Things You Can Do to Help Prove You Are Mentally Competent When Executing Your Estate Plan

One of the common challenges to a will or trust is that the person who made the will (the testator) or trust (the trustmaker or settlor) was not mentally competent to create it. While we would all like to believe that our family and loved ones will honor our wishes as expressed in our estate plan, contests are, unfortunately, more common than you might think. If a family member does not receive what they thought they were entitled to after a loved one passes away, they may file a lawsuit alleging that the person who made the will or trust was not mentally competent when they signed the legal document. If you disinherit someone who ordinarily would have received money and property at your death or if you have been diagnosed with a medical condition that will slowly decrease your mental capacity, there may be a heightened risk that your estate planning documents will be challenged. If a court were to find that you did not have the mental capacity to sign your estate planning documents, the documents will be invalidated. Your money and property would then be transferred to the people state law determine to be your proper heirs, who may not be the individuals you would have chosen.

In most states, there is a legal presumption that people have capacity to create their estate planning documents and that they can transfer their property to whomever they would like. The person challenging your plan then has the burden of proving that you did not have capacity at the time your documents were signed. However, there are some proactive steps you can take to provide evidence that you were competent when you created or updated your estate plan.

Document the reasons for your decision. If you are disinheriting a child or other family member or providing an inheritance that may be less than they expect, tell your estate planning attorney the reasons for your decision. Write down those reasons and record the names of other people you have told about your decision, such as friends or financial advisors. Keep a copy of this document with your will or trust. It can provide evidence of the rationale and deliberation underlying your decision. However, it is recommended that you not list these reasons in your will or trust, in order to avoid further complications during the contest.

Get a doctor’s evaluation. As close in time to signing your estate planning documents as possible, ask a doctor (preferably your primary doctor or a specialist in cognition such as a neurologist) to evaluate your mental capacity and document their opinion in writing. If desired, your attorney can provide information to educate the doctor about the standards that must be met to show capacity to execute estate planning documents. This will assist them in determining and documenting whether you have the necessary legal competency.

Make a gift. If you plan to disinherit or provide a proportionally smaller inheritance to a family member than they expect, consider making a gift to the family member close in time to when you sign your estate planning documents. If the family member accepts the gift and wants to keep it, they are admitting that you had the capacity to make the gift. If you had capacity to make the gift, you more than likely had capacity to sign your estate planning documents.

What Standards Must Be Met to Show Mental Competence
Under state law, there is a certain level of understanding that you must have at the time you sign your estate planning documents. Even if you do not have the required level of mental competence before or after you sign your documents, if you are competent at the exact time you sign them, your documents will be valid. Individuals who suffer from dementia may still be mentally competent when signing their estate planning documents if they have a fleeting moment of lucidity at the time they sign.

Having the mental competence to sign your documents does not mean you must understand all the legal terminology that those documents contain, but rather, that you have a basic understanding of what you are doing when you sign. Depending upon your state’s law, there may be different standards for determining capacity depending upon the type of document you are signing.

Wills. In Michigan, a person signing a will is found to have sufficient mental capacity if (1) the individual has the ability to understand that he or she is providing for the disposition of his or her property after death, (2) the individual has the ability to know the nature of his or her property, (3) the individual knows the natural objects of his or her bounty, and (4) the individual has the ability to understand in a reasonable manner the general nature and effect of his or her act in signing the will. As applied, those standards do not require someone to know details of names, dates of birth, account balances, etc.

Lifetime gifts. Although some states apply the same standard that is applicable to wills to lifetime gifts, others apply a stricter standard. Michigan law does not expressly define the mental capacity for making a gift. The standard applied by courts in Michigan is similar to the standard for capacity to make a will. In states that apply a higher standard to gifts, you must satisfy the threshold for testamentary capacity, and you also must understand the financial impact of your gift, or the effect on your future financial security or the financial security of those who are dependent on you.

Trusts. Some states apply the same rules to trusts that are used to determine the capacity to make a will, but others apply the more stringent threshold that is used to determine the capacity to enter a contract. Michigan holds that the capacity required to create, amend, revoke, or add property to a revocable trust, or to direct the actions of the trustee of a revocable trust, is the same as that required to make a will. If a stricter threshold for contracts is used, the person creating the trust must be able to understand the nature of the transaction, including the rights, duties, and responsibilities created or affected by the trust, its significance, the consequences for the creator of the trust and others affected by its creation, and the risks and benefits involved in the transaction.

Let Us Help
If you are concerned that someone may be dissatisfied with their inheritance and may attempt to challenge your plan, there are steps you can take to avoid lawsuits or conflicts after you pass away, including measures aimed at proving your mental competency at the time your estate plan was created. Please contact us so we can assist you in creating or updating your estate plan before serious competency issues arise.