Incapacitation and the California Estate Plan

As medical technology advances, Americans are increasingly living longer lives. This means many people are at a greater risk for becoming incapacitated in some way prior to death. When an individual becomes incapacitated, they are no longer able to make important financial decisions and manage their own affairs. Additionally, incapacitation may call into question important estate planning documentation such as wills and trusts.

Most estate plans will include a revocable living trust, a will that pours specified assets over into the trust upon death, a financial power of attorney, a healthcare power of attorney, and a living will. In order to execute such estate planning instruments, an individual must be of sound mind. If the person executing the estate planning documents lacks capacity, his or her will, trust, and other documents may be subject to a court challenge. According to the California Probate Code, the capacity required to execute a will is fairly easy to demonstrate. An individual who possesses the capacity to create a will understands that a will is being created, is aware of the extent of his or her property or other assets, and recognizes heirs and other individuals who will be affected by the provisions of the will.

In order to create a revocable living trust in California, however, an individual must generally demonstrate the same level of capacity required to enter into a contract. This is a higher capacity standard than what is required to execute a will. California’s Due Process in Competence Determinations Act states an individual must be able to understand the rights and responsibilities created by a decision, the benefits, risks, and alternatives to a decision, and the likely consequences for both the decision-maker and anyone likely to be affected by the decision. Although this capacity standard applies to most estate planning documents, a California appeals court recently said that the property transfer conditions included in a trust document would still be valid so long as the creator demonstrated the capacity to execute a will.

As a general rule, a properly executed revocable living trust and powers of attorney will name an individual who will make decisions on behalf of an incapacitated person. The point at which this authority may be transferred, however, can vary. Although loved ones and doctors will normally make this decision, some estate plans require the approval of a court. The standard will often vary based upon the length of time an individual would like to maintain control over their finances and healthcare decisions.

If you have questions about a deceased loved one’s mental capacity, call the law firm of Ginzburg & Bronshteyn, LLP at (310) 914-3222. Our knowledgeable Los Angeles probate and trust litigation attorneys are available to help individuals throughout Southern California with all of their estate litigation needs. The skilled lawyers at Ginzburg & Bronshteyn represent clients in Hollywood, Santa Monica, Los Angeles, West Los Angeles, and Beverly Hills. To discuss your estate litigation matter with an experienced attorney, do not hesitate to contact Ginzburg & Bronshteyn online today.

Additional Resources:

Defining Incapacity in the Modern Estate Plan, by Randy Gardner, Leslie Daff, and Julie Welch, Journal of Financial Planning