Hamilton Grey Power December 2017

Legal capacity
When you make or revoke a legal document,
eg a will or enduring power of attorney, you
have to be mentally capable at the time of
signing,otherwise the document will not be valid.
What does “mentally
capable”
mean, for the
purposes of making a will
or relating to enduring
powers of attorney?
Capacity to Make a Will
If you are mentally capable
of making a will you are
said to have testamentary
capacity.
At the time of signing the
will you must be of sound
mind, memory and understanding,
ie you must understand
the nature of the
document you are signing,
be free of any condition
causing a loss of reason
and judgement, and know
and approve the contents
of the will, both with regard
to knowing the extent of
the property of which you
are disposing and how your
property will be divided between
the beneficiaries.
On instruction to prepare
your will and when you sign
it, your lawyer will need to
be satisfied that you have
testamentary capacity; your
instructions are freely given
and you understand the effect
of the will.
Just because a client is elderly,
has a degree of mental
impairment, or demonstrates
some unusual behavioural
traits, the lawyer cannot assume
that that client lacks
testamentary capacity.
Harkness Henry has a team of lawyers
specializing in providing advice about
family trusts, wills and enduring powers
of attorney.
Our specialist lawyers are committed to listening
to you and understanding your needs. We
want to use our expertise to help you achieve
your goals. Whether you need a new will,
want to appoint an attorney or are considering
establishing a family trust, contact any member
of our team for advice; we’re here to help.
Matthew Peploe
Partner
Jillene Peters
Associate
Geraldine Austin
Senior Associate
16 Hamilton greypower Magazine – December 2017
If your lawyer has concerns
about your testamentary
capacity, he or she is
entitled to make further inquiries,
eg by consulting an
appropriate medical professional.
Capacity and Enduring
Powers of Attorney
If you are the person who
makes an enduring power
of attorney (“EPA”) you are
called the “donor”.
As for wills, it is the capacity
of the donor to grant
and revoke the EPA at the
time of signing the document,
which is relevant.
EPAs differ from ordinary
powers of attorney because
they continue to be effective
and are not automatically revoked
if the donor becomes
mentally incapable.
In relation to property
you, as donor, are mentally
incapable if you are not
wholly competent to manage
your own affairs in relation
to your property.
In relation to personal
care and welfare, you are
mentally incapable if you
lack capacity to:
• Make decisions in relation
to your personal
care and welfare; and
• Understand the nature
of decisions about your
personal care and welfare;
and
• Foresee the consequences
of decisions
about your personal
care and welfare; and
• Communicate decisions
about your personal
care and welfare.
If your EPA is designed to
come into effect only if you
become mentally incapable,
the assessment of mental
capacity must be made by a
professional health practitioner
who is qualified to make
the assessment. Neither
your lawyer nor other lay
person may determine this.
If you want to cancel one
or both of your EPAs, you
must also have the mental
capacity to revoke. This
means that you must be
able to understand the nature
and effect of the revocation,
but you don’t necessarily
have to have the
competence to manage
your property or affairs, or
the capacity to make decisions
regarding your personal
care and welfare.
The problem with this is
that, if you do revoke your
EPAs, but lack the capacity
to make new ones, someone
else may have to apply
to the Court for orders
to be appointed to be your
property manager and/or
welfare guardian in place of
the EPAs which have been
revoked.
Do be aware that if you
are a trustee of a trust and
become mentally incapable,
your attorney under an enduring
power of attorney
cannot sign documents for
you as a trustee. An EPA in
relation to property is not
a deed of delegation of the
powers of a trustee.
If it is not possible to remove
or replace an incapacitated
trustee under the
terms of the trust or the
Trustee Act 1956, then it is
necessary to apply to the
Court for orders to remove
or replace an incapable
trustee, or to transfer land.
If you are an elderly trustee
of a trust, it may be wise
for you to retire to avoid the
possibility of a difficult situation
arising if you become
mentally incapable.
Concluding comments
It isn’t a pleasant thought
to contemplate the possibility
of loss of one’s mental
capacity, but it is an issue
you should not ignore as you
age.
Make sure that you have
made your will and have enduring
powers of attorney in
place while you are mentally
capable, to avoid the possibility
of having their validity
challenged on the grounds
that you lacked capacity
when you signed them.
If you are a trustee of a
trust, be aware of the possible
implications for the
trust if you lose your capacity
while still a trustee.
Your lawyer can advise
you.