Legal Competency: When Is It Too Late to Create a Will, Trust or POA?

26 Nov Off

In elder law, I am frequently advising adult children who suddenly find themselves in a place where they need to help an aging parent. When parents end up falling behind on medical bills, or their decision making isn’t what it once was, as it pertains to their medical care, the topic of transitioning control over their personal affairs can be challenging. Unfortunately, signing a power of attorney (POA) over to their children can be seen as a loss of independence. However, failing to preplan or discuss these matters can be stressful and costly. In many cases, an attorney has to decide if a senior is deemed competent and legally able to sign a will, trust or power of attorney.

Last Will and Testament

Under the laws of most states, a person is competent to sign a will if they meet the following criteria at the time of signing:
• They are aware of their spouse and children, if any.
• They know approximately their net worth and what kind of assets they own.
• They realize that it is indeed a will they are signing and what that means.
• They are able to make a disposition of their property according to a plan formed in their mind.
A lawyer must meet with the individual in question and try to discern the above. If the attorney determines that the client is incapacitated, they must refuse to prepare a will.

Power of Attorney Documents

A slightly different competency test is involved for signing a power of attorney. With POA documents, the individual must be capable of understanding and appreciating the extent and effect of the document, just as if they were signing a contract. For this reason, a person may be deemed competent to sign a power of attorney but not competent to sign a will.
If it turns out that the client is not competent to appoint a power of attorney for health care and/or finances, it may be necessary for the adult child or another family member to seek guardianship.

Trusts

Similarly, a trust is sometimes deemed to be more like a contract than a will, so the mental capacity required to sign a trust may be less than that needed to sign a will. In recent years, states have recognized that living trusts are often utilized as substitutes for traditional wills. Therefore, some have enacted statutes that make the competency test for creating a trust the same as that for signing a valid will.

A Note on Mental and Physical Capacity

The mental capacity to sign a legal document should not be confused with the physical ability to sign one’s name. The law will permit a person to sign an “X” (known as a “mark”) that will suffice in lieu of a signature as long as it is properly witnessed. In addition, if an individual is incapable of making a mark, they can direct someone else to sign on their behalf.
Of course, the best advice is not to wait until it may be too late to engage in proper legal planning. If possible, make a point of having these conversations with family members while they are still of sound mind and able to comprehend exactly what they’re signing and why. These discussions can be difficult, but an experienced elder law attorney can help with this process.
If you have any concerns or questions regarding Mental Competency you can contact me. We, as Elder Law Attorneys are always there to assist you.

Call me at (262) 812-6262 to arrange a complimentary meeting.