter disposed her property to the issue of her sister Margaret Blake who predeceased her. At her death, Dexter owned some assets outright while $88,000 was still in trust.

Issue. Whether a testator exercises a power of appointment over a trust in her will if she does not express nor implies intent to exercise that power?

Held. Yes. The testator exercised her power of appointment even though she did not express a specific intent to exercise the power because the power was general. The holder of a general power of appointment is not expected to distinguish between the property subject to the power and her own property. The testator’s power was general because she treated the trust property as her own during her lifetime. She had the use and enjoyment of the appointive property that was initially placed in her trust share. Also, she relinquished the right to add the trust property to her estate and gave away part of her power.

Discussion. Where a beneficiary of a trust is deemed to have been given a general power of appointment, they are not required to distinguish between the trust property and their own property in to order to exercise the power.