FINAL BILL REPORT

HB 1170

                                   C 33 L 89

BYRepresentatives Padden, Crane, Tate and P. King 

Changing provisions relating to the exercise of the power of appointment.

House Committe on Judiciary

Senate Committee on Law & Justice

SYNOPSIS AS ENACTED

BACKGROUND:

A "power of appointment" is authority given to one person to dispose of property held by another person.  For example, a parent may in his or her will leave property to a child (the property holder), but give another person the authority to dispose of the property (the power holder).  A power may also be created by inter vivos deed.  Various restrictions may be placed on the exercise of a power of appointment.  The power is said to be "general" if it contains no restrictions and includes authority for the power holder to dispose of the property by transferring it to himself or herself.

The law allows a power holder to exercise the power of appointment through his or her own will. However, a will that purports to exercise a power of appointment must identify the instrument that created the power and must indicate the date of the power's creation.  If the instrument that creates the power originally is itself a will, for instance, the power holder may not know of the existence of the power, or of the nature or timing of any changes made in the power by amendments to the will.  In such a circumstance, it may be impossible for the potential power holder to make the necessary identifications in his or her own will.

The holder of property subject to a power of appointment in a will may dispose of the property without fear of liability if six months have passed since the death of the power holder and the property holder has not been notified in writing that the will has gone to probate.

SUMMARY:

The power of appointment statute, by which a person may delegate to another the authority to dispose of property, is amended.  Removed is a requirement that the exercise of a power through a will must identify the creating instrument and the date of creation of the power.

A provision is amended regarding the potential liability of the holder of property that is subject to a power of appointment in the property owner's will.  It is made explicit that a property holder with actual knowledge of the exercise of a power cannot avoid liability for disposing of the property just because he or she has not received written notice of the exercise within six months of the death of the power holder.  A holder of property subject to a power of appointment in a will may not avoid liability for disposing of the property unless two conditions are met.  The property holder must have had no actual knowledge that the power had been exercised through a will and must have made a reasonable effort to find out if the power had been exercised.

VOTES ON FINAL PASSAGE:

      House 95   0

      Senate    43     0

EFFECTIVE:July 23, 1989