Power of Appointment Trust Law and Legal Definition

Power of Appointment Trust is a trust in which property is left in trust for the surviving spouse. Assets are placed into trust by a spouse, usually at death, with the income of the trust distributed to the surviving spouse for the life of such spouse. The surviving spouse is given an unqualified power of appointment to determine who should benefit from the trust assets at the death of the surviving spouse. A power-of-appointment trust is commonly used to qualify property for the marital deduction. Marital deductions are federal tax deductions allowed for lifetime and testamentary transfers from one spouse to another (26 USCS).