That many standard EPOA’s may only apply to financial and property matters if you suffer a legal incapacity and may not be applicable to the management of your Self Managed Superannuation Fund in other circumstances.
When it comes to managing your SMSF the EPOA needs to act as either a direct trustee or as a director of the trustee company on your behalf. This may occur when you suffer a legal incapacity however it may also occur when you decide to hand this role over to someone else i.e. your attorney.
To solve this dilemma it is advisable to have a separate EPOA specific to the fund trust deed and corporate trustee constitution.
SMSF Trustee Requirements
It is important at all times for your superannuation fund to remain as a compliant SMSF. That means all members must either be trustees or directors of the funds corporate trustee. In the event that this standard is breached the SMSF must windup and all assets need to be transferred to a non-SMSF superannuation fund.
This is could be expensive and costly exercise however the penalty for failing to do so may be significant.
Exception for non-trustee members
In real life there are certain members who shouldn’t be trustees of the Fund such a situations where:
Fund members are living overseas;
Fund members who have dementia, early onset Alzheimer’s or whose cognitive ability is impaired;
Fund members who do not want to take on the legal responsibility of acting as a Trustee of a SMSF.
In these situations, these people need to appoint a legal representative (a specific SMSF EPOA) to act as trustee or director of the trustee company on their behalf.
The SMSF Replacement Trustee for Members
A member of a SMSF is allowed to nominate a replacement or substitute Trustee or director of the fund’s corporate trustee. This person may not even be member of the fund, to act as their enduring power of attorney.
The enduring power of attorney needs to specifically state that it provides the attorney with the power to become a replacement trustee and from a date when the member seeks to no longer act as a Trustee for one or more of the reasons noted above.
As your SMSF adviser we strongly recommend that together we undertake a simple four step process to implement your specialised SMSF EPOAs:
Review any current EPOA of fund members.
Update or create an EPOA with specific SMSF replacement trustee rules.
Consider any members who many want to put in place a replacement trustee to absolve them of the legal responsibilities of acting as a trustee.
Review of the Fund’s trust deed to ensure it has the ability to implement the SMSF EPOA replacement trustee strategy.
We can provide the above four step review for all members of the Fund. We believe it is important to complete this task immediately to provide stability, certainty and security if something happens to a member of the Fund. This also provides the opportunity for a member to stay in the Fund and not be a Trustee, if they choose an alternative person to act as their replacement trustee
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