When you make or revoke a legal document, for example a will or enduring power of attorney, you have to be mentally capable at the time of signing, otherwise the document will not be valid.
What does “mentally capable” mean, for the purposes of making a will, or in relation to revoking or making enduring powers of attorney?
Capacity to Make a Will
If you are mentally capable of making a will you are said to have testamentary capacity.
At the time of signing the will you must be of sound mind, memory and understanding. That means you must understand the nature of the document you are signing, be free of any condition causing a loss of reason and judgement, and know and approve the contents of the will. In turn, that means knowing both the extent of the property you are disposing of and how your property will be divided between the people who will benefit under the will.
When you talk to your lawyer to give instructions for preparing your will and when you sign the will, your lawyer will need to be satisfied that you have testamentary capacity, that your instructions are freely given and that you understand the effect of the will.
Just because a client is elderly, has a degree of mental impairment, or demonstrates some unusual behavioural traits, the lawyer cannot assume that that client lacks testamentary capacity.
If your lawyer has concerns about your testamentary capacity, he or she is entitled to make further enquiries, such as by consulting an appropriate medical professional, before preparing the will and having you sign it.
Capacity and Enduring Powers of Attorney
If you are the person who makes an enduring power of attorney (“EPA”) you are called the “donor”.
As for wills, the capacity of the donor to grant and revoke the EPA at the time of signing the document, is relevant.
EPAs differ from ordinary powers of attorney because they continue to be effective and are not automatically revoked if the donor becomes mentally incapable.
In relation to property, you as donor, are mentally incapable if you are not wholly competent to manage your own affairs in relation to your property.
In relation to personal care and welfare, you are mentally incapable if you lack capacity to do the following:
- make decisions in relation to your personal care and welfare; and
- understand the nature of decisions about your personal care and welfare; and
- foresee the consequences of decisions about your personal care and welfare; and
- communicate decisions about your personal care and welfare.
If your EPA is designed to come into effect only if you become mentally incapable, the assessment of mental capacity must be made by a professional health practitioner who is qualified to make the assessment; this is not something your lawyer or other lay person can determine.
If you want to cancel (revoke) one or both of your EPAs, you must also have the mental capacity to revoke. This means that you must be able to understand the nature and effect of the revocation, but you don’t necessarily have to have the competence to manage your property or affairs, or the capacity to make decisions regarding your personal care and welfare.
The problem with this is that, if you do revoke your EPAs, but lack the capacity to make new ones, someone else may have to apply to the Court for orders to be appointed to be your property manager and/or welfare guardian in place of the EPAs which have been revoked.
Mentally Incapable Trustees
Do be aware that if you are a trustee of a trust and become mentally incapable, your attorney under an enduring power of attorney cannot sign documents for you as a trustee. An EPA in relation to property is not a deed of delegation of the powers of a trustee.
If it is not possible to remove or replace an incapacitated trustee under the terms of the trust or the Trustee Act 1956, then it is necessary to apply to the Court for orders to remove or replace an incapable trustee, or to transfer land.
If you are an elderly trustee of a trust, it may be wise for you to retire to avoid the possibility of a difficult situation arising if you become mentally incapable.
It isn’t a pleasant thought to contemplate the possibility of losing one’s mental capacity, but it is an issue none of us should ignore as we age.
Make sure that you have made your will and have enduring powers of attorney in place while you are mentally capable, to avoid the possibility of having their validity challenged on the grounds that you lacked capacity when you signed them.
If you are a trustee of a trust, be aware of the possible implications for the trust if you lose your capacity while still a trustee.
Your lawyer can advise you in relation to these matters and help with preparation of any documents you may need to ensure that your affairs are in order in the event that you lose your mental capacity.
Published: 28 February 2020