If you have a self-managed super fund (SMSF) or are thinking of establishing one, it is important to know that members of the fund are also generally the trustees of the fund. As trustee of the fund you are legally responsible for the fund’s operation and compliance with the superannuation legislation. Therefore, the position of trustee is vital to ensure that you maximise the benefits of holding your retirement capital through a SMSF.
There may be situations where you as the trustee may be unable to fulfil your role, for example if you temporarily or permanently lose your mental capacity as a result of a stroke. Legally, an SMSF trustee cannot exercise their duties if they have suffered an event which could cause temporary or permanent mental incapacity. As a consequence, it is advisable that you have a trusted person in place that could act on your behalf under the powers of an enduring power of attorney and allow the fund to continue to operate.
What is an enduring power of attorney?
An enduring power of attorney is a legal agreement allowing the designated attorney to make financial, health and personal decisions on behalf of someone who has temporarily or permanently lost ‘capacity’, and as a result is unable to make these decisions for themselves. This includes decisions in relation to the operation of a SMSF.
Is having a general power of attorney good enough?
No. A key difference between an enduring power of attorney and a power of attorney is that the latter ceases to exist if you lose your mental capacity. Therefore, if you are an SMSF trustee and only have a power of attorney in place and you lose mental capacity, the person appointed under the powers of this arrangement will not be able to assist in the operation of your fund.
Can you have more than one enduring power of attorney?
Yes, it is possible to appoint more than one attorney under an enduring power of attorney. In fact, this may be prudent if there is the possibility the person chosen may not be able to fulfil their role (if for example, they are regularly unavailable due to travel commitments).
However way an enduring power of attorney arrangement is structured, it needs to be appropriate considering your individual circumstances and be legally documented.
Obviously, it is important to choose wisely when selecting the person (or people) who will act on your behalf. It is also important for you to have an up-to-date will.
How we can help
Our team of experienced SMSF advisors at Wilson Pateras would be happy to discuss your circumstances with you if you would like to know more about how you can ensure you have appropriate Estate Planning measures in place for your SMSF.
We can also assist with both the establishment and ongoing management of a SMSF to ensure not only compliance with relevant legislation but also that you maximise the benefits of this investment structure.
Contact us today for a complimentary, obligation-free consultation to find out more!