EPOA regarding incapacity tricky

EPOA incapacity

The process of having an enduring power of attorney act on behalf of an SMSF trustee experiencing incapacity is not necessarily simple.

An SMSF technical specialist has highlighted the complex nature of managing trustee incapacity even when the decision has been made to appoint an enduring power of attorney (EPOA).

“One of the questions here is who determines incapacity? So, who is making the call the person is incapable of acting as a trustee?” SuperConcepts SMSF technical and strategic solutions executive manager Philip La Greca told attendees of a practitioner webinar he held last week.

La Greca noted the difficulty regarding this situation comes about because if a person is deemed incapable of performing a certain duty, this does not mean they are unable to carry out other responsibilities, particularly in the context of an SMSF.

“They still may be able to act and manage their own personal affairs, but it’s the additional responsibilities of being a trustee of a self-managed super fund that may actually have a higher level of capacity requirements. But as I said, the question is who is going to make that call?” he noted.

According to La Greca, the first condition to be satisfied is whether the SMSF trustee has sufficient capacity when putting an EPOA in place, but once that is done the next conundrum is to determine the point in time when the individual in question is incapacitated, in turn triggering the EPOA.

“When does it become enforced? Sometimes it’s really obvious because [there are] some medical issues that clearly make a person incapable of doing things,” he observed.

“But that’s not always the case, particularly you can imagine with some more degenerative and age-related conditions. It [can be] a gradual progression so at what point do you have that discussion with both the trustee and the power of attorney that maybe it’s time for the power of attorney to step in?”

He reminded his audience the power of attorney does not have to commence their duties as a trustee just because a person is incapacitated.

“But clearly if a person can’t act as trustee, the power of attorney needs to be there,” he said.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital