Elderly people suffering from mental health related issues belong to one of the most vulnerable groups in society and their numbers are on the rise.
Diminished capacity alongside accumulated wealth may result in estate litigation based upon questions as to that person’s testamentary capacity at the time of his or her last will.
Capacity Of A Person Suffering From Mental Health Related Issues
The term “capacity” refers to the power, ability or competence of a person to make decisions with regard to their finances and health.
In absence of any contrary evidence, the law presumes a person to be of “sound mind” and capable of making decisions pertaining to their life.
However in situations where a person’s suffers from mental health related issues such as dementia and Alzheimer’s are deemed incapable of making decisions with regard to their health and lifestyle.
In such circumstances, the law provides alternative ways to manage that person’s affairs.
A person found with mental health related issues such as dementia and alzheimers does not necessarily lose their legal capacity. In such cases, the person’s capacity to take decisions may be determined by the NSW Trustee and Guardian, Public Guardian, that persons Doctor or carer.
Assessments are done based on the person’s capacity to:
Understand given information;
Make decision based on such information; and
Communicate that decision to another person.
Planning Ahead
As mental health related issues such as dementia and Alzheimer’s progresses, a person’s ability to make legal and financial decisions in turn decreases. It is therefore important to plan ahead so as to avoid potential estate litigation on that person’s estate.
Planning ahead requires the person affected by dementia and Alzheimer’s and/or his carer to have an up-to-date will, an “Enduring Power of Attorney” and should also plan about “Enduring Guardianship” requirements if required.
Capacity To Make Will, Enduring Power Of Attorney And Enduring Guardianship
Will
A “will” is a legal declaration by which a testator enforces their wish to distribute their assets upon death.
A person suffering from a mental health related issue such as dementia and Alzheimer’s can make a valid will by seeking advice of a lawyer.
Owen Hodge Lawyers are experienced in guiding you through the matters related to the preparation of your Will and helps minimising the chance of that persons will and therefore estate being challenged on the basis of lack of “testamentary capacity”.
When taking instructions to draft a will, a lawyer must satisfy themselves that the person making the will satisfies the legal standard for “testamentary capacity” as outlined in Banks-v- Goodfellow (1870) LR 5 QR 549, and as a result the person making a will should be able to:
Understand the nature of a will and its effects;
Understand the extent of the property of which he or she is disposing;
Be aware of those persons who are potential beneficiaries;
Be able to evaluate between the strengths of claims of the potential beneficiaries; and
No delusions or hallucination should be present which would influence the previous 4 capacities.
In the event that, on application by any person, the Court finds that the person who made the will lacked testamentary capacity, the Court may order authorising that:
The will made be altered, in specific terms approved by the Court, on behalf of the person who lacked testamentary capacity when making the will; or that
The will or part of the will be revoked.
Enduring Power Of Attorney
A “Power of Attorney” is a document giving authority by one person (the “donor”) to another(s) (the “donee”) to manage the financial affairs of the donor.
An attorney under a Power of Attorney has power to pay for services and medical treatment but has no power to make decisions with regard to the health and lifestyle of the donor.
The power can be for a specific period of time, of limited or unlimited power, may apply to specific assets of may apply to all of the donors assets.
The Power of Attorney ceases to have effect when the donor loses mental capacity.
A Power of Attorney confers authority and does not affect title, rights or obligations. Therefore the donor can continue to operate bank accounts and sell real estate.
An “Enduring Power of Attorney”, as opposed to a “Power of Attorney”, continues to be effective even if that person loses mental capacity, operating until the death of the person making the appointment.
The responsibilities of an attorney under either an Enduring Power of Attorney or a Power of Attorney include:
Taking into account any wishes the donor has expressed to the donee;
Act in the donor’s best interests; and
Wherever possible, make the same decisions that the donor would have made.
If the appointed attorney is not acting in the best interests of the donor of the Enduring Power of Attorney, the NSW Trustee and Guardian can revoke or suspend the Enduring Power of Attorney.
Anyone who has a genuine interest in the donor’s welfare can make an application to the NSW Trustee and Guardian to investigate the actions of the appointed guardian.
An Enduring Power of Attorney is therefore a very useful document for those persons suffering from mental health related issues such as dementia and Alzheimer’s.
Appointment Of Guardian
An Enduring Guardianship is an appointment by one person (the “donor”) to another(s) (the “donee(s)” or “appointed guardian(s)”) to make personal and lifestyle decisions for the donor.
In certain circumstances, a “guardian” may be appointed under an Enduring Guardianship to make decisions on behalf of a person who has lost their capacity to make decisions and is not in a position to manage their personal and lifestyle affairs.
The responsibilities of the appointed guardian include:
Taking into account any wishes the donor has expressed to the donee(s);
Act in the donor’s best interests; and
Wherever possible, make the same decisions that the donee would have made.
If a guardian is not acting in the best interests of the donor of the Enduring Guardianship, the NSW Public Guardian can revoke or suspend the Enduring Guardianship.
Anyone who has a genuine interest in your welfare can make an application to the NSW Public Guardian to investigate the actions of the appointed guardian.
Owen Hodge Lawyers is dedicated to providing unique legal and asset protection strategies in relation to estate planning of a person diagnosed with mental health related issues such as dementia and alzheimers.
A Formal and Enforceable Will
Can A Carer Make A Claim On The Estate?
Can I Disinherit My Wayward or Estranged Child in my Will?
Contesting A Will – The Court Procedure
Current and Future Needs
Dementia and the Law
Executor: Defending a Contested Will
Family Members ‘Moral Duty’ To Make A Family Provision
Family Provision Act Claims
Intestacy And Family Provision
How to Contest a Will – The Process
Other Factors the Court can Consider in Family Provision Claims
Protect your Inheritance against a Claim
Settlement of a Claim on a Estate
Spouses Claims Against Estates Using Binding Financial Agreements
Two Stage Process pf Family Provision Claims
Family Provision Act allows Wills to be contested
Make a Claim