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Assessing the Legal Capacity of Our Clients

by Aimee Smith |

One of the trickiest, most subjective things we do as attorneys is assessing whether our clients have the requisite capacity to execute legal documents.  As an elder law attorney, I regularly deal with clients who have diminished capacity for one reason or another. 

Diminished capacity is not always evident.  This is particularly true if the client is a new client for whom you have no frame of reference.  In law school as a student in the Elder Law Clinic at Wake Forest, I was required to visit an adult day care center.  The director of the center told me that many of the participants at the center have a ‘record’ that plays in their head.  They can play their record over and over and if you don’t attempt to change records, you may not realize that the person has a memory problem. 

While at the day care center, I spoke to several of the participants and it was not long before I found that what the director told me was true.   I met a gentleman who was impeccably dressed and groomed, very distinguished looking, and stood straight and tall.  At first, I thought he was a volunteer but then I noticed that he was wearing the name tag that all of the day care participants were required to wear.  He told me his name, what he had done for a living (he was a retired business executive), and proceeded to tell me how the adult day care center had way too much staff and with that kind of overhead, it would never be profitable.  He seemed pretty sharp to be at an adult day care center, but as soon as I tried to talk about something other than his concerns about the viability of the adult day care center business model, his deficits became readily apparent.  I realized I had been listening to his ‘record’. When meeting with a new client that I suspect may have diminished capacity, I have a discussion with them on a range of topics in an attempt to make sure that I’m not listening to their ‘record’.

If you determine the client has diminished capacity, the next step is to determine whether the client has the capacity required to proceed with whatever he or she came to see you about.  Clients (or more commonly, client’s children) usually assume that the family doctor determines whether someone has capacity to sign documents or not.  In practice, it is the attorney who ultimately makes that decision.  That is not to say that medical records are not helpful or that the doctor should not ever be consulted, but a doctor’s opinion is not the end of your inquiry.  It will not be the doctor who is ultimately on the hook for the documents that you prepare and allow your client to execute.

Most doctors do not understand what constitutes contractual capacity or testamentary capacity.  I have found that most doctors do not want to weigh in on capacity in the first place and sometimes make a mess of it when they do.  In one case, a client’s child asked the mother’s primary care physician (“PCP”) for a letter opining on whether the mother could handle her affairs.  The PCP wrote a couple sentences opining that the mother could not handle her affairs.  This letter was then used as the basis of an incompetency proceeding.  When the doctor was made aware of what was going on by the mother and another child, he wrote a second letter attempting to explain what he actually meant in the first letter and backing off of his original statement regarding the client capacity to handle her affairs.  Needless to say, it was a mess. 

In some cases, you will want a professional medical opinion about capacity.  This does not mean a two sentence letter from a PCP.  This means an in depth evaluation by a psychiatrist or psychologist who has special training to assess an individual’s legal capacity.  If you are seeking this assessment on behalf of an estate planning client or a client who has been alleged to be incompetent, it is important to select a provider who is familiar with testamentary and contractual capacity.  An evaluation by someone trained to determine whether a criminal defendant can stand trial is probably not going to be helpful (something I learned by way of a court ordered multi-disciplinary evaluation in a hotly contested guardianship case).

As a practical matter, you will not be consulting a psychiatrist before preparing estate planning documents for all of your clients who may not be firing on all cylinders.  In cases where that will or trust you are preparing is likely to be challenged, a professionally prepared evaluation of testamentary capacity completed contemporaneously with the will can be a good way of papering your file.  These fancy evaluations represent an additional cost to the client as they are not covered by insurance. In my area, this sort of evaluation is generally in the range of $1,200-$2,000.  This expense may be well worth it to a client who is concerned about their estate plan being challenged.

In most cases, it will be you who makes the decision about capacity.  In my practice, I ask clients to fill out a key family information form and bring in information about their assets when they come in for an initial appointment.  We also request documents such as marriage certificate, birth certificate, etc. We ask for a lot of documentation of this nature because most of my clients are coming in with questions about Medicaid and Medicaid requires a LOT of information from applicants.  The upshot of having all of this documentation is that I can quiz the client about their basic information (DOB, etc.), their assets, their income, etc. and independently verify the extent client is familiar with his or her affairs.  If the client is unable to tell me where they bank or how much their Social Security is each month, I know that we have some capacity issues.

Testamentary capacity is perhaps the easiest to determine.  It is simply a matter of does the client know who the natural objects of their bounty, the extent of their property, and the understanding that the will states how their property will be disposed of upon their death.  Clients tend to think you really need to be with it in order to have testamentary capacity but in reality testamentary capacity is not a very high standard.  In order to execute a durable power of attorney, a client has to have contractual capacity.  Contractual capacity means that the person has the ability to understand the nature and effect of the act and the business being transacted.  If the durable power of attorney contains gifting powers or if the document being executed by the client is making a gift of their property, then donative capacity should be evaluated as well.  Donative capacity requires that the client understand the nature and extent of their property, the natural objects of their bounty, and the nature and effect of a gift. 

It is a good practice to ask the client to explain to you what a will is or what a durable power of attorney does.  If you ask a client with diminished capacity if they understand what a durable power of attorney is they will almost certainly say “yes”.  I have found that clients with dementia are very adept at covering their dementia.  They will not want to admit that they don’t know what a power of attorney does. 

Meet with the client alone for at least part of your consultation.  Some clients are really uncomfortable not having a family member present but it is important to have some alone time with the client so that they can speak freely and you can ascertain whether or not they being unduly influenced.  Also, I find that if I attempt to assess capacity of a client by asking simple questions that I know the answers to, the client’s children cannot resist jumping in to answer the question for their parent if the parent doesn’t spit out the answer immediately.  I have actually had to explain on numerous occasions that yes, I know who the president is; I asked that question because I want to know if your mom knows who the president is. 

Keep in mind that sometimes your client may appear to lack capacity for reasons that are reversible.  For instance, something like a urinary tract infection or a nutritional deficiency can really affect the cognitive ability of an elderly client.  You may find that once those problems are addressed, the client’s cognition vastly improves.  Additionally, with clients with Alzheimer’s disease you will find that they may be a vibrant, alert person mid-morning and totally out of it in late afternoon.  This is called sun-downing.  Some clients with dementia will be much more alert in familiar surroundings than they will be in your office.  For this reason, I sometimes visit clients in their homes. 

For a much more detailed analysis of assessing capacity, I recommend a publication from the American Bar Association titled Assessment of Older Adults With Diminished Capacity:  A Handbook for Lawyers

About the Author

Aimee Smith

Aimee L. Smith is a partner with the law firm of Craige Jenkins Liipfert & Walker LLP in Winston-Salem.  She is a graduate of Wake Forest University School of Law.  She focuses her practice on issues related to elder law including, long term care planning, Medicaid planning, and guardianship.

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