SMSF trustees holding off on implementing an enduring power of attorney (EPOA) need to consider why they have not taken that step already, particularly where they trust those who will hold that role in the future, according to a specialist adviser.
RSM Australia SMSF services partner Katie Timms noted the issue of appointing someone under an EPOA was a critical issue as more trustees faced capacity issues and had significant assets within their funds.
“It is a hard thing to explain to people and say you should have someone appointed now rather than go through that process at the end, especially if time is going to be an issue, because if you trust them to act as an attorney, then why wouldn’t you trust them to do it now?” Timms told delegates Class Ignite 2025 in Sydney today.
“When I did my EPOA and appointed my sister I said: ‘Absolutely not. She is not being appointed right now.’
“I then went through this thought process and realised it does not make sense for her to not be appointed now because I trust her to look after me down the track, so why would I not trust her now?”
She gave an example of the family of a client who delayed appointing an EPOA and sent an email stating their father might be losing capacity so his wife wanted to sell the farm and needed the son appointed to do that.
“I told them to read the EPOA, which says he has to be declared incapacitated and that is not just a doctor saying they’ve lost capacity, it has to be a legal definition of incapacity,” she added.
“That meant they had to go and have him legally declared, which held up their farm sale for two months to go through that process.
“Now, we have all heard the stories of that one person that ran off and took the money from the bank and disappeared.
“If that’s the possible circumstance for your client and they really don’t trust the person, you should ask them would they want that person making decisions for you at any point in time, and maybe they need to be making a different EPOA decision.”
