ENDURING POWERS OF ATTORNEY AND SELF MANAGED SUPER FUNDS
A power of attorney is a legal document which allows you to appoint an attorney who can make decisions in relation to your financial affairs. Where an enduring power of attorney is prepared, the attorney you have appointed will be able to continue making decisions in relation to your financial affairs even after you cease to have mental capacity.
The financial decisions that an attorney can make under a power of attorney can be extended to the ability to deal with assets held in a self managed super fund. This can be done by giving the attorney the ability to act as trustee of the fund or as the director of the trustee company that manages the fund. In order for the attorney to have such powers, it is important that the power of attorney clearly states that your attorney is to be given such powers and that these powers are not inconsistent with the terms of the trust deed which establishes the fund and the company constitution in cases where there is a trustee company.
The ability to grant an attorney such powers is particularly useful where you are a member of a self managed super fund as you will usually be either a trustee or a director of the trustee company that manages the fund. In the event that you lose mental capacity or are unable to act as trustee/director and there are no other trustees remaining, an approved trustee will need to be appointed or else the fund will become non-complaint with ATO rules such that the funds in the self managed superfund will need to be transferred to a retail super fund. This can cause adverse tax consequences and practical difficulties where assets need to be liquidated in order to transfer the funds to a retail super fund.
By ensuring that you have an attorney who can act in your place as trustee/director in the event that you are unable to do so, you will be able to reduce the risk of having a non-complying self managed super fund.
For more information, please contact our office.