How Timing Depends on Whether the Power Has Been Used
A power of appointment gives someone the right to direct where property goes, often within a trust. If you hold that power in a personal role (not as a trustee), this law covers what happens when you disclaim it.
If a holder disclaims a power of appointment or other power not held in a fiduciary capacity, the following rules apply: 1. If the holder has not exercised the power, the disclaimer takes effect as of the time the instrument creating the power becomes irrevocable.
A.R.S. § 14-10009(1)If the power has never been used, the disclaimer reaches back to when the document became final. The law treats the power as though it was never granted. This matters for tax and estate planning because it can remove the power from the person's taxable estate.
Disclaiming After Partial Use
If the holder has already used the power at least once, the timeline shifts. The disclaimer takes effect right after the last use of the power.
The instrument creating the power is construed as if the power expired when the disclaimer became effective.
A.R.S. § 14-10009(3)Once the disclaimer takes effect, the law reads the document as though the power simply expired. No one else gains the power. It ceases to exist. The property then passes based on any default terms the document contains.
For families with complex trusts that include powers of appointment, this law helps clarify the options. Disclaiming a power can simplify trust management, lower tax exposure, or redirect property to better serve the family's current needs.