Most often, a person making a will decides exactly how their estate will be divided and to whom their assets will be gifted, subject of course to any legal limitations (such as creditors, taxes and family obligations). It is, however, possible to give someone else the authority to make that decision. This is known as a power of appointment. A power of appointment is essentially a power or authority a person grants in their will to another person to select the person(s) who are to receive and enjoy their estate, the income from their estate or from a fund after the will maker’s death or the donee`s death.
In Re Nicholls, 1987 CanLII 4398 (ON CA), the testatrix, who was a member of an unorganized religious sect, directed her executor to follow the directions of a named person (the “Appointee”) in the distribution of the residue of her estate (the residue being the portion of her estate which remained after specific gifts and legal and administrative expenses had been satisfied). She had supported the sect’s mission for many years. The Appointee directed the executor to distribute the residue among six members of the sect who were involved in its missions work. The executor applied to the court for directions about this clause.
If the court declared the clause to be invalid, the residue would be distributed to the testatrix’s relatives on an intestacy; that is, as if no valid will existed with respect to the assets comprising the residue.
It was decided at trial and on appeal that the relevant will clause was a valid power of appointment and therefore a valid testamentary disposition of the residue. In making this decision, the court of appeal affirmed that it was not aware of any legal principle that prevents a testator from giving another person the right to direct that the testator’s estate be paid to him personally for his own benefit or be paid to such others as he directs. The court further commented that “the right of an individual to dispose of his assets as he sees fit is basic to our law and should not be interfered with unless the interference is justified on policy grounds.”
The court also observed that it is indeed “common practice for a husband to leave his estate to his wife for life with the right to encroach on the capital and on her death to such persons as she by will appoint. Such dispositions have been held valid by the courts. Henderson v. Henderson (1922), 52 O.L.R. 440.”
To discuss your options for division of your estate, please contact Andrea Kelly.
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Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.