How Do You Exercise A Power Of Appointment (“Poa”)

In Cessac v. Stevens, 2013 WL6097315, Sally died having an interest in 3 different trusts. Sally devised the residue of her estate to Joanne. Sally’s will did contain a reference to the trusts but did not reference the POA held by Sally. All trusts included a provision authorizing Sally to direct who would receive the trust assets upon her death by “making specific reference to the powers herein granted.” If the POA was not exercised, then the trust assets would be distributed to Sally’s children.

The magistrate determined that Sally had not validly exercised her POA, and therefore, the assets were not included in her estate and thus, not distributed to Joanne. Joanne, however, argued to the trial court that (1) Sally’s intent was to exercise her POA in favor of Joanne; (2) Section 732.607 of the Florida Statutes allows for intent to be a basis of exercising a POA; and (3) an equitable construction standard should be applied by adopting a “substantive compliance” requirement instead of the stricter “specific reference” standard. The trial court denied all three of Joanne’s claims and upheld the magistrate’s ruling.

First, the trial court agreed that intent is irrelevant if the will fails to comply with the specific reference requirement in the trust. Second, the trial and appellate court stated that Section 732.607 of the Florida Statutes was not applicable because the trust document had a specific requirement so the use of extrinsic evidence and Section 732.607 became inapplicable. Finally, the appellate court acknowledged the harsh result but determined that he donor had the right to place specific requirements on the decedent. The decedent could have adhered to this requirement by simply referring to the POA in her will.

Advice:

To properly exercise a POA granted in a document, READ the document and comply with any specific requirements.