Estate Duty surviving spouse exemption: powers exercisable by will or by deed
In considering whether the deceased had a general power of appointment such as would make them competent to dispose of the settled property, it is necessary to distinguish between a power exercisable by will and one exercisable by deed. An appointor cannot by will appoint property to themselves personally; and they are not regarded as competent to dispose of it merely because under the terms of a limited power they can so appoint property by will as to make it liable for their debts. Any limitation on the objects in favour of whom a power by will alone can be exercised will render the appointor not competent to dispose of the property.
To the extent that a power of appointment is exercisable by deed, the appointor is regarded as competent to dispose if they are able to appoint to themselves (Re Penrose  Ch 793), but not otherwise.
In the case of a power exercisable by deed or will, you will need to consider both aspects.
In each of the following situations, the appointor is empowered to appoint to themselves by deed, and is therefore competent to dispose by deed. (He is not competent to dispose by will, unless the persons excepted from the objects of the power predecease him.)
- property held on trust for such persons, other than the deceased’s wife, as the deceased should by deed or will appoint.
- property held on trust for such persons, other than the deceased’s wife or any of her relatives or nominees except her children, as the deceased should by deed or will appoint. (The deceased himself would not be regarded as a relative of his wife for this purpose.)Where property held on trust for such persons, other than the deceased, as he should by deed or will appoint, the appointor is competent to dispose by will but
not by deed. He is competent to dispose by will because, when the power takes effect on his death, it is unfettered. The same would be true if other objects excepted from the power exercisable by will had predeceased the appointor, with the result that the power was not in fact subject to any limitation on the appointor’s death.