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Tag Archive: Enduring Power of Attorney

  1. THE 15% TAX TRAP ON SUPERANNUATION DISTRIBUTIONS (Why you might need a “Conflict of Interest” clause in your EPOA)

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    After death, any money that the deceased was still holding in their Superannuation Fund must be distributed out. According to the usual Superannuation rules, the payment of this money is made in line with written instructions* and is typically directed to the deceased’s surviving spouse and/or family members. Under tax laws however, these payments will be taxed at the rate of 15%** if made to anyone other than the member themselves or a “dependant”.  Because dependants are defined as only a surviving legal spouse or infant children, any distribution made to other persons such as the deceased’s adult children is susceptible to the 15% tax bill. Considering Superannuation account balances are typically well over $100,000 this tax bill can be very substantial.

    If however, the member had an Enduring Power of Attorney in place before they passed away, then usually, the medical issues which are expected to take the person’s life, will enable their Attorneys to withdraw the entirety of the member’s Superannuation account and pull the money down into an account in the member’s personal name prior to the date of their death. This payment into the member’s own account is tax free and from here, the money can then be distributed out to the deceased’s family pursuant to the terms of their Will again, tax free.

    Importantly however, this course of action, is only available if the member had a “Conflict of Interest” clause written into their Power of Attorney.  In order to work, the “Conflict of Interest” clause does need special drafting and of course without a Power of Attorney at all, the money transfers before death cannot occur at all.

    * commonly called a Binding Death Benefit Nomination.

    ** tax is calculated by a formula which firstly exempts any tax component of the accumulated member’s account (the tax component can be found in the tax returns) and then factors in the period of time between the date of death and the member’s permissible date of retirement. 

    Michael Zande is a Queensland Law Society Accredited Family Law Specialist with over 30 years’ experience in the field. He is the principal at Zande Law Solicitors, Suite 7, Norwinn Centre, 15 Discovery Drive, North Lakes.  To contact Michael for advice, phone 3385 0999.

    The information in this article is merely a guide and is not a full explanation of the law.  This firm cannot take responsibility for any action readers take based on this information.  When making decisions that could affect your legal rights, please contact us for professional advice.

  2. Sharing Family Finances with an Enduring Power of Attorney in place?

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    Sharing financial assistance within family networks such as interest free loans, lump sum gifts and even contributing to the cost of the construction of a granny flat for personal occupancy occur all the time. Usually, these arrangements go on between Parents and their adult children but can also be between adult siblings and/or spouses. Commonly, the transacting parties to these “family friendly” arrangements have also agreed to act as Enduring Powers of Attorney (EPOA) for one or another and have gone on to sign up the appropriate EPOA forms which have been lodged with the relevant institutions. In any of these scenarios it is important to note that under Section 87 of the Queensland Powers of Attorney Act, any transaction (financial or otherwise) from the person who has given an EPOA (the Principle) in favour of the person appointed (the Attorney) can be challenged (by other persons), rendered completely void and reversed unless the parties involved can produce proof that the transaction was entered into without any pressure, in any form, being put upon the advancing person to pay over the money or provide the financial benefit to the receiving person.  In a Supreme Court decision that was previously determined on this issue, it was found that a way to produce this proof was for the advancing person(s) to obtain independent legal advice about the nature and the effect of the intended transaction before it was completed.  In circumstances where the entire family enjoys supreme harmony between all of its members, taking matters to the extremes of independent legal advice is probably unnecessary. But in any situation where family quarrels might occur, the extra precaution of securing proof of independent legal advice having been provided simultaneously with the transaction would be very prudent.

    Michael Zande is a Queensland Law Society Accredited Family Law Specialist with over 30 years’ experience in the field. He is the principal at Zande Law Solicitors, Suite 7, Norwinn Centre, 15 Discovery Drive, North Lakes.  To contact Michael for advice, phone 3385 0999.

    The information in this article is merely a guide and is not a full explanation of the law.  This firm cannot take responsibility for any action readers take based on this information.  When making decisions that could affect your legal rights, please contact us for professional advice.

     

  3. Executors Questions Answered

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    On the 7th of August Zande Law ran a seminar on ‘Executors Questions Answered’. A big thank you to all of our guests. Judging from feedback, all information was well received.

    Watch out for upcoming seminars!

  4. Health Check For Your Enduring Power Of Attorney

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    HEALTH CHECK FOR YOUR ENDURING POWER OF ATTORNEY

    Medically speaking, we all know that a regular health check-up with your Doctor (even when we are not sick) can detect and cure health problems before they become unmanageable. In many ways, the same practice should be followed with legal documents such as Enduring Powers of Attorney and Wills. For Enduring Powers of Attorney, below is a short quiz that everyone should take:

    • Do you have an Enduring Power of Attorney? If not, did you know that if you were to become incapacitated, two Government Departments will take over the control of your life.  The Public Trustee will manage your finances and the Adult Guardian will handle health decisions.  By preparing an Enduring Power of Attorney however, you instead will be able to nominate the people that you choose to make those decisions for you.
    • Is the Power of Attorney expressed as a “General” Power of Attorney or an “Enduring” Power of Attorney? If only a General Power of Attorney, the onset of incapacity will actually revoke the power of attorney meaning you are back with the Public Trustee and Adult Guardian.
    • Was your Power of Attorney signed up before 1998? If yes, the Power of Attorney will relate only to financial matters.  To extend the Power of Attorney into personal health matters, a new Power of Attorney needs to be prepared now.
    • Have you appointed a backup Attorney? A “backup Attorney” is the person or persons who will step in to perform the role if the first choice of Attorney is unable or unwilling to do the job.  If you do not have a backup Attorney, then you are back with the Public Trustee and Adult Guardian.
    • If you have appointed more than one Attorney, how are they to act? If the Attorneys are appointed to act “jointly” or by some form of “majority”, the arrangements can, in practice become unworkable. It is frequently not understood that the workload for Attorneys can run into many hundreds of (big and small) tasks. If the EPOA requires two or more of the Attorneys to “work together” then none of that workload can be shared/divided between the Attorneys because each of them will be required to do (that is redouble-up and redo) 100% of the job. If the appointment is marked as “several”, the Attorneys then are able to divide and share up the work. There are protections against anyone turning “rogue” because the Attorneys remain obligated to confer.
    • Is the Attorney (for financial matters) expressed to activate “immediately” or “upon incapacity”? For some, incapacity happens permanently and suddenly.  For many others however, it is a gradual decline where the person moves back and forth between capacitated and incapacitated states. If the EPOA is expressed to activate “only on incapacity” and the affected person is in the gradual decline scenario, they will potentially have to be repetitively hauled off to their doctor for a ruling as to whether they have lost or still retain capacity each and every single time the EPOA is to be used. This torturous problem is easily avoided by marking the EPOA to activate “immediately”.  After all, if the Attorney can be trusted to look after you once you’ve lost your marbles, they surely can be trusted to do you no harm whilst you still have them.
    • Do you have or know where the original EPOA is? If the original EPOA has been misplaced and you only hold a (un-certified) copy, it is likely that if the EPOA is ever needed, it cannot be used without the original being produced.
    • Has everyone signed and dated the document in the correct place? Note the person who witnesses the principal signing the Attorney must also complete a Certificate of Capacity and so signs the document in two locations and all of the persons who have been appointed must sign the document at the back.  The Attorney also must be dated.
    • Have you completed part 3 concerning expanded powers? If this section is left blank then the Attorney will convey the usual or “standard” powers which in most cases will be sufficient.  In some cases however, an expanded array of powers will be advisable.  The decision about whether these powers are needed or not however, must be had in consultation with a Financial Planner and your Solicitor.
    • Have you considered preparing an Advance Health Directive? The Advance Health Directive is the document that gives your own direction about what health measures you do, or do not want to have performed on you, if you are to lose capacity.  If an AHD is completed, it will in all circumstances trump the Power of Attorney.  The AHD can be done before, simultaneously with, or after the date that the Power of Attorney was/is prepared.

    We here at Zande Law are more than happy to review your existing Power of Attorney for no charge.  So, for peace of mind and particularly compared to the consequences of what might happen if your Power of Attorney is actually defective, or you do not have a Power of Attorney at all, it is worth your while to have it checked over.

    Joshua Zande is a Solicitor at Zande Law Solicitors, Suite 7, Norwinn Centre, 15 Discovery Drive, North Lakes. To contact Josh for advice, please phone (07) 3385 0999.

    The information in this article is merely a guide and not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.