SMSF investors must ensure their enduring power of attorney (EPOA) document caters to all possible scenarios clearly, such as incapacity, to avoid leaving it wide open to disputes, an industry lawyer has said.
“My view is that the standard prescribed form says bugger all,” PricewaterhouseCoopers partner, solicitor and notary Michael Fitzpatrick told the Chartered Accountants Australia and New Zealand 2014 National SMSF Conference in Sydney recently.
“The less it says, the more contentious it will all be.
“It’s made a whole lot clearer and less contentious where there’s a specific provision in the instrument itself, authorising that very [situation]. Where the document spells it all out in some detail, then the opportunity for disputation is greatly diminished.”
In addition, Fitzpatrick said it was important to ensure clients thought wisely about who was appointed.
“Once you’ve signed an EPOA and you lose capacity, guess what else you lose? You lose the ability to revoke it,” he said.
“You’re stuck with it for the rest of time.”
As the form was seldom completed with a full understanding of what those decisions meant, clients should be guided through the process, he said.
“When you sit down with your clients to talk about EPOA, please don’t just say that there’s a standard form that they can download from the Internet to fill out themselves because often unwittingly clients create a whole lot of [unforeseen] issues,” he said.
