A superannuation lawyer has emphasised the need for practitioners to implement a signature authentication process for their SMSF clients to allow the fund to continue to operate in a seamless fashion when one member either loses metal capacity or passes away.
“The authentication process [in managing disability or death] is huge. It’s also simple risk,” consultant lawyer Peter Bobbin confirmed.
He suggested the most common construct of an SMSF makes implementing proper authentication for both members imperative.
“[Many SMSFs are a] two people super fund made up of a husband and wife. The male is often a control freak and the wife sits back and allows the male to be the control freak. [Imagine if] no signature authorisation had been attained on her behalf. That is a disaster waiting to happen,” he told delegates at the Super Playbook 2025 co-hosted by the Institute of Financial Professionals Australia and The Auditors Institute in Sydney last week.
According to Bobbin, health statistics show 21 per cent of events leading to an individual becoming disabled occur without any warning signs and this is what makes an SMSF with no signature authentication process in place an extremely risky proposition.
“[So if this] just occurs [with no warning it will mean] she has no access to passwords, no recognition by any organisation in terms of being a signatory such as with banks or brokerage houses,” he explained.
He shared his own experience to further highlight the seriousness of not implementing a signature authentication arrangement.
“Year ago I had a situation where a father and his daughter were the trustees of their super fund and the father died. The broking house didn’t know of the existence of the daughter. [Unfortunately] they had the brokerage account in the father’s name, they knew it was for the super fund, but it was in the father’s name,” he said.
“So she was unable to act on that brokerage account because the broker couldn’t trade on her behalf [and that was] in a volatile market.”
