Whilst the number of SMSF’s and Members continue to grow each year little attention is given to ensuring that Members have adequate General and Enduring Powers of Attorney (PoA) in place. Yet having adequate General & Enduring POA’s is vital to ensuring the Member’s affairs are properly managed and that their Fund continues to operate smoothly.
Whilst having Enduring & General PoA’s are not just relevant to SMSF Trustees and Members, by having an SMSF, their importance certainly increases.
The reason is that as Trustees/Members have full control over their retirement savings (including when to invest, what to invest, maximizing contributions, minimizing tax, timing pension payments, managing the Total Super Cap, and Transfer Balance Cap) which is a large reason why Members are attracted to having an SMSF.
However, the flip side is that if a member loses capacity, a Fund may not be able to operate unless the Member /Trustee has an Enduring Power Of Attorney in place. As an enduring PoA allows a person to act as Trustee on behalf of another Trustee if they lose capacity i.e. they are ill and in hospital.
Similarly, a General PoA can be used and is helpful for managing the Fund, where Member is unavailable (i.e. overseas, or documents need to be signed (although this is less relevant with DocuSign). However, if the Trustee loses capacity the general PoA becomes ineffective unless the Trustee has an enduring PoA in place.
To ensure a general or enduring PoA is effective, it is important that Trustees and Advisers understand State law as it is a State matter, and each State is slightly different. For example, in NSW an enduring PoA must be witnessed by a lawyer, whilst in Victoria, it can be witnessed by any professional.
If you have not looked at your POA’s in a while, please reach out as we can assist as it is critical that we know who has your back in case something unexpected happens!
The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.