Recent changes to Victorian legislation required advisers to pay extra attention to any new enduring power of attorney (EPOA) arrangements put in place, as all new appointments made must now meet the requirements in order to be valid.
The Powers of Attorney Act came into operation on 1 September and specifically prohibits attorneys from entering into conflicted transactions unless they had obtained prior consent from the principal, that is, the member of the fund.
Existing EPOAs remain valid under grandfathering rules.
“Conflicted transactions are those which do or have the potential to bring the attorney’s duty to the principal into conflict with the interest of the attorney or other associated persons of the attorney, such as relatives or business partners,” Townsends Business and Corporate Lawyers solicitor Julie Hartley said.
“Examples of situations which are not uncommon in the SMSF context but are likely to involve such conflict are the attorney making a binding death benefit nomination for the principal in favour of the attorney or the attorney amending the nomination to remove beneficiaries and nominate the attorney in their place.
“Or the attorney cashing out the principal’s benefit before their death.
“In anticipation of these scenarios and others, a principal/member will have to carefully consider from the outset how much flexibility and power in relation to their super fund they wish to give their attorney.”
Once the decision had been made, the EPOA documentation must be drafted to expressly outline which potentially conflicted transactions the attorney was authorised to enter into on behalf of the principal, she said.
“If the attorney is unable to demonstrate they had the prior consent of the principal, their actions could potentially be found in breach of the new legislation and held to be invalid.”
