Marlene* is strong willed and clear in her views. Self-reliance is a virtue, financial independence is a virtue, and you can never trust the government, whichever party is in power.
And hard work never hurt anyone, which is why she has a slightly distant, guarded relationship with her children.
Unfortunately, Marlene was hospitalised with a mild stroke eight months ago. Initially she was quite debilitated, and the children convinced a medical practitioner that she was no longer able to manage her affairs.
They were appointed custodian of her SMSF and started making “investment” decisions.
Marlene’s mental faculties are fully restored, and she is trying to fight the medical decision in court. She is not happy.
However, there was no Power of Attorney, nor any document that clearly appointed someone else to act on her behalf if she became incapacitated.
It is a bad time of life to get all the paperwork & IDs needed and chase things up when someone is unwell in hospital. Banks won’t speak to anyone without a Power of Attorney, wary of money laundering and identity theft.
There is a lot involved and it takes a lot of time and patience.
* The name is changed to protect client confidentiality, but otherwise this is a real-life story.
Marlene’s story is similar to ones I see come across my desk at least weekly.
The first generation of SMSF trustees are getting old.
Incapacity and death are now realities, yet few SMSFs are ready for that.
Thorough estate planning around different contingencies would have prevented Marlene’s troubles and expenses.
However, I see little evidence of it in many SMSFs and in many of the troubled cases coming across my desk, trust deeds are amended after the fact.
It raises the point in law as to whether there was a genuine discussion.
- Does the trust deed cover estate planning contingencies?
- Where is the will?
- Who has the Power of Attorney? Is it still valid?
- What are the plans to minimize death benefits tax?
Death and SMSFs
As a reference for accountants, I have run a series of webinars about Death & SMSFs which covers off on these issues.
You can watch the recordings here.
Alternatively call me and I can point you in the right direction.
I know these are unpleasant issues but as their trusted advisor, you will be saving the trustees, your clients, a lot of emotional turbulence and wasted money.
Finally, I will be presenting a live webinar on Divorce & SMSFs on the 29th February. Our bonus day in 2024.
