This article is more than 36 months old and is now archived. This article has not been updated to reflect any changes to the law.

clearlaw

An enduring power of attorney can help your SMSF stay compliant

Last revised on : 28-10-2016
If an SMSF member ceases to be a trustee or director of a trustee by reason of incapacity, the SMSF may no longer be a complying fund. The SIS Act provides for continued compliance in circumstances where the member's legal personal representative holds a valid enduring power of attorney granted by that member and is appointed in their place. Cassandra Townsend, Thomson Reuters

The SIS Act sets out conditions a fund must satisfy to be an SMSF. A member who has an enduring power of attorney in place ensures:

  • the fund can continue to satisfy the definition of an SMSF if they lose capacity; and
  • they can choose their most appropriate replacement as trustee or a director of the trustee.

There are some points to note about the power of attorney:

  • it must be in force before the member loses capacity;
  • it must be current; and
  • it must accord with relevant state or territory legislation.

The replacement process is not automatic. The incapacitated member must be removed as trustee and the legal personal representative appointed as trustee or director of the trustee, all in accordance with the relevant legislation and the governing rules of the entity (SMSF trust deed or company constitution).

The legislation provides for a 6 month period to get the fund in order. This means the replacement must be appointed within 6 months of the incapacity, unless the member regains capacity within that period and can resume their duties.

More information from the ATO

For more information, read Self Managed Superannuation Funds Ruling 2010/2.

More Cleardocs information on related topics

You can read earlier ClearLaw articles on a range of SMSF and estate planning topics.

Order Cleardocs estate planning packages

 

Lawyer in Profile

Julia Tonkin
Julia Tonkin
Partner
+61 3 9258 3318
julia.tonkin@maddocks.com.au

Qualifications: BA, LLB, University of Melbourne

Julia is a Partner in Maddocks Corporate and Private Clients team. Julia has extensive expertise in:

  • estate planning, structuring for succession of ownership and control of private and family businesses.
  • charities and not-for-profit space.

Julia's clients include high net worth individuals and families and privately held businesses.

Clients value Julia's empathic, common sense yet technically sound approach to complex legal (and often interpersonal) issues.

She has been recognised as an Accredited Specialist by The Law Institute of Victoria with an accreditation in Wills & Estates Law. She has also been recognised in Doyles Guide for Wills, Estates & Succession Planning Law Recommended - Victoria in 2023.

Read Our Latest Articles