Power Of Appointment

What Does Power Of Appointment Mean?

Power of appointment is the authority to determine who will inherit an asset that is part of an estate. This responsibility is granted through the original asset owner’s will. Life insurance works on the same principle, since whoever the policy names as the beneficiary collects the payout, and that designation can override what the will says about that money. Most people setting up a policy should know the basic life insurance beneficiary rules before signing off on the paperwork.

Insuranceopedia Explains Power Of Appointment

When a testator writes a will and appoints someone to decide who will inherit the assets, they are granting that person the power of appointment. The testator may also choose to name the beneficiary themselves, thereby directly deciding who will receive the assets. With life insurance specifically, the named beneficiary files a claim directly with the insurer to collect the life insurance payout, separate from anything that happens in probate court.