Asset Protection – Planning for Incapacity in a Business or Investment Context

Asset Protection – Planning for Incapacity in a Business or Investment Context

Often when people consider executing an Enduring Power of Attorney document, they are considering incapacity and decision making around personal health matters and personal finance matters. Whilst everyone should give consideration to this, it is particularly important for anyone who is in control of a business or investments to have protection in place should they lose capacity. The complicating factor with this situation is that more often than not, business and investment assets are held through entities such as trusts and corporations. Despite these structures, an Enduring Power of Attorney document can generally still be utilised so that the appointed attorney can deal with these assets, specifically –

1. The holder of a financial enduring power of attorney can act as trustee of a Self Managed Super Fund in lieu of a living member of the SMSF^[1]. They can also act as director of a trustee of an SMSF^[2].
2. The holder of a financial enduring power of attorney of a person who is Trustee or Appointor of a family or discretionary trust may, depending on the provisions of the Trust Deed, be able to step into one of those roles. The express power to do so should also be noted in the EPOA document. In the absence of either of these it is still possible that an Attorney may have the power to exercise the principal’s power as an Appointor, although this is not completely clear^[3]. Having different parties as Appointor and Trustee is a practical consideration also.
3. The holder of a financial enduring power of attorney of a person who is Sole Director and Shareholder of a private company can appoint a replacement director to control the company^[4]. Other considerations for a company are to have the company execute a Financial EPOA or for the company to appoint more than one director.

In the above scenarios it is also important to review and consider any governing documents such as trust deeds, company constitutions and agreements between shareholders, unitholders or appointors. A full and considered asset protection plan should cover off on the incapacity of key people, not just their death as is often the case.

Miller Sockhill Lawyers have been assisting Queenslanders with their asset protection and estate planning for many decades. If you would like any advice or assistance in this regard, please contact our office.

[1] Superannuation Industry (Supervision) Act 1993 (Cth) s17A(3)(b)(ii)

[2] Australian Taxation Office. (2010) Self Managed Superannuation Funds: the scope and operation of subparagraph 17A(3)(b)(ii) of the Superannuation Industry (Supervision) Act 1993 (Cth)

[3] Belfield v Belfield (2012) 83 NSWLR 189; [2012] NSWCA 416

[4] Corporations Act 2001 (Cth) s201F(2)(b)