THE CONCEPT OF LEGAL LACK OF MENTAL CAPACITY
The law in California has certain standards as to people’s capacity to make wills and to make trusts. If those standards are not met, then the will and are trust could be declared invalid if challenged in court. Here are the basic rules for wills and trusts. Even worse, people who are seriously ill or seriously mentally incapacitated can be totally incapable of even having a discussion with their attorney about a will or trust and cannot sign anything.
CAPACITY TO MAKE A VALID WILL
A person must be at least 18 years old and of sound mind to make a will. A person is not mentally competent to make a will if at the time of making the will (i) he or she does not understand the nature of the testamentary act, (ii) does not understand and recollect the nature and situation of his or her property, (iii) and does not remember or understand his or her relations to living descendants, spouse, parents, and those whose interests are affected by the will. Also a person is not mentally competent to make a will if he or she suffers from a mental disorder with symptoms including delusions or hallucinations, which result in his or her devising property in the will in a way which except for the existence of the delusions or hallucinations he or she would not have done.
THE CAPACITY TO MAKE A TRUST
Generally speaking, the legal rules to prove that a person is competent enough to execute a will are not as stringent as competency to execute a trust. A trust is considered a contract and the law has higher standards for capacity to make contracts. That capacity means that a person has the ability to communicate verbally or by any other means and to understand and appreciate (i) the rights, duties, and responsibilities created by or affected by the trust; (ii) the probable consequences for the decision-maker and the persons affected by the decision; and (iii) the significant risks, benefits, and reasonable alternatives involved in the decision.
CONSERVATORSHIP AS A SOLUTION
When a person becomes incompetent such that they lack the mental capacity to do a will or trust a conservatorship could be formed. The will and are trust could then be done through the conservatorship.
A conservatorship is a court proceeding in which a court-appointed fiduciary, known as the “conservator”, manages the personal care of the person who cannot properly provide for his or her personal needs. A conservator can either be a conservator of the person or a conservator of the estate or both. The person who is the subject of the conservatorship is known as the “conservatee”. A conservatorship is an extremely serious proceeding and requires the conservator to file various reports and accountings with the court throughout the conservatorship. Where the conservatee has no will or trust, there is a specific part of the California law which allows the conservator to apply for permission to establish a will and/or trust for the conservatee. The point of doing this would be to avoid the expense and time and complication of a probate proceeding where the conservatee has significant assets. When faced with mandatory attorneys fees in the probate court of 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000 and 1% of the estate asset amounts in excess of $800,000, most people are motivated to have the conservatee’s assets be placed in a living trust to avoid probate and those fees.
Getting a conservatee’s assets into a living trust involves several steps. First, the conservatorship has to be formed which involves filing a court petition and other papers and then a hearing is held and a Judge decides if the conservatorship can be established. After that, the conservator files a special court under the law providing for the establishment of wills and trusts and the court’s permission has to be granted. Also, the court and all interested parties will need to review and approve the proposed will and trust. However, when the alternatives of probate costs and time delays are considered, doing a conservatorship is often a good choice.
CALL (949) 682-5316 to speak with Orange County Estate Planning Lawyer Robert L. Miller
PROOF OF CAPACITY IN A BORDERLINE SITUATION PRIOR TO MAKING A WILL OR TRUST
If the person wanting to make a will or trust has no mental capacity or is so sick that they could sign those types of documents then conservatorship is the only alternative. However, if they are of questionable mental capacity, they could be tested first to determine if they have enough mental capacity to discuss and sign a will and/or trust. The testing would be done by a licensed mental health professional. The mental health professional would then make a report and/or fill out a court form having to do with capacity as a backup to the attorney’s file. If the report indicates the person does have the proper legal capacity, then that is good evidence to have available to defend against a will contest or trust contest case. If the person lacks the capacity to do a will or a trust and then everyone involved will realize that a conservatorship is the best action to take.
