What power allows the surviving spouse, during his or her lifetime or in his or her will, to direct that trust assets go to his or her children or grandchildren?

• A. Bypass trust
• B. Power of appointment
• C. A/B will
• D. QTIP trust

Answer: (B)

A power of appointment is the legal authority to designate who will receive trust property among a defined group of beneficiaries, either during the holder’s lifetime or at death. When a trust is set up for the benefit of the surviving spouse, giving that spouse a power of appointment lets the spouse direct that the trust assets go to the spouse’s children or grandchildren, within the specified limits of the power (inter vivos or testamentary). This flexibility is precisely what the question describes: the spouse can exercise the right to appoint assets to descendants according to the plan, either while alive or through a will.

By contrast, bypass trusts are about shifting tax obligations, an A/B will outlines how assets are split between trusts or sides of the estate, and a QTIP trust is designed to preserve the marital deduction while controlling ultimate remainder beneficiaries; none of these inherently grants the spouse the flexible appointment power to redirect assets to children or grandchildren in the same way.