SMSF trustees heading overseas who are planning for someone else to manage their fund during their absence may strike difficulties in setting up an enduring power of attorney (EPOA) after they have left, a specialist lawyer has noted.
SuperCentral superannuation special counsel Michael Hallinan said trustees who did not want to fail the fund residency requirements, which include that its central management control (CMC) be ordinarily situated in Australia, can use an EPOA to act on their behalf and should implement that before heading off.
“For the CMC to be ordinarily in Australia, a majority of the trustees/directors must ordinarily reside in Australia. This test involves looking at where the strategic and important decisions of the trustees are taken, that is, in Australia or overseas,” Hallinan explained.
“If trustees will be unable to satisfy the CMC requirements, but want to maintain their SMSF, each departing member will need to execute an EPOA to appoint one or more attorneys and effect the necessary change of trustees/directors.
“Trustees should start planning for the management of their SMSF before leaving Australia for various reasons, including if any documentation, such as the EPOA, has to be signed overseas, stringent rules apply to their execution in order for them to be valid in Australia. It may be very difficult or even impracticable to find an eligible witness.
“Some documents, such as EPOAs, will require the original document to be sent back in hard copy by post to someone in Australia to sign, such as the appointed attorney, with the risk of the document being lost during international transit.
“It is also easier if clients are in the country at the time the strategy is implemented in case documents which are only in the trustees’ possession are needed by their adviser or lawyer.”
According to Hallinan a person acting under an EPOA would not be a proxy, but would have the full rights and responsibilities of a trustee.
“The appointed attorney is not acting as an agent of the member; they are appointed in their own right, effectively taking on the responsibilities, duties and liabilities of a trustee and can be found personally liable for breaches committed while in that office,” he indicated.
“The members are also handing over control and management of the SMSF to someone else, so do they have someone they can trust?” he asked.
