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Taipei frees pension funds - Column

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Did you know you don't own your body? On one view of the law at least there are no property rights attaching to a person's body.
Did you know you don't own your body? On one view of the law at least there are no property rights attaching to a person's body.

While you are alive the issue is irrelevant - a living person who is not legally incapacitated (say, by youth, senility or mental or physical trauma) has a full suite of human rights that have nothing to do with any sense of ownership of their body as a separate piece of property.

Generally when you pass away you cannot give to your executors or heirs through your will any greater powers or rights than you had when you were alive.

So it is doubtful you can give them property rights over your body. Such rights as exist come not from the law of property but rather from the law of succession that imbues certain people with certain rights - such as your next-of-kin's right to direct how to dispose of your remains.

I raise this issue to highlight that not all rights are property rights. We all have different types of rights and it is important to distinguish the types of rights you are dealing with before taking steps in relation to them. It is common for planners and clients to think all the client's rights can be safeguarded through the use of an enduring power of attorney and if anything happens to the client their attorney-under-power will be able to act fully in respect of their rights and their assets.

Unfortunately this is not necessarily the case and planners need to be cautious in advising people on the use and effectiveness of powers of attorney. To complicate matters, powers of attorney come under state law so you would need to consider the legislation in your state when advising someone on their power of attorney.

In New South Wales, the Power of Attorney Act of 2003 governs the issue although it only applies to powers of attorney in writing and signed after the act commenced. It also does not change the common law except where it does so expressly.

By following the form set out in schedule 2 of the act a "prescribed power of attorney" is created that is governed under the act. This is what most solicitors in NSW do.

The NSW act is not very helpful because all it says is that "a prescribed power of attorney confers on the attorney the authority to do on behalf of the principal anything that the principal may lawfully authorise an attorney to do . subject to compliance with any conditions or limitations specified in the instrument creating the power".

So we have to consider what things a principal can authorise their attorney to do and what things they cannot. This is where the issue of property rights versus other types of rights becomes important. In general terms the principal can authorise their attorney to do all things and sign all documents in respect of their property rights. The principal cannot give rights they don't have, so they can't authorise the attorney to do more than theprincipal themselves can do.

So if property rights are okay, what kind of rights are off limits to the attorney-under-power? Generally the answer is: rights that the principal has because of an office they hold as opposed to property they own. There are three types of offices that planners would need to pay special attention to.

Firstly, there are the client's directorships. A power of attorney cannot give the attorney the right to act as a director of a company in place of their principal. If that is an issue then the principal should appoint their attorney as their alternative director.

Secondly, there is the client's trusteeship of their self-managed super fund or indeed any other trust. In NSW section 10 of the Power of Attorney Act specifically states that "a prescribed power of attorney does not confer authority to exercise any function as a trustee that is conferred or imposed on the principal. The trust deed probably sets out clearly how the fund's trustees can be replaced or removed.

Thirdly, there is the client's role as appointor under a discretionary trust. I recently had to advise a client on the current status of their family trust and noted it contained a default provision appointing a deceased's executor as appointor. Because that appointment was made pursuant to the trust deed, it meant the family trust now had four appointors - way too many to be efficient and effective.

Again, the role of appointor is an office, or grant of a power, not a property right, and it is doubtful the power of attorney could have the effect of making the attorney-under-power the appointor in the principal's place, particularly as the trust deed probably sets out clearly how the fund's appointor can be replaced or removed.

The lesson here I guess is to be aware of these potential issues when advising on the use of powers of attorney, to take sufficient instructions to cover all of the client's needs and to refer the client to expert legal advice if necessary.

 

Taipei frees pension funds - Column
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