Legal column: mental competency and the courts
Local attorney Teresa J. Rhyne
By Teresa J. Rhyne
– Losing mental competency is something everyone worries about as they age. It’s also something most children worry about on behalf of their parents. Cognitive impairment can have a significant impact on one’s life and the lives of family members. Thus it’s essential to plan for the possibility and assure appropriate documents are in place. But it’s also important to know when a power of attorney or change in trustee may be activated as a result of a person’s diminished mental capacity and what that does and doesn’t mean. The process isn’t as straightforward as many think.
The presumption of capacity
The California Probate Code provides a presumption that all persons have the capacity to make decisions and to be responsible for their acts or decisions. The law specifically provides that a person who has a mental or physical disorder may still be capable of contracting, conveying, marrying, making medical decisions, executing wills or trusts, and performing other actions.
In fact, the American Bar Association (the ABA) has a rule requiring lawyers to presume a client’s capacity and maintain a normal client/lawyer relationship (including confidentiality) even when a client may exhibit signs of cognitive impairment.
Like lawyers, doctors are to presume capacity and work with their patients to allow them to make their own decisions for as long as possible. A patient who cannot make major or more complex decisions may still be able to make smaller, simpler decisions.
Determining incapacity
A physician’s diagnosis of dementia or any other mental impairment is not a determination of mental incompetence. Likewise, a doctor signing a statement that a patient lacks the ability to make their own financial decisions or handle their own affairs is not a determination of legal incapacity—only a judicial order can do that. Instead, the doctor’s written statement can be used to activate a power of attorney and/or allow a successor trustee to take over handling the trust matters, but there are limits on those documents.
Power of attorney
All persons, regardless of age, should have a power of attorney in place. A power of attorney designates an agent to act on your behalf should you become unable to handle your own affairs. Generally, the power of attorney is activated either voluntarily (i.e., you sign agreeing to allow someone else to act on your behalf) or when two physicians sign off that a patient can no longer act on their own behalf. Likewise, a living trust should provide how and when a new trustee takes over, in the event the Trustmaker is unable to act. The trust should provide how that inability is determined—one or two physicians signing a statement, or perhaps a majority of a named committee of people.
A power of attorney and/or appointment as successor trustee of a parent’s trust works in many situations and might be all that is needed, provided family members are in agreement (i.e., siblings aren’t arguing over matters concerning the parent and making conflicting decisions). A power of attorney is not, however, a determination of legal incompetence, and it does not take away any rights of the principal. Thus, you may have a valid power of attorney and appointment as a successor or co-trustee to act on behalf of your parent diagnosed with dementia, but that does not mean your parent cannot still sign checks, enter into contracts, and engage in other transactions. It is not uncommon that a parent is led to this behavior at the urging of the child who does not have power of attorney, in an effort to curry favor or gain control. To prevent that, you may need to file for a conservatorship—a judicial determination that the person no longer has legal competency and an order stating who specifically may now act on that person’s behalf.
Conservatorship
When a conservatorship is ordered by a court, the conservatee loses some rights, including the right to enter into contracts on their own behalf.
In a conservatorship, a person, who may or may not be the person named in the power of attorney, is appointed conservator of the incapacitated client’s person and estate and is the only person who can act on the conservatee’s behalf. The determination will be made by a judge who will also appoint an attorney to act on behalf of the incapacitated adult to determine their desires and best interests.
However, California law provides that an attorney who moves for conservatorship over their client is violating attorney-client privilege. Thus, the attorney who drafted mom or dad’s power of attorney or trust, cannot be the attorney who assists you in getting a conservatorship over your parent. That attorney’s job is to protect the parent/client and act solely in their interest.
Stages of incapacity
When mom or dad start forgetting your name, misplacing keys, repeating things they just told you, is it time to activate the power of attorney? How about when they go for a walk and get lost? Forget to pay their bills? Start handing out money to any scammer that calls? Are diagnosed with a type of dementia?
The answer is “it depends.”
Generally, you’ll want to observe the parent much more carefully, with regular in-person visits (wear a mask!). Get a doctor’s opinion. Frequent communication with the parent and all siblings is desirable, so everyone knows what’s going on and can agree on a plan. Arguments and disagreements over who acts when will only add to the confusion and stress the parent may be feeling.
If the parent will voluntarily agree to activate a power of attorney or appoint a child as co-trustee (or sole trustee) of a trust so that a child can at least check bank account balances, ask questions at financial institutions, and obtain and review important documents, that’s a good first step. If they won’t voluntarily turn over any control, you will likely need a doctor’s opinion, and if problems still persist, a conservatorship may be needed.
The farther ahead you plan, the more options you will have available.
Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild.” You can reach her at Teresa@trlawgroup.net.
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