8.4 Creditors and Non-Testamentary General Powers of Appointment

The rule as to a presently exercisable general power of appointment, however, is not without ambiguity. Under U.S. Bankruptcy law, the assets subject to such a power would be brought into the estate of the debtor/donee of the power regardless of whether exercised. 11 U.S.C.A. § 541(b). Also, where the settler creates a power of appointment exercisable by the settler in favor of the settler, the assets subject to the power is exposed to creditors. In re Robbins, 826 F.2d 293 (C.A. 4th Md. 1987) (A retained limited power of appointment subject to ascertainable standards is reachable as a self-settled trust). Whether such a power created by a third party creates a sufficient property interest in the donee is not decided in Maryland. The Restatement (Third) Trusts § 56 cmt. b holds that it is the equivalent to ownership. See, however, University Nat’l Bank v. Rhoadarmer, 827 P.2d 561 (Colo. App. 1991) (A “5 & 5″ power was not attachable because it is not an ownership of property but merely a conduit for the donor of the power.)