Enduring Power of Attorney: Exception to the SMSF Trustee Rule
The general rule for SMSF trustees/members is that all trustees (or trustee company directors) must be members and all members must be trustees (or trustee company directors).
One exception to the general rule provides some guidance to trustees and a safety net for Fund members.
This exception allows a member’s legal personal representative (LPR) to be appointed as a trustee (or trustee company director) where the member would otherwise be required to be appointed in that role. This exception requires that the LPR is the member’s attorney under an enduring power of attorney (EPOA).
This can be particularly useful, for example, where:
- The member has lost mental capacity. If a member loses mental capacity without an EPOA in place, there may be no one with the legal authority to manage their financial affairs, as it cannot be put in place after the fact. This will often mean costly and time-consuming court applications.
- The member is absent for an extended period (e.g. overseas) – the LPR can be appointed even if the member still has capacity.
It is also possible to appoint more than one attorney. In this case, the attorneys can be required to act jointly or even separately depending on the member’s preferences. This can allow them to cooperate and work together in the best interests of the member.
Once an LPR has been appointed by an EPOA, they still need to be formally appointed as a trustee of the Fund (or trustee company director) in accordance with the trust deed. Even in the case of incapacity, the appointment of the attorney as trustee is not automatic.
Once appointed as trustee, the LPR has the same responsibilities as a normal SMSF trustee.
