Creditor General Powers of Appointment

Basis optimization for credit shelter and irrevocable trusts often involves granting the trust beneficiary a general power of appointment (GPA) over trust assets to achieve stepped-up basis.  One planning variation limits appointees to the powerholder’s creditors or creditors of his estate (creditor GPAs). This seemingly achieves basis step-up without much risk of having property diverted to appointees outside the donor’s dispositive scheme.