Vital for clients with self managed superannuation funds
It is important to ensure that everyone has a current Enduring Power of Attorney in place, particularly members of self-managed superannuation funds (SMSFs).
An Enduring Power of Attorney appoints someone to make decisions on your behalf, particularly if you are incapacitated.
If you are a member of a SMSF, you must generally also be a trustee or a director of the trustee company. If you lose capacity, you can no longer be a trustee or a director of a company which may mean you cannot continue as a member of the SMSF and your member balance may have to be rolled to a retail fund.
This can have significant transaction costs (such as CGT and duty), and can also lead to many practical issues. For example, the trustee may need to sell assets to transfer the benefits to a retail fund.
If however you have appointed an attorney under an Enduring Power of Attorney, your member balance can remain in the SMSF with your attorney as a trustee or director in your place.
Importantly, the attorney can act as trustee or director even if a member is not incapacitated.
This can be a useful strategy if you want to include children as members but do not necessarily want them to be co-trustees or directors of the trustee company. In that case, it is possible for the children to give the parents an Enduring Power of Attorney, and just the parents remain as trustees or directors.
Enduring Powers of Attorney should also be considered as part of an estate plan.