Incapacity of SMSF members
Under current superannuation laws, a member of an SMSF who suffers from incapacity is required to step down as a trustee of the fund or director of a corporate trustee
Under current superannuation laws, a member of an SMSF who suffers from incapacity is required to step down as a trustee of the fund or director of a corporate trustee. This means that they lose any control of the fund and its decision-making. In these circumstances, it is essential that you consider someone that you trust to take on this role if you lose decision-making capacity for any reason. For example, this can occur as a result of a degenerative disease, illness or accident.
Under the superannuation laws, by default, the person who takes control of the member/trustee who loses capacity is the person that is nominated as their Enduring Power of Attorney. However, clients can nominate another person, but only if the SMSF deed permits appointing somebody other than an Enduring power of attorney.
Many people are unaware that any restrictions in the Enduring Power do not apply once the attorney becomes a trustee of the SMSF . They are free to make the same decisions with the same powers as the incapacitated member. This can have profound consequences and complications where the attorney becomes a co-trustee with say a step-parent and where there is family conflict.
A more contemporary and nuanced approach is for a special power of attorney to be prepared for an SMSF that limits or restricts the powers of a power of attorney when they become trustee because the special power of attorney becomes hardwired into the governing rules of the fund.
Inherit Australia is a holistic estate planning offering. It means advisers and lawyers work hand in hand to cover all estate planning scenarios, including SMSF matters that are nort managed by a standard Will. Our value pricing structure caters for those cases and provides price certainty for each client based on their unique requirements.