Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 374

Every SMSF trustee should have an Enduring Power of Attorney

If you’re an SMSF trustee, there are several vital things to consider when it comes to your estate and succession planning.

COVID-19 shows need to prepare

Your will enables assets to be distributed in accordance with your wishes when you die, and a binding death benefit nomination will direct your super and any insurance benefits to your chosen beneficiary.

However, many people are not prepared for what happens if a trustee is incapacitated and not able to act either on a temporary or permanent basis.

COVID-19 and the events of 2020 are an indication of why now, more than ever, SMSF trustees need to be prepared for the ‘unexpected’ by having an Enduring Power of Attorney (EPOA) in place.

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

Importantly, superannuation law allows an EPOA to act in the place of the member without causing the fund to cease to be an SMSF.

Different to a Power of Attorney

Many people believe that if they have a Power of Attorney in place their SMSF is secure. However, what happens if mental capacity is lost? Unfortunately, in this circumstance the Power of Attorney ceases to operate which is why it is important to have an EPOA in place.

All members of an SMSF must be trustees, but to be a trustee of an SMSF an individual cannot be under any legal disability including mental incapacity. If a trustee becomes unable to act or loses capacity, they must be removed, and someone will need to be appointed either temporarily or permanently in the trustee’s place until the individual can act again on their own.

A person acting as an Enduring Power of Attorney will take on all responsibilities of being a trustee. They will make financial decisions on the members' behalf. This will include the acquisition and disposal of investments, transacting on the fund’s bank account and paying all expenses of the fund including pensions. They will also be responsible for the signing of financial statements, annual returns, and other mandatory compliance minutes required.

In other words, they will oversee the day-to-day running of the SMSF in much the same way the member themselves did.

As blended families are becoming more prevalent, having an EPOA can avoid unnecessary friction or certain unanticipated actions being taken.

Anyone can be appointed as an EPOA and more than one EPOA can be nominated to act jointly in making the decisions. It is also a good idea to appoint a substitute where possible should one of the EPOAs not be able to take on the responsibility of being a trustee.

If something adverse happens without an EPOA in place, there can be dire consequences. For example, if a member resides in NSW an application would need to be made by the next of kin to the NSW Civil and Administrative Tribunal to obtain an order to enable the SMSF assets to be dealt with.

If you have an SMSF, don’t leave your assets to chance and arrange not just a Power of Attorney, but an Enduring Power of Attorney sooner rather than later.

 

Karen Dezdjek is Director, Superannuation and Wealth at Prime Financial Group. This article is general information and does not consider the circumstances of any individual.

 

RELATED ARTICLES

Importance of updating your SMSF Trust Deed

Clime time: Asset allocation decisions for SMSFs

SMSF trustees who question their capacity and look for options

banner

Most viewed in recent weeks

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

Supercharging the ‘4% rule’ to ensure a richer retirement

The creator of the 4% rule for retirement withdrawals, Bill Bengen, has written a new book outlining fresh strategies to outlive your money, including holding fewer stocks in early retirement before increasing allocations.

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Are franking credits worth pursuing?

Are franking credits factored into share prices? The data suggests they're probably not, and there are certain types of stocks that offer higher franking credits as well as the prospect for higher returns.

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Latest Updates

A nation of landlords and fund managers

Super and housing dwarf every other asset class in Australia, and they’ve both become too big to fail. Can they continue to grow at current rates, and if so, what are the implications for the economy, work and markets?

Economy

The hidden property empire of Australia’s politicians

With rising home prices and falling affordability, political leaders preach reform. But asset disclosures show many are heavily invested in property - raising doubts about whose interests housing policy really protects.

Retirement

Retiring debt-free may not be the best strategy

Retiring with debt may have advantages. Maintaining a mortgage on the family home can provide a line of credit in retirement for flexibility, extra income, and a DIY reverse mortgage strategy.

Shares

Why the ASX is losing Its best companies

The ASX is shrinking not by accident, but by design. A governance model that rewards detachment over ownership is driving capital into private hands and weakening public markets.

Investment strategies

3 reasons the party in big tech stocks may be over

The AI boom has sparked investor euphoria, but under the surface, US big tech is showing cracks - slowing growth, surging capex, and fading dominance signal it's time to question conventional tech optimism.

Investment strategies

Resilience is the new alpha

Trade is now a strategic weapon, reshaping the investment landscape. In this environment, resilient companies - those capable of absorbing shocks and defending margins - are best positioned to outperform.

Shares

The DNA of long-term compounding machines

The next generation of wealth creation is likely to emerge from founder influenced firms that combine scalable models with long-term alignment. Four signs can alert investors to these companies before the crowds.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.