A leading specialist law firm has recommended all SMSFs consider putting an enduring power of attorney (EPOA) in place as a solution to mental incapacity and repatriation.
According to Super Central superannuation and estate planning special counsel Brian Hor, an EPOA could provide a critical solution for an SMSF if a trustee suffered the effects of a stroke or dementia, rendering them incapable of fulfilling their trustee responsibilities.
If the trustee had appointed an EPOA, under section 17 A(3) of the Superannuation Industry (Supervision) Act, that person could take the incapacitated member’s place as trustee or director of a corporate trustee, Hor noted.
In reference to the situation where a member travelled overseas, an EPOA could play a critical role as well, he said.
“Their (resident) enduring attorney can become the trustee or director of the trustee in their place to avoid fund residency issues under subsection 295-95(2) of the Income Tax Assessment Act 1997,” Hor said.
Trustees, however, did have to ensure they appointed an eligible person to take on the position of the EPOA, he warned.
“You need to ensure, on an ongoing basis, that the person nominated as enduring attorney is not a disqualified person, for example, someone convicted of an offence involving dishonesty, otherwise they will not be able to act as trustee or director of the trustee in place of the member,” he said.
He added an EPOA coupled with an up-to-date will and a binding death benefit nomination would make for a very effective estate planning strategy.
