Costly Delay: Importance of Mental Capacity in Estate Planning
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Too people say about estate planning, “I’m not ready for that yet.” A person must be able to think clearly enough to make a will, trust, power of attorney, deed, health care directive or other estate plan document. As we wrote in our blog article, Crisis Management for a Nursing Home Resident without an Estate Plan, an incapacitated person’s options to deal with a health crisis are very limited. An incapacitated person cannot make decisions about things that the person would normally expect to control. When a person procrastinates estate planning until a health crisis incapacitates the person to the incapacitated person’s family must file a petition in court, a judge must hold a hearing, and then the judge must appoint a guardian to make the person’s decisions.
Indiana’s courts evaluate a person’s mental capacity to make a will by determining whether the person has sufficient mental capacity at the time of making the will to know:
- the extent and value of his property,
- the number and names of those who were the natural objects of his bounty, and
- their deserts with reference to their conduct toward and treatment of him
(as stated by the Indiana Court of Appeals in Hinshaw v. Hinshaw, 134 Ind.App. 22, 182 N.E.2d 805 (Ind.App. 1962)).
The mental capacity standard uses old-fashioned language that may not make clear sense to modern readers. The reference in the second mental capacity element to “the natural objects of his bounty” means the people that you would ordinarily expect to inherit a person’s assets, such as the person’s children or other family members. The reference in the third mental capacity element to “their deserts” means what they deserve to receive based on how they have treated the person. A modern mental capacity statement would be that if a person wants to make a will, the person needs to know:
- what money, land, and other belongings the person owns, and what those things are worth;
- the number of people and their names of people that you would normally expect to receive land, money, and other assets after the person’s death as beneficiaries of the person’s estate; and
- whether each beneficiary’s behavior toward the person is good enough for the beneficiary to deserve inheritance, or bad enough that the beneficiary should be disinherited.
Many things can disrupt a person’s ability to think clearly to make or update an estate plan, and the disruption can come suddenly without warning. Some of the factors that can rob someone of their ability to make or update an estate plan include:
- stroke
- Alzheimer’s disease or other cause of dementia
- extended loss of oxygen to the brain during a heart attack
- head injury from a fall or other accident
- several kinds of medications, especially when some drugs interact with other drugs
- insulin problems related to diabetes
- infection, such as a urinary tract infection
- breathing problems that limit oxygen flow to the brain
- intimidation or improper influence by other people
- shock from a traumatic event
- depression during serious physical illness or after a major loss such as the death of a friend or close family member
Time is the enemy of any person who has not made or updated an estate plan. When a person waits to make or update an estate plan until the person is “ready,” the person risks losing the mental capacity necessary to do the work.
Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
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