Chapter 702

subch. II of ch. 702 SUBCHAPTER II

CREATION, REVOCATION, AND AMENDMENT
OF POWER OF APPOINTMENT

702.201 702.201 Creation of power of appointment.

702.201(1) (1) A power of appointment is created only if the instrument creating the power satisfies all of the following:

702.201(1)(a) (a) The instrument is valid under applicable law.

702.201(1)(b) (b) Except as provided in sub. (2), the instrument governs the disposition of the appointive property.

702.201(1)(c) (c) The terms of the instrument manifest the donor’s intent to create in a powerholder a power of appointment over the appointive property exercisable in favor of a permissible appointee.

702.201(2) (2) Subsection (1) (b) does not apply to a power of appointment that is created by the exercise of a power of appointment.

702.201(3) (3) A power of appointment may not be created in a deceased individual.

702.201(4) (4) A power of appointment may be created in an unborn or unascertained powerholder.

702.201 History History: 2023 a. 127.

702.201 Annotation A warranty deed grants a present fee simple interest. A purported reservation of a power of appointment in a warranty deed is ineffective. Powers may be reserved and a lesser interest granted, but not by warranty deed. Lucareli v. Lucareli, 2000 WI App 133, 237 Wis. 2d 487, 614 N.W.2d 60, 99-1679.

702.201 Note NOTE: The above annotation relates to powers of appointment under former ch. 702, 1997 stats., prior to the repeal and recreation of this chapter by 2023 Wis. Act 127.

702.202 702.202 Nontransferability. A powerholder may not transfer a power of appointment. If a powerholder dies without exercising or releasing a power of appointment, the power lapses.

702.202 History History: 2023 a. 127.

702.203 702.203 Presumption of unlimited authority. Subject to ss. 702.204 and 702.205, and unless the terms of the instrument creating a power of appointment manifest a contrary intent, a power of appointment is all of the following:

702.203(1) (1) A presently exercisable power of appointment.

702.203(2) (2) An exclusionary power of appointment.

702.203(3) (3) A general power of appointment.

702.203 History History: 2023 a. 127.

702.204 702.204 Exception to presumption of unlimited authority. Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the power is a nongeneral power of appointment if all of the following apply:

702.204(1) (1) The power is exercisable only at the powerholder’s death.

702.204(2) (2) The permissible appointees of the power are a defined and limited class that does not include the powerholder’s estate, the powerholder’s creditors, or the creditors of the powerholder’s estate.

702.204 History History: 2023 a. 127.

702.205 702.205 Rules of classification.

702.205(1) (1) In this section, “adverse party” means a person with a substantial beneficial interest in appointive property that would be affected adversely by a powerholder’s exercise or nonexercise of a power of appointment in favor of the powerholder, the powerholder’s estate, a creditor of the powerholder, or a creditor of the powerholder’s estate.

702.205(2) (2) If a powerholder may exercise a power of appointment only with the consent or joinder of an adverse party, the power is a nongeneral power of appointment.

702.205(3) (3) If the permissible appointees of a power of appointment are not defined and limited, the power is an exclusionary power of appointment.

702.205 History History: 2023 a. 127.

702.206 702.206 Power to revoke or amend. A donor may revoke or amend a power of appointment only to the extent that any of the following applies:

702.206(1) (1) The instrument creating the power is revocable by the donor.

702.206(2) (2) The donor reserves a power of revocation or amendment over the power of appointment in the instrument.

702.206 History History: 2023 a. 127.

subch. III of ch. 702 SUBCHAPTER III

EXERCISE OF POWER OF APPOINTMENT

702.301 702.301 Requisites for exercise of power of appointment.

702.301(1) (1) 

702.301(1)(a) (a) A power of appointment is exercised only if all of the following apply:

702.301(1)(a)1. 1. The instrument exercising the power is valid under applicable law.

702.301(1)(a)2. 2. The terms of the instrument exercising the power do all of the following:

702.301(1)(a)2.a. a. Manifest the powerholder’s intent to exercise the power.

702.301(1)(a)2.b. b. Subject to s. 702.304, satisfy the requirements of exercise, if any, imposed by the donor.

702.301(1)(b) (b) A power of appointment is exercised under par. (a) only to the extent the appointment is a permissible exercise of the power.

702.301(2) (2) If the donor requires the consent of the donor or any other person for the exercise of a power of appointment, the consent must be expressed in the instrument exercising the power of appointment or in a separate written instrument, signed in either case by the persons whose consent is required. If any person whose consent is required dies or becomes legally incapable of consenting, the power of appointment may be exercised by the powerholder without the consent of that person unless the terms of the instrument creating the power of appointment manifest a contrary intent.

702.301(3) (3) 

702.301(3)(a) (a) Except as provided in par. (b) and unless the terms of the instrument creating a power of appointment manifest a contrary intent, if a power of appointment is vested in 2 or more persons, the joint powerholders may only exercise the power of appointment unanimously.

702.301(3)(b) (b) If a power of appointment is vested in 2 or more persons and one or more of the joint powerholders die, become incapable of exercising the power of appointment, or renounce, release, or disclaim the power of appointment, the power of appointment may be exercised unanimously by the other powerholders.

702.301 History History: 2023 a. 127.

702.302 702.302 Intent to exercise: determining intent from residuary clause.

702.302(1) (1) In this section:

702.302(1)(a) (a) “Residuary clause” does not include a residuary clause containing a blanket-exercise clause or a specific-exercise clause.

702.302(1)(b) (b) “Will” includes a codicil and a testamentary instrument that revises another will.

702.302(2) (2) A residuary clause in a powerholder’s will, or a comparable clause in the powerholder’s revocable trust, manifests the powerholder’s intent to exercise a power of appointment only if all of the following apply:

702.302(2)(a) (a) The terms of the instrument containing the residuary clause do not manifest a contrary intent.

702.302(2)(b) (b) The power of appointment is a general power of appointment exercisable in favor of the powerholder’s estate.

702.302(2)(c) (c) There is no gift-in-default clause in the instrument creating the power of appointment or the gift-in-default clause in the instrument creating the power of appointment is ineffective.

702.302(2)(d) (d) The powerholder did not release the power of appointment.

702.302 History History: 2023 a. 127.

702.303 702.303 Intent to exercise: after-acquired power. Unless the terms of the instrument exercising a power of appointment manifest a contrary intent, all of the following apply:

702.303(1) (1) Except as otherwise provided in sub. (2), a blanket-exercise clause extends to a power of appointment acquired by the powerholder after executing the instrument containing the clause.

702.303(2) (2) If the powerholder is also the donor of the power of appointment, a blanket-exercise clause does not extend to the power of appointment unless there is not a gift-in-default clause or the gift-in-default clause is ineffective.

702.303 History History: 2023 a. 127.

702.304 702.304 Substantial compliance with donor-imposed formal requirement. A powerholder’s substantial compliance with a formal requirement of appointment imposed by the donor, including a requirement that the instrument exercising the power of appointment make reference or specific reference to the power, is sufficient if all of the following apply:

702.304(1) (1) The powerholder knows of and intends to exercise the power of appointment.

702.304(2) (2) The powerholder’s manner of attempted exercise of the power of appointment does not impair a material purpose of the donor in imposing the requirement.

702.304 History History: 2023 a. 127.

702.305 702.305 Permissible appointment.

702.305(1) (1) A powerholder of a general power of appointment that permits appointment to the powerholder or the powerholder’s estate may make any appointment, including an appointment in trust or creating a new power of appointment, that the powerholder could make in disposing of the powerholder’s own property.

702.305(2) (2) A powerholder of a general power of appointment that permits appointment only to the creditors of the powerholder or the creditors of the powerholder’s estate may appoint only to those creditors.

702.305(3) (3) Unless the terms of the instrument creating a power of appointment manifest a contrary intent, the powerholder of a nongeneral power of appointment may do any of the following:

702.305(3)(a) (a) Make an appointment in any form, including an appointment in trust, in favor of a permissible appointee.

702.305(3)(b) (b) Create a general or nongeneral power of appointment in a permissible appointee that may be exercisable in favor of persons other than permissible appointees of the original nongeneral power of appointment.

702.305(3)(c) (c) Create a nongeneral power of appointment in any person to appoint to one or more of the permissible appointees of the original nongeneral power of appointment.

702.305 History History: 2023 a. 127.

702.306 702.306 Appointment to a deceased appointee. Subject to s. 854.06, an exercise of a power of appointment is ineffective to the extent it is in favor of a deceased appointee.

702.306 History History: 2023 a. 127.

702.307 702.307 Impermissible appointment.

702.307(1) (1) Except as otherwise provided in s. 702.306, an exercise of a power of appointment is ineffective to the extent it is in favor of an impermissible appointee.

702.307 History History: 2023 a. 127.

702.307(2) (2) An exercise of a power of appointment in favor of a permissible appointee is ineffective to the extent the appointment is a fraud on the power.

702.307 History History: 2023 a. 127.

702.308 702.308 Selective allocation doctrine. If a powerholder exercises a power of appointment in a disposition that also disposes of property the powerholder owns, the owned property and the appointive property must be allocated in the permissible manner that best carries out the powerholder’s intent.

702.308 History History: 2023 a. 127.

702.309 702.309 Capture doctrine: disposition of ineffectively appointed property under general power. To the extent a powerholder of a general power of appointment, other than a power to withdraw property from, revoke, or amend a trust, makes an ineffective appointment, all of the following apply:

702.309(1) (1) The gift-in-default clause controls the disposition of the ineffectively appointed property.

702.309(2) (2) 

702.309(2)(a) (a) If there is no gift-in-default clause or to the extent the gift-in-default clause is ineffective, the ineffectively appointed property passes to one of the following:

702.309(2)(a)1. 1. If the powerholder is a permissible appointee and living, the powerholder.

702.309(2)(a)2. 2. If the powerholder is an impermissible appointee or deceased, the powerholder’s estate if the estate is a permissible appointee.