Nearly every aspect of estate planning and elder law requires an attorney to assess a client’s legal capacity. As elder law attorneys, we are regularly working with individuals who have some form of cognitive impairment such as dementia or Alzheimer’s Disease. A common assumption is that someone with dementia or Alzheimer’s cannot sign a Last Will and Testament (“Will”) or Power of Attorney with Statutory Gifts Rider. This assumption can have grave consequences if the opportunity to draft necessary estate planning documents is foregone.
Mental capacity is different than legal capacity. A person diagnosed with a cognitive impairment may very well have the legal capacity to execute documents, especially in cases where they are in the initial stages of the disease. Each case must be analyzed based on its own particular facts and circumstances. Legal capacity generally falls into two categories: testamentary capacity and contractual capacity.
- Testamentary capacity is the requisite capacity to sign a Will. A person has testamentary capacity if he/she understands, in a general way the property he/she owns, the identity of the natural objects of his bounty, and the disposition he is making of his estate. This is a very low standard and much lower than the requisite capacity to create a trust or execute a Power of Attorney and Statutory Gifts Rider.
- Contractual capacity is the requisite capacity to create a trust or execute a Power of Attorney and Statutory Gifts Rider. Contractual capacity focuses on whether the person was able to understand the nature and consequences of a transaction and make a rational judgment concerning it. Thus, contractual capacity is a higher standard.
It is not uncommon for a client to have the capacity to execute a Will but not a trust or Power of Attorney. This is akin to someone being acquitted in a criminal matter and found liable in a civil matter (do the letters O.J. sound familiar?).
There is no bright-line test for an elder law attorney when assessing a client’s capacity. Quite frankly it is often difficult to determine and I must make a determination using my best judgment. A major factor in assessing capacity is the likelihood of the documents being challenged. Where there is a black sheep in the family, I am more conservative in my assessment. However, I will take every measure to make the case for capacity.
For instance, I was recently consulted by a client whose spouse has diminished capacity due to dementia and Alzheimer’s. In order to protect the couple’s primary residence, I recommended that the residence be transferred to the well spouse. Rather than resorting to the Court system in the form of a guardianship, I am making a personal visit to the nursing home in order to properly assess my client’s spouse. This is an integral part of how I practice.
If you or someone you know has diminished capacity, please do not be hesitant to contact us. There still may be an opportunity to execute important legal documents. We are sensitive to the issues involving diminished capacity and might be able to make an assessment resulting in significant preservation of assets in the long run.
I can be reached at 914-245-2440 or by e-mail at firstname.lastname@example.org and we can begin a discussion about assessing your legal capacity