Understanding Capacity: How it Affects Consent and Drafting An Estate

California's aging population is growing and so are their health care related needs. Governor Jerry Brown signed a new budget into law this week. The budget touches on several issues related to mental health, like the mental health tax on California millionaires and how it is spent (hint: not on yoga or horseback riding). The budget also sets aside a one-time 2.5 million dollar allocation for Alzheimer's research. The money will go to early detection and diagnosis of the disease. This expenditure is another in a series of steps in recent years to make California a leader in Alzheimer's care, including legislation last year to update physician guidelines for Alzheimer's, which include guidance on legal issues for Alzheimer's patients.

Alzheimer's Disease Is A progressive Disease - What Are the Signs?

Understanding Capacity: How it Affects Consent and Drafting An Estate

According to the Alzheimer's Association, the number of Californians with Alzheimer's is growing rapidly and is expected to reach over 1.1 million patients over the next twenty years. The disease is progressive and may be difficult to diagnose in its early stages. Persons suffering from early-stage Alzheimer's may function independently, and their symptoms (such as difficulty finding the right word or retaining the names of new acquaintances) may only be detected through a detailed medical exam. Read more about the 10 common signs for early detection at www.alz.org/10signs.

Loss of Mental Capacity and Estate Planning

Persons with later stages of Alzheimer's may have difficulty expressing themselves, and may experience increased suspicion, compulsiveness, or delusions. Although most Alzheimer's patients live about four to eight years after the onset of the disease, some live as long as twenty. During that this difficult time they face many challenges, including whether they can and how to prepare an estate plan to ensure their wishes for their care and legal affairs are respected by their family and their health care providers. And the first step is to determine whether the patient has the necessary legal capacity as defined by law!

Do I have capacity to Create a Will?

Understanding Capacity: How it Affects Consent and Drafting An Estate

In California, a person has capacity to execute a Will if he/she can (a) understand the nature of the act of making a Will, (b) understand and recollect the nature and situation of their own property, and (c) remember and understand their relations to those whose interests are affected by the Will (see Probate Code Section 6100.5). This means that, if challenges to the Will arise later, it may be easier to prove that the person had capacity to make their Will, especially if the Will is simple and brief.

Do I have Capacity to Create a Revocable Trust?

Understanding Capacity: How it Affects Consent and Drafting An Estate

The legal standard for capacity to create a Trust is the same as any other contract, and is generally higher than that of a Will. The person has to understand (a) the rights, duties, and responsibilities created by the Trust, (b) the likely consequences for themselves and for other people affected by the decision, and (c) the significant risks, benefits, and reasonable alternatives. However, in recent years California courts have held that the lower standard for capacity for Wills should be applied to simple amendments to a Trust; especially if the Trust fulfills the same function as a Will. This means that challenges to the creation of a Trust on the basis of incapacity are more difficult to defeat, although simple amendments to the Trust are easier to defend.

Which is More Preferable, a Will or a Trust?

A Will is the older form of estate planning document. A Will is a statement of how a person wishes for their property to be disposed of when they die, and who they wish to carry out these wishes. A Will can be quite simple in language or it can be lengthy and complex. After the person dies, a probate court will examine the Will and oversee its execution. A Will only goes into force when a person dies, not when they become incompetent. This means that the Will of an Alzheimer's patient, for example, would not go into force until their death, even if that patient loses legal capacity before that time.

A Trust on the other hand is a contract which provides that the person's estate will be managed by a Trustee according to the terms of the Trust. The terms of the Trust can provide that the Trust will begin to manage the property when the person dies, or if they lose capacity. A revocable Trust does not go through probate, so it allows for a quicker, simpler transfer of assets if the person loses capacity or dies. For this and other reasons, it is preferable to create a Trust as soon as possible, especially for individuals who expect to suffer diminishing mental abilities and will require assistance managing their assets.

Get Advice on Planning your Estate

If you or someone you love is facing loss of mental capacity, you will need legal guidance on estate planning. Contact Farhat Law Firm, APC in Corona to meet with an experienced estate planning attorney who will make sure your loved ones' wishes are respected when they are no longer able to express those wishes to you.