SMSF trustees concerned about an attorney amending a binding death benefit nomination (BDBN) need to ensure they have placed limits on what can be done, an SMSF lawyer has suggested.
Cooper Grace Ward partner Scott Hay-Bartlem said it was possible for an attorney under an enduring power of attorney (EPOA) to make, revoke or amend a BDBN, unless it was otherwise stipulated.
“I see lots of EPOAs with complete and utter blanket authorisations, which means the attorney can do anything with no limits and no comeback, but is that what we want? The answer is probably not,” Hay-Bartlem said during the law firm’s Annual Adviser Conference in Brisbane today.
“There are some SMSF deeds which say an attorney can do anything a member can do and, in particular, an attorney can amend a BDBN unless the EPOA expressly says they can’t.”
He said allowing the attorney to act but preventing them unwinding specific estate planning that has taken place requires the need to authorise conflicts within the EPOA.
“We should have a base level of conflict authorisation in every EPOA these days, but let’s take a step back though because a clause that says you can do anything you want, even despite a conflict, is probably too much,” he said.
“We want to authorise enough conflicts, but not all conflicts so we need to look at what are you happy with your spouse doing with your money [after you die].
“Do you want your attorney being able to rip up your BBDN and do a new one?
“What about your child who is also your attorney without any conflict provisions who decides to revoke your BDBN to your estate and makes one to themselves? That’s probably something you can stop because of a conflict authorisation.
“If your EPOA or SMSF deed authorises that to happen, there’s probably not a lot you can do about it and you end up making several sets of lawyers extremely happy as they fight it out.”