Definition of "Special Power of Appointment"

A unique power that allows you to facilitate your eligibility for Medicaid while protecting your home and potentially receiving certain tax benefits. With a special power of appointment, you transfer your house to someone else in order to avoid having to sell the house and 'spend down' the proceeds before you can qualify for Medicaid. At the same time, the special power allows you to reserve the right to irrevocably redirect the house to a different person at a later time. This ability or power to redirect the home can be exercised during your lifetime (by a deed) or at your death (by a will), but only once in any case. Moreover, there are certain parties, such as your creditors and your estate, to whom you cannot redirect the house under the special power.

Also see general power of appointment A form of estate planning distribution which involves the distribution of property by living hand (a gift, a limited property interest grant or a gift in trust) and the distribution of property after the death of the owner (through a will or by state law if no will exists).