Capacity Under the Law

(Republished from The Fifth Chapter Blog, original date 10/3/11)

I had a recent call from someone whose aging husband had uncharacteristically decided to call their stockbroker to place an order to buy stocks during a recent dip in the market. He had not been involved with the financial management previously. He exercised control over assets that while technically were also his, were from her previous marriage. At the same time, he was encouraging her to buy a vacation home in a place that they both liked. She was concerned that he was losing it as his decisions seemed illogical.

Since there is a difference in perception between generations as to what age and what activities constitute an obvious need for intervention, it can be helpful to start with the legal standards in determining capacity. Even when a person has capacity under the law, there are many who exercise their sound judgement and ask someone trustworthy to step into the role of trustee or power of attorney. When a person assesses their own lack of capability, they are acting with capacity.

Lawyers are trained to parse the words of the black letter code; analyze the impact of similar cases; and, make the best argument for their clients based upon the facts of the particular situation. Here is my disclaimer. The discussion that follows is not legal advice. For this a person must seek competent legal counsel for their particular situation. The discussion on capacity and other topics which touch upon the law is offered to help us think logically about the question of capacity. Often this subject arouses more emotion than logic. It is presented to help us understand the intricate and delicate nature of decisions made about another person.

Capacity means you are able to make decisions that affect you or to engage in acts with knowledge and understanding. Under the law, there is a rebuttable presumption affecting the burden of proof that all adults have the capacity to make decisions and to be responsible for their own acts or decisions. This means that the law assumes you have capacity until someone proves you do not have capacity. Each state defines the type of evidence required to prove incapacity. 

Under California Probate Code, the elements of capacity to make a decision include the ability to communicate verbally or by any other means the decision, and to understand, among other things, the rights and responsibilities created or affected by the decisions, the probability of consequences, and the significant risks, benefits, and reasonable alternatives involved in the decision. A determination that a person lacks the capacity to make a decision or to do a certain act must be supported by evidence of a deficit in at least one of the following mental functions:      

a) alertness and attention;
b) information processing;
c) thought processes; and,
d) the ability to modulate mood and affect.

Additionally, under California Probate Code, a person lacks testamentary capacity (the ability to make a will, trust) if either A or B below is true:

A) The individual does not have sufficient mental capacity to:
i) Understand the nature of the testamentary act;
ii) Understand and remember the nature and situation of his or her property; or,
iii) Understand and remember his or her relationships to his or her living descendants, spouse, parents, and others whose interests will be affected by the testamentary document.

B) The individual suffers from a mental disorder involving delusions or hallucinations that cause the person to choose a property disposition that he or she would not have chosen but for the delusions or hallucinations.

Attorneys practicing in the area of estate planning are ever vigilant for signs of incapacity.  It is not always obvious. When dealing with the practical side of life, even with an aging adult who has capacity, or an adult suffering from a mental disorder, there is still a broad range of ability to handle day to day care independently.

When these areas begin to surface, there is still time to plan If you are the aging adult, begin to ask those close to you to help you monitor your mental alertness and ability to handle basic care areas. Do an annual check-in with your family or those close to you. If you are the child of someone facing this situation, keep in mind the goal of keeping a healthy adult functioning independently for as long as practical and reasonable. Only when necessary, step in to ensure comfort and functioning for as long as possible.

How would you view the situation presented at the beginning of this blog?