law offices of merwyn j. miller
191 calle Magdalena, suite 270 • encinitas, San Diego County, ca  92024 • 760-436-8832

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When Is Someone No Longer Competent to Sign Estate Planning Documents?

What physicians do and don’t do
Importance of Attorney Doing Investigation
Presumption of Capacity
Power of Attorney–Test
Living Trust–Test

Introduction: My mom’s physician has declared my mom mentally incompetent. I guess she can’t sign documents any more. That’s a problem because her current Will leaves everything to her former spouses’s children. Those children have not spoken to or visited her in the last 10 years. It would be a crying shame if they inherited everything.

In my practice in California, this question comes up probably more often than any other I deal with. It is particularly important when the family wants to do Medi-Cal or Veterans Aid and Attendance (also known as the Veterans Pension) planning as this is probably going to require changing the distribution plan set forth in the already existing documents.

What physicians do and don’t do: Is the physician’s pronouncement equivalent to a “death sentence?” Not necessarily. It all depends on the document and your Mom’s ability to mentally function. Physicians who are not psychiatrists don’t typically make a determination of mental competence rather, they usually say the person is not able to handle his financial affairs or they diagnose the person as having dementia or Alzheimer disease.

Dementia or Alzheimer disease can be early, middle or late stage and people in early or maybe even in middle stage often have sufficient mental capacity to effectively sign various estate planning documents. Even the pronouncement by a physician that the person can no longer handle his financial affairs (or on the rare occasion the pronouncement by the physician that the person is mentally incompetent) is not necessarily legally final. It is simply the opinion of one person who may or may not be an expert in that field.

Importance of Attorney Doing Investigation: This is the reason why, when I am told by a family member that Mom or Dad is incompetent, I always question further what, exactly, the person means by using that term. Most of the time it is nothing more than the parent is forgetful or that the short term memory is very poor. Usually, in these cases, I want to see the parent myself and come to my own conclusion. Often, I find that the parent seems to put more of an effort into focusing and concentrating on my conversation and the parent’s responses as on more than one occasion the child has told me that Mom or Dad was much more responsive than usual.

Further, when I come to the conclusion that the person does have sufficient capacity to sign whatever documents are necessary, it goes a long way toward the eventual validation of the document. After all, if the documents are contested after Mom dies, having an attorney who is not financially involved in the distribution of the assets on the person’s death and who was present at the actual signing of the documents can be very persuasive evidence.

Presumption of Capacity: Here are the California rules. They are going to differ somewhat from state to state. First, until a court determines that one lacks the necessary capacity it is presumed that he is legally capable of making decisions.

Wills–Test: So what about the capacity to execute a will? The standard for this type of act is typically a lower standard than that necessary for entering into a contract. If the person understands the nature of his act (that he is signing a Will), knows what he owns (at least in general context), and knows his relationship to his living family members, and does not suffer from hallucinations or delusions that cause him to leave his assets to those he would not normally have, then he is competent.

Power of Attorney–Test: To execute a power of attorney a person must have the capacity to contract. That is a higher standard than being able to sign a Will and requires the person to understand the rights and responsibilities created by the document, the consequences for the person of signing the document, and the risks and benefits of doing so. (The importance of mental capacity after the person has signed the power of attorney is discussed here.)

Living Trust–Test: The test for capacity to execute a living trust has always been somewhat up in the air as it occupies a middle ground: is it more like a Will or more like a contract?

Summary: In any case, the law is clear that a diagnosis of a particular disorder, such as dementia or Alzheimer, is not the test but, rather, the conclusion of incompetence must be made on evidence of a significant deficit in mental functions. Anyone in this situation should talk to that person’s attorney at once as Mom’s mental capacity probably is probably going to continue to diminish, maybe rapidly.

  Capacity, Trusts, Wills, Powers of Attorney, Medi-Cal, Medicaid, Veterans Pension, Aid and Attendance, California