A person who has been nominated as a death benefit recipient and granted an enduring power of attorney (EPOA) cannot automatically exit the assets of the gravely ill SMSF member in question to deliver a better tax outcome as a consequence of this role in the fund, a sector specialist has said.
“The ability to access SMSF benefits before a member dies can come down to who benefits from those decisions being made. If the EPOA is making the decision to take benefits out for somebody who is about to die, it is possibly because of taxable components the beneficiaries will have to pay tax on. So arguably that decision to take the money out advantages the beneficiaries more than the donor or actual member of the fund,” Accurium senior SMSF educator Anthony Cullen said.
“The EPOA has a fiduciary duty to the donor of the power of attorney and should not be making decisions that they have gained a benefit from.
“So you have to be very mindful of who is actually benefitting from the decision and in whose favour the decision should made.”
Cullen also acknowledged the person with the EPOA may be restricted in their ability to act on behalf of the relevant member if they are not also a trustee of the SMSF.
“You must also take into consideration who is the trustee of the fund. It’s all well and good the EPOA may be able to make that request on a member’s behalf, but it is the trustees who are going to receive that request and make the decision whether they will action it or not,” he told attendees of the recent SMSF Professionals Day 2024, co-hosted by selfmanagedsuper and Accurium.
“So if the EPOA has not actually taken on the role of trustee, they then can’t make that decision and action it.”
Further, he recommended the holder of the EPOA check if the SMSF trust deed allows trustees to accept instructions and requests from an EPOA.
