Though self-managed super funds (SMSFs) have continued to enjoy solid growth in 2011, making preparations for those unforeseen events that can take place in a trustee's life remains an area in need of increased focus, according to Peter Hogan, Principal of Plaza Financial.
"It's an estate planning issue, clearly, but because there are now more people staying with their self-managed super funds into retirement, it is one that trustees need to pay close attention to," he said. "Like it or not, we all have to accept that there comes a point with all of us where perhaps a lack of interest or capacity is going to occur."
Hogan said it was also important to realise that loss of capacity wasn't necessarily an issue solely related to old age.
"It can be incapacity for any reason, and it needs to be planned for appropriately and, given the responsibilities that individuals have as trustees of their own fund, it's clearly an essential part of the advice that's given to clients," he said.
"Financial advisers need to be sure that there are things like enduring powers of attorney in place, because the ATO (Australian Taxation Office) has made it clear in a number of rulings that, when there is some incapacity, it is indeed possible to have an enduring power of attorney who can take the place of the trustee in order to run the fund."
"That person is then in the position to assess whether the fund can continue or should be wound up and the money rolled over."
