Understanding Capacity for Decision Making.

Capacity is the ability to understand and to appreciate the consequences of a decision. Does the person understand the risks, benefits and options associated with the decision(s) to be made. Capacity is a threshold requirement at law for decision making. The more involved (difficult) the decision making the more cognitive ability is needed to have the relevant legal capacity.

In California, the law presumes that everyone has capacity unless proven otherwise. Making unwise decisions, however, does not itself alone mean that the person necessarily lacks decision making capacity.

Understandably, therefore, different types of capacity – and different attendant standards to measure such capacities — apply to different types of decision making situations. That is, to make a contract a person must not be of unsound mind or entirely without reason; to execute a will a person must know the nature and condition of his or her assets, the natural objects of his or her bounty (family) and be able to say how he or she wants to leave assets to beneficiaries; and to make health care decisions a person must understand the options, their consequences and be able to reason and communicate a decision. Lack of capacity to engage in a relevant activity – e.g., to sign a trust or a deed – means that the person is not legally able to engage in that specific capacity at that time.

Capacity, however, can vary significantly with circumstances. That is, generally, a person may at a specific time be situationally incapacitated – e.g., being drunk — but at a different time have capacity – e.g. being sober. Also, a person with borderline capacity may have more capacity during certain times of day when they are alert and in certain situations.

There are various factors that can assist or hinder a person’s cognitive abilities. Accommodations should be made that facilitate cognitive abilities in order to have better capacity to engage in the relevant activity.

Furthermore, under recent California law, disabled people (including persons with dementia, blind persons, and other types of disabilities) are entitled to rely upon Supporters (e.g., friends or family acting as advisors/assistants) to better understand, make and communicate their decisions. The disabled person must still make the decision but can offload some of the processing of options to their Supporters. This is called Supported Decision Making.

Supported Decision Making can be informal, or better yet formalized with a written agreement between the disabled person and his or her Supporters. A disabled person’s capacity is then determined with the benefit of such supports in place at time of the supported decision making.

Incapacity for any one or more types of decision making, however, does not mean that the person is Incompetent. Incompetence is determined through court proceedings — such as a conservatorship court proceeding — and not by one or two physicians’ certificates of incapacity. Such certificates, however, are often relevant to implementing powers of attorney and trustee succession upon a determination of incapacity. That requires already pre-existing estate planning signed while the person yet still had capacity. This helps to avoid court involvement downstream if and when they are no longer able to manage their legal, financial, property and health care affairs.

In addition, a person’s decision making must be free from undue influence, coercion or menace. Not all influence is undue. Undue influence is only that influence that overcomes the free will of the person and makes them act involuntarily and under the control of the person exerting the undue influence.

Both capacity and undue influence become the subject of litigation in court proceedings such as conservatorships (where a person loses some or all decision making authority) and will contests (regarding the admission of a will). Such litigation is expensive, time consuming and burdensome.

Estate planning while a person has capacity is the best opportunity to avoid future court involvement. As capacity generally declines with age and health problems, being proactive is wise.

The foregoing brief discussion is not legal advice. Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.