Lawyer warns of dangers of mistranslated rules in deeds
The trustee member rules in many cases are being misinterpreted and included in trust deed documents, which is impacting the ability of trustees to elect enduring powers of attorney, according to an industry lawyer.
Cooper Grace Ward Lawyers partner Clinton Jackson says many trust deeds are replicating the trustee member rules in their deeds in terms of who is required to be a member and who is required to be a trustee in accordance with section 17A of the SIS Act.
“It’s not necessary to do that. I understand why they do that, they do it because it makes it clear who can be a trustee and who can be a member, but what we often see if those rules being mistranslated into the deed,” Mr Clinton told SMSF Adviser.
“Often, [this results] in the inability to appoint an attorney who holds an enduring power of attorney as a trustee if a member loses capacity.”
In cases where the trust deed doesn’t allow this to happen, the only other option if the trust deed cannot be amended is to remove the member from the fund, Mr Clinton said.
“Unfortunately, we’ve been seeing that come up more and more as the age of members in SMSFs becomes older and the risk of incapacity is greatly increased.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.