A member appoints their daughter under a general power of attorney. Can she replace the member as an SMSF trustee?
A general power of attorney is not enough
A general POA may authorise financial or administrative actions where those actions can legally be delegated.
But a general attorney isn’t a “legal personal representative” under s10(1) of the SIS Act. The trustee-replacement exception in s17A(3)(b)(ii) is therefore only available where the attorney holds an enduring power of attorney (EPOA).
An EPOA can allow the attorney to become a trustee, or a director of the corporate trustee, in place of the member. Before relying on it, there are three practical checks.
1. Is the EPOA valid under the relevant state or territory law?
Check that the member and the attorney have both signed, and that the witnessing complies with the relevant state or territory law.
There is no single Australia-wide rule. The number of witnesses, their qualifications and who is excluded depend on the jurisdiction. For example:
- NSW: a prescribed witness is required, such as a registered legal practitioner. The witness must certify that they explained the document’s effect and that the member appeared to understand it. A JP alone is not sufficient.
- Victoria: two adult witnesses are required. At least one must be authorised to witness affidavits or be a registered medical practitioner.
- Tasmania: the EPOA must be registered before it takes effect.
Obtain written confirmation that the EPOA remains in force, including whether it has been revoked, varied or affected by a court or tribunal order.
2. Has the authority commenced, and are there any restrictions?
“Enduring” means the authority can survive loss of capacity. It does not necessarily mean the authority starts when capacity is lost.
For financial matters, commencement may be immediate, on a specified date or upon loss of capacity, depending on the document and applicable law.
If incapacity is the trigger, obtain evidence that the condition has been met, following any assessment requirements in the document. In WA, an enduring power stated to operate only on loss of capacity doesn’t commence until the State Administrative Tribunal declares that the member lacks capacity. A doctor’s letter isn’t enough.
Check any restrictions in the EPOA, including limitations on financial or superannuation matters.
If the attorney proposes to make or change a death benefit nomination in their own favour, obtain legal advice about their authority and any conflict requirements. Appointment as trustee or director does not, by itself, authorise them to make the member’s nomination.
3. Has the SMSF appointment been made?
The EPOA does not itself appoint the attorney as trustee or director. A separate, valid appointment is required.
Obtain the documents showing the attorney’s appointment as trustee or director in place of the member, and the corresponding change to the member’s role.
The appointment and removal must comply with the trust deed and, for a corporate trustee, the company’s constitution and the Corporations Act 2001.
Once appointed, the attorney acts in their own capacity as trustee or director, not merely as someone signing for the member.
What if the member loses capacity without an EPOA?
An EPOA must be granted while the member still has the capacity to make it. Once that capacity is lost, it is too late.
A tribunal-appointed administrator or financial manager may provide an alternative under s17A(3)(b)(i), depending on the appointment and its scope. A separate appointment as trustee or director is still required.
Capacity and death: the other key differences
A general POA ends when the member loses capacity, while an EPOA can continue.
Both end when the member dies. From then, the executor is the legal personal representative, and s17A(3)(a) allows them to act as trustee in place of the member until death benefits become payable.