Compliance, Documentation

Recent court case a spur for EPOA review

SMSF advisers and trustees have been urged to take another look at their enduring power of attorney (EPOA) arrangements following a recent Queensland Supreme Court judgment.

At the SMSF Association NSW Local Community Event in Sydney today, Townsends Business and Corporate Lawyers associate Julie Hartley said the Re Narumon Pty Ltd [2018] QSC 185 judgment, handed down on 24 August, brought up issues covering the validity of the deed of ratification, whether the complying pension was reversionary and the validity of an extension of the binding death benefit nomination.

Hartley said it was ideal for advisers to use the case as an example to go through with clients.

“Find out their wishes. Are they comfortable giving away so much power and what are the pros and cons?” she said.

“You should review the EPOA: is there one, is it valid, who is the donee, is the principal still satisfied with the appointment?

“Importantly, is there a limitation on the attorney’s power? What’s their scope?

“And is there an express authorisation regarding conflict transactions? Is one needed?”

She added trustees must consider whether all attorneys will have power or only specific people.

In the case where an EPOA needs updating or a new one must be created, she said the considerations are to check whether the member still has mental capacity and if they have someone they genuinely trust.

She also underscored it was vital to remember the EPOA and the trust deed work together and not to overlook either document.

“It depends on the circumstances of your client, but usually if there is no EPOA, you are leaving it to chance and open for contention in court,” she noted.

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