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Team Intello

What is an Enduring Power of Attorney & Why you Should have one in Place.

We all recognise the need for a Will when we begin to plan for our future and the future of our loved ones. However, one crucial document is often overlooked, and that is the Enduring Power of Attorney (EPOA).

What is an enduring power of attorney (EPOA)?

An Enduring Power of Attorney is quite simply a legal agreement that enables you to appoint another person or people to make financial, personal/medical or property decisions on your behalf in the event you are unable to act. This appointment can be either on a temporary or permanent basis depending on the reason for the appointment.

Many people indicate that they have a Power of Attorney in place, which is fine if you have mental capacity. If in any event, you lose mental capacity the Power of Attorney ceases to operate. It’s therefore prudent you have an EPOA in place.

Losing capacity does not just happen to people as they are getting older. A loss of capacity can occur at any age and may be temporary or even permanent. If there is any doubt about whether a person has legal capacity, we recommend obtaining a written opinion from a qualified medical practitioner.

Who can be appointed?

Your attorney can have enormous power over your financial and business affairs. Therefore, it is important that you appoint someone who you trust completely, and who can responsibly manage your affairs.

A spouse, adult child, relative or close friend can be the most logical choice when considering who you should appoint as an attorney. However, if you have an SMSF it is important to make sure that the person appointed as an attorney is not a disqualified person (as defined by the SIS Act 1993), as otherwise, they will not be able to act as trustee on your behalf.

It may be worthwhile appointing more than one attorney to allow for situations where an attorney cannot act on your behalf.

What are the duties and responsibilities of an attorney?

An attorney has the responsibility to always act in your best interests and must act honestly and make responsible decisions. You can give your attorney the power to make any decision about your finances that you would make under usual circumstances. These can include paying bills, selling a property, accessing cash and making investments (eg. buying or selling shares). In addition to this, should your Enduring Power of Attorney act on your behalf as trustee of your SMSF, they will be subject to the same trustee responsibilities as you were.

An Enduring Power of Attorney must:

  • Avoid conflicts between their interests and yours,
  • Obey the instructions you make whilst mentally capable and any directions you make in the Enduring Power of Attorney document,
  • Keep their finances separate from yours,
  • Act according to the limits and conditions placed on their authority
  • Not provide benefits to themselves or others using your finances unless authorised to do so, and
  • Keep accurate records of their dealings with your financial and business affairs.

An Enduring Power of Attorney can be revoked or suspended if they act improperly and abuse their position of trust.

When should I appoint an EPOA?

Like any important document, you should not wait until unforeseen circumstances force you to appoint an Enduring Power of Attorney. It can be very difficult to appoint someone to act on your behalf after you have had a serious accident or lost capacity, so it is essential to appoint an attorney when you are healthy, aware and in control.

You can nominate when you want the Enduring Power of Attorney to commence:

  • either immediately OR
  • only when you have lost capacity and are incapable of making decisions.

Each State has different legislation to deal with the appointment of powers of attorney and this must be followed.

The authority must be drafted with express authority to act on behalf of your superannuation affairs.

It is important to note that for an SMSF trustee/director of a corporate trustee with an Enduring Power of Attorney, the appointment as replacement trustee when capacity is lost, is not automatic. The trustee/director of the corporate trustee needs to be removed and the attorney appointed in their place under the legislation, trust deed and company constitution (if relevant). The attorney must be appointed to the SMSF within 6 months of the incapacity. The appointment can be temporary until the individual can act again or may be permanent depending on the loss of capacity. The attorney who takes on this responsibility will have the same powers as the original trustee/director of the corporate trustee.

When does an EPOA end?

An Enduring Power of Attorney ends when one of the following occurs:

  • You revoke the power while you have legal capacity
  • You make a new Enduring Power of Attorney document with a later date
  • You pass away.

Having a valid Enduring Power of Attorney document and having the attorney appointed under the legislation, trust deed and company constitution (if relevant) when capacity is lost is vital to the SMSF’s compliance.

What happens if I don’t have an EPOA nominated?

If something happens to you and you don’t have an EPOA (depending on which state you reside in), there can be dire consequences for the fund.  The loss of mental capacity and are unable to make decisions and it becomes necessary for someone to make decisions on your behalf then there will need to be an application made to the ACAT(or equivalent) and they will then make the appointment of a suitable person to take on such a role.  If they determine there isn’t a suitable person in their view they will then appoint the Public Trustee or Guardian.

Where to from Here?

We have negotiated special pricing with our legal supplier for us to assist in the facilitation of EPOA’s for our clients.  Should you wish us to arrange this for you the fee is $200 incl. GST for an individual or $350 including GST for a couple.  

Should you wish to proceed, please complete the following form and a member of our team will be in touch with you.

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