Power of Attorney in a Trust Question

[lamby]

Getting very close to signing documents and after the bank's legal department went through one of our trust documents they've come back saying that under the current terms of the trust there is no unlimited power to appoint an attorney with that power being limited to signing documents. They want this changed to unrestricted before they'll proceed with the loan.

Now I'm presuming that this is standard and I'll be sending it through to the accountant today and on to the lawyer that drew up the original trust document from there but thought I'd check just in case I'm missing something.

 

[Terry_w]

There is nothing standard with trusts.

Think of the consequences of an unrestricted power of attorney.

 

[Paul@PFI]

Yep seen that one. They don't want a POA at this time (which Terry is correct in saying may be a concern) but just that the deed contains a clause that permits a trustee to grant a POA to others when and if it ever arises. This avoids concerns that a later POA or person acting under Trustee authority (ie wife, lawyer, settlement agent etc) isn't authorised by the terms of the original deed.

Some amendments banks ask for are silly. I had one once ask for an explicit amendment that didn't just allow bank bill borrowings but specifically named each of the bank bill products issued by NAB.... I wonder what may happen if the bank changes a product name ?? Silly really. Its like asking for a deed amendment for the type of saving account.

 

[lamby]

Thanks guys, it's the same mob you mentioned Paul... I'll definitely get an opinion before proceeding.

 

[Terry_w]

Is changing lenders an option?

 

[lamby]

It is Terry, the loan is an agri based one although the parcel of land I've bought should meet the Commonwealth Bank's requirements for the hobby farm category. I'm currently utilizing a private mortgage through a friend. The trust deed relates to the parcel of land owned by my parents who are going guarantor for my loan but we were also setting up a LOC on that title as part of the process to enable expansion of the business. Having said that the lending manager we are dealing with has been particularly good to deal with so far - that relationship would be something I wouldn't want to throw away unless necessary.

Are you thinking that another bank may not have the requirement? I thought it odd that the private mortgage lender's lawyers didn't have an issue with it as they were very stringent about things (lending from within a super fund).

 

[Terry_w]

No need to let a lender dictate how you structure a trust. ask them why they want it changed and you can possibly argue your way out of it. Another lender may be the next step.

 

[Paul@PFI]

Thanks guys, it's the same mob you mentioned Paul... I'll definitely get an opinion before proceeding.

Their lawyers are dicks. That said a simple amendment might be easier than a headache. Make sure you get legal advice and that same lawyer can amend it. probably a one page deed of amendment. Its just a power to act under a POA. Just don't give any POA and ensure it is clear that the amend gives form the specifics the POA must take !!!! ie enduring / revokable, in writing, witnessed etc...

I have seen deed amendments that allowed a third party company to automatically amend a smsf deed. Without the trustee or members knowing or giving consent. Ironic it came from a very prominent SMSF specialist. That was a form of POA they argued. ATO argued that POA must give specific authorities not waffle that allows someone to act freely as if they are a trustee. Their view was it could jeopardise a SMSF and be used to circumvent a non-resident fund problem.