SMSF trustees have been advised to consider the conflict that could occur during the appointment of multiple children as joint powers of attorney due to the complex regulations governing superannuation.
Speaking during a recent webinar, SuperConcepts SMSF technical and strategic solutions executive manager Philip La Greca said while numerous children can be appointed under an enduring power of attorney (EPOA), family super funds should consider other options.
“It is not unusual for parents to give both of their children a joint power of attorney. Now that is fine, but then the issue becomes: How does that work within the super rules when you’re trying to put them both on?” La Greca said.
“You technically can, but you’ve got to be really careful about how that works because while they are being put in as trustees, they are technically representing only one person. So can they become joint directors? Generally not; you need to have one appointed as a director.”
He further warned SMSFs to consider time restrictions regarding EPOAs, in particular in situations where the issues cannot be resolved in an appropriate manner, including when a trustees is overseas.
“I’ve actually seen it happen, where the enduring power of attorney lapses. This one became quite awkward because it happened with a client who was using a power of attorney [that had lapsed] while they were overseas,” he said.
“So that person, while they were a trustee – because that appointment was separate to the power of attorney appointment – [they] were no longer a power of attorney, which then gave us a conflict between super rules and what was taking place. They were a trustee, but they were not the member and the exception that allows a power of attorney didn’t apply to them, so we actually technically had a breach.”
In order to resolve such a breach, SMSF trustees have up to six months to deal with the lapse, but he advised trustees to appoint a power of attorney without a time limit or to remove limits on any additional powers that need to remain with the attorney.
