Congratulations to one of our Managing Partners, Mary E. Vanek, on passing the Florida State Bar! Mary is now able to assist our clients with their Florida related legal issues, including estate planning and estate and trust administration services in Florida. Please email Mary E. Vanek, or call 1-847-770-6600 to schedule a meeting with Mary.
What Is Mental Capacity, and Why Does It Matter?
What is mental capacity in a legal sense? Having the cognitive ability to enter a contract is a crucial legal principle. All parties entering into a contract must have the mental capability to do so. Otherwise, the agreement can be considered void and then canceled.
Mom is 78 years old, living alone after the death of Dad. She was recently diagnosed with the early stages of Alzheimer’s. Mom doesn’t have a will or powers of attorney for health care or property, and you have heard that these are important. You have also heard that if Mom lacks mental capacity, she can’t sign these crucial estate planning documents.
“Capacity” is not a one-size-fits-all concept. The answer depends upon what decisions Mom needs to make and what type of documents she needs to sign. For example, the legal standard for capacity is lower for executing a power of attorney for health care than for signing a contract or a deed.
WHY DOES MENTAL CAPACITY MATTER?
If Mom lacks the capacity to sign a will, then any will she signs during her incapacity will be subject to legal challenge. For example, a contested estate matter could revolve around the issue of whether a person lacked the capacity to favor one child over another or to give her estate to her hairdresser.
If Mom lacks even the capacity to sign a power of attorney for health care, then you may have no option other than having her declared a disabled person and appointing a guardian to act on her behalf.
Let’s discuss how mental capacity can affect various legal decisions.
Every adult in Illinois is presumed to have the capacity to make their own health care decisions, assuming they are in a conscious state. A diagnosis of early Alzheimer’s will not necessarily overcome this presumption, but a diagnosis of advanced dementia or Alzheimer’s could.
POWERS OF ATTORNEY
The level of capacity required to execute a durable power of attorney has not been determined in Illinois. However, the standard of capacity for powers of attorney for health care would most likely be similar to those outlined above under “medical decisions.” In contrast, the standard for powers of attorney for property would most likely fall between “testamentary capacity” and “contracts and deeds.”
TESTAMENTARY CAPACITY (WILLS)
The standard for testamentary capacity is less exacting than the ability to transact ordinary business. Mom may not be able to balance her checkbook or pay her bills on time, but if she can meet the following standards, she is competent to make her will:
- The ability to know the nature and extent of her assets;
- The ability to know the natural objects of her bounty (typically close family, friends and charities; and
- The ability to make a disposition of his property in accordance with some plan formed in her mind.
It is not necessary that the person actually knows these things. It is only necessary that she has the mental ability to know them.
Neither Illinois statutes nor Illinois case law clearly establish the level of capacity needed to execute a trust. The key is determining whether the trust in question is more like a will or a contract. An irrevocable trust (such as a special needs or life insurance trust) is more like a contract or deed than a will because it disposes of the person’s property immediately and forever.
A trust that delays making a gift to another person until after the client dies is more like a will and requires a level of capacity similar to that required to make one. An irrevocable trust requires a level of capacity similar to that of a contract, as discussed below.
CONTRACTS AND DEEDS
The requirements to execute a contract or deed are the highest on the capacity spectrum. The person must have sufficient mind and memory to comprehend the nature and effect of her actions, exercise her own will, cope with her adversaries, and protect her interests.
Guardianship requires filing a petition with the court to have a guardian appointed to handle the day-to-day financial and/or health decisions of a disabled person who is not able to manage her affairs fully. Guardianship can be avoided if the incapacitated person has signed valid powers of attorney for health care and property. In addition, individuals who have been declared to be disabled may still have testamentary capacity that may be exercised with court approval.
If you have a family member whose capacity is diminishing, don’t delay taking action to get their affairs in order. Since capacity usually diminishes over time, it is essential to take care of these issues as early as possible before capacity is lost. Have a capacity assessment made by a qualified physician, preferably a geriatric psychiatrist or geriatrician, in the case of an elderly person.
If you need help handling a loved one’s affairs or putting estate planning documents in place,
contact Matlin Law Group at 1-847-770-6600 to schedule an appointment today.
Power of Attorney for Health Care and HIPAA Authorization for Clients with College-Bound Children
While many parents are covering dependent insurance of their adult children until the age of 26, many of these parents are unaware that they have no access to that adult child’s medical records and/or no one has been appointed agent under power of attorney for healthcare for the adult child.
Imagine: Your daughter is in college, a thousand miles away. You pray that she is safe in her new environment, but if she is hurt you can find yourself in a nightmare world. You get a call from a hospital: “She’s here, in stable condition.”
You ask, “What happened? What’s happening?”
The worker at the other end of the phone may feel legally restricted in what information she can give you without conflicting with HIPAA regulations, so you receive no clear response and are denied basic information. She believes that she is honoring your daughter’s federal right to privacy under HIPAA and minimizing her potential liability; but her “take it up with our legal department” response leaves you in a lurch.
HIPAA (Health Information Portability and Accountability Act) authorizations and Powers of Attorney for Health Care (POAHC) are examples of estate-planning tools that are valuable to people of all ages and means. Every competent person age 18 and over should have them. HIPAA authorizations allow access to your adult child’s health information to whomever your adult child chooses.
POAHCs provide for the appointment of an agent who can make the personal and medical decisions on your behalf of your adult child, should they become incapacitated. It is a type of “advance directive” that helps to avoid a guardianship over their person, keeping your family out of court, and provides a forum for your adult child to articulate end-of-life philosophies, addresses organ donation issues and disposition of remains.
Think of a HIPAA Authorization as your loved one’s answer to the voice at the medical emergency end of the phone saying, “Sorry, I’m not authorized to discuss her condition with you — if you have a problem with this, take it up with our lawyers.” The penalties for health workers (physicians, nurses, hospital administrators and others) who violate complex HIPAA privacy rules can include fines and jail time.
If you are a new or existing client and your adult child is on their way to college, please have them contact Matlin Law Group at 1-847-770-6600 to schedule an appointment to execute their health care power of attorney, HIPAA authorization, and Living Will.
New Attorney Spotlight
At Matlin Law Group, we are committed to providing quality legal services to our clients, as well as building on our success and ensuring the longevity of our firm. Two talented attorneys recently joined our firm. We are pleased to introduce you to: Andrew M. Winegar and Talia M. Shambee.
Please contact Andrew or Talia to request a free estate planning consultation via Matlin Law Group’s website or feel free to give us a call at 1-847-770-6600.
New Partner Announcement
We are pleased to announce that Attorney Ryan S. Smith and Attorney Jeffery Ramirez have become Partners at the firm! Both Ryan and Jeff have significant experience vigorously representing all parties in estate planning, estate administration as well as estate and trust litigation.
Please contact Ryan or Jeff via Matlin Law Group’s website or feel free to give us a call at 1-847-770-6600.
A Baker’s Dozen of Why People Procrastinate About Their Estate Plan
Do any sound familiar to you?
- Most people don’t like to think about death or money. Wills and Trusts force you to confront mortality and money, two issues that can be difficult to face. This is particularly true if you are healthy and don’t feel you have much money.
- Estate planning is something most people are unfamiliar with or feel uncomfortable about. Because you don’t know much about estate-planning documents, you may experience anxiety or struggle with feelings of inadequacy when confronted with the subject. You know how to be a good plumber or schoolteacher or police officer or how to run a restaurant, but you don’t know estate planning.
- There’s no hard-and-fast deadline. Many people can’t accomplish anything until a deadline looms. But when it comes to wills, trusts, and powers of attorney, there is nothing on your calendar telling you when you will need it. The deadline often comes without warning.
- It’s not much fun. True, but life isn’t always fun, especially if you are an adult. If you need fun, plan a party to celebrate finishing your estate plan.
- People hate spending money on lawyers. But not all lawyers deserve this animosity; you can find a good one you can relate to, buy peace of mind by getting your affairs in order and ultimately save exponentially more in legal fees by spending some money now, rather than paying later.
- People are afraid of massive amounts of paper. If you understand the paperwork, it becomes less intimidating. Be prepared to ask questions about anything you don’t understand.
- You won’t live to see the benefits of your estate plan. The beneficiaries will be your heirs. It can be difficult to devote yourself to this task until you accept your family’s priorities as your own.
- It might mean making decisions that could arouse negative feelings in loved ones. Maybe you’re concerned your family will be angry when they learn the details of your estate plan, but your wishes are paramount.
- The size of the job can be daunting. Estate planning can be, but isn’t necessarily, a big, time-consuming task. The perceived enormity of the task can prevent some people from even starting the job.
- Not doing your estate planning can be a form of passive-aggressive behavior. If you’re not happy with your future heirs, failing to complete necessary wills or trusts can be a subconscious way to punish them.
- Some people just like to live for the moment. Some procrastinators simply can’t—or won’t—force themselves to pass up short-term pleasure and sit down to complete their estate planning, even if on some level they understand that doing so will provide them with long-term satisfaction.
- Seeking perfection in your estate plan. Some people start the estate planning process, multiple times even, but never finish. They want to analyze every possible contingency and account for every possibility, which can lead to a maze that makes the trustee’s job impossibly complicated. Just give it your best shot, focus on what’s really important, and sign documents that capture your overall wishes.
- Guilt feeds upon itself. The real number-one excuse for not doing an estate plan, when you know you need one, is the wall built from guilt caused by putting off estate planning. This adds to any depression you might have about procrastinating in other areas of your life and leads, ironically, to further delay. If you can’t move on from that state, a psychologist or a counselor who has experience working with procrastinators might help you.
All of these reasons to delay are perfectly understandable—but that doesn’t make them any less dangerous or counterproductive. Keep in mind that doing nothing can make your worst fears come true. Whatever keeps you from properly planning your estate, the damage arising from your own inaction will inevitably be greater than doing nothing. Weigh the perils of delay against your fears and you might discover that doing your estate plan is easier not only in the long term, which is obvious, but also in the short term, because the whole subject can then be put behind you.
We can help you stop procrastinating. Give yourself peace of mind and a gift to your family. Please click here to request an estate planning consultation via Matlin Law Group’s website or feel free to give us a call at 1-847-770-6600.