As medical advances extend human life expectancy, the likelihood that an individual will become incapacitated before dying increases. For wealth planning and conservation purposes, it is critical to assess whether a person has the necessary capacity to execute estate planning documents.
Making this assessment can be an extremely complex exercise. The standard of mental competence to make a will is, by itself, fairly low: Does the person understand he or she is making a will regarding property he or she recollects owning, and understands that provisions of the will affect her family members who she or he recollects.
But in addition it must be clear that, despite passing the standard to make a will, it must be determined whether the person is of "unsound mind" or suffers from a "mental deficit" that deprives him or her of the capacity to execute estate planning documents.
Determining whether a person suffers from a "mental deficit" or is of "unsound mind" can be extremely difficult to determine. This issue was addressed in a recent article in the Journal of Financial Planning titled “Defining Incapacity in the Modern Estate Plan.” The article is based on California law, but if you are caring for an elderly loved one, the message is the same: defining legal capacity can be incredibly difficult.
Much ink has been spilled by lawyers, judges, and family members over the years defining it, too. The biggest teaching point from the article (and my own experience with clients) is to “ink” your own estate plans sooner rather than later. You likely will never again be as sharp as you are today.
Procrastination is the death bed of proper estate planning.
For more information regarding estate planning, visit my website http://www.grainlaw.com/CaliforniaEstatePlanning.php
Reference: The Journal of Financial Planning (May 2012) “Defining Incapacity in the Modern Estate Plan”