June 2013 Newsletter 

In this edition:

Welcome

Retirement Villages and Aged Care: Is there a Difference?

End of year Superannuation tax planning

Fuel tax credits - Changes from 1 July 2013

Superannuation and Powers of Attorney: Part 1

For most people, visiting an estate planning lawyer often results in a swathe of documents to sign at the end of a worrying process where worst case scenarios dominate discussions. One of those documents is often a "power of attorney" – something which allows someone else (your attorney) to act for you on various legal matters. 

A general power of attorney will lapse if you are mentally incapacitated but a special version of the power of attorney – an "enduring power of attorney" – can continue to act until you die, no matter what happens to your mental state in the meantime. This is obviously a very powerful document in terms of your general wealth and personal management but how does it fit in with your self managed superannuation fund?

This article explains what your power of attorney can do, in future editions we look at when having an attorney is useful and the situations in which an attorney cannot be appointed.

What can your attorney do?
One of the rules your fund must normally meet to be a "self managed superannuation fund" is that all members are trustees (or, if your trustee is a company, a director of that company) and all trustees (or directors) are members.

Perhaps most importantly, then, anyone who holds your enduring power of attorney can be a trustee of your fund in your place, without failing this test. This can be extremely useful and we have explored a number of opportunities it presents below.

It is important to note that superannuation law specifically allows your attorney to be the trustee of your fund in your place, not alongside you.

What happens once the attorney has been appointed as trustee?
Once the attorney has been appointed, that person simply is a trustee. That means that in conjunction with the other trustees, the attorney will make all the important decisions about the fund:

• where to invest
• when to pay benefits and to whom
• what service providers to use, etc.

Importantly, you can't limit their "fund trustee" decision making powers in the documentation prepared to appoint them as your attorney. In addition once appointed the attorney will ultimately be responsible for their decisions as well as for making sure the fund complies and is operated in the best interests of all members. 

The attorney – once appointed as a trustee – therefore clearly holds a powerful but also onerous position in your superannuation fund. For this reason it is not a decision that should be taken lightly by either party.

What if you decide you no longer want your attorney acting as trustee?
They would need to resign (or be removed) and the process for doing this would depend on the terms of the trust deed and/or the constitution of the company where there is a corporate trustee. Often the power to remove and appoint trustees rests with the members of the fund and under these circumstances you would effectively be able to forcibly remove an attorney if necessary.

Note that you can't simply revoke the power of attorney to solve this problem. The only way they would automatically cease being a trustee if you revoked their power of attorney and your trust deed or constitution stipulated that their appointment terminates at that point.

See our July 2013 newsletter for Part 2: When is it useful to have an attorney act in your place?