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Estate Planning with Alzheimer’s or Other Dementia

Estate planning often becomes top of mind when someone is diagnosed with Alzheimer’s or any type of dementia. Over the past year or so, I have spoken for the Alzheimer’s Association three times, and have had to opportunity to speak with several families that have loved ones affected by the disease.

It is important to address estate planning issues early, when mental capacity (competence) is hopefully still intact. According to Kiplinger’s article, Build an Action Plan For Alzheimer’s, we have no way to know how long someone will have the capacity to sign legal documents. If a person is considered too impaired to sign, a court may need to appoint a conservator to oversee the person’s affairs and make decisions on their behalf.

A diagnosis of Alzheimer’s does not mean a person lacks mental capacity to sign estate planning documents such as wills, trusts, powers of attorney, and the like. In fact, in California, according to Probate Code Section 810, all persons are presumed to have capacity to make their own decisions and be responsible for their actions.

In order for a person to lack mental capacity, he or she must have a deficit in one or more mental functions that significantly impairs their ability to understand and appreciate the consequences of their actions with regard to the type of act or decision in question. The deficits include alertness and attention, ability to understand and communicate, issues with thought process such as severely disorganized thinking or delusions, and ability to modulate mood. Frequency, severity, and the duration of periods of impairment are also factors that a court can consider.

The more complex the action or decision, the higher the standard a person must be able to meet in order to be deemed to have capacity as it pertains to that particular action or decision. Below are some specific instances that arise in the context of estate planning.

Contracts, Complex Trusts, and Powers of Attorney Have the Highest Standard for Capacity

Contracts and more complex trust agreements (as opposed to simple trusts) are subject to a higher standard for capacity. According to California Probate Code Section 812, the person must be able to communicate (verbally or otherwise) the decision, and to understand the rights and responsibilities of the decision, the probable consequences (including persons affected) and the risks, benefits, and alternatives.

Powers of Attorney have a standard similar to contracts discussed above, according to California Probate Code Section 4120.

Medical decisions and the ability to give informed consent to treatment are also similar to that required for contracts, and are set forth in California Probate Code Section 813.

Wills and Simple Trusts Have a Lower Standard for Capacity

According to California Probate Code Section 6100.5 and case law, in order to make a will or a relatively simple trust, a person must be able to understand the nature of the testamentary act, and be able to remember and understand their property and relatives. They must also not suffer from a mental disorder that includes delusions or hallucinations that result in them devising their property in a way they would not otherwise do but for the delusion or hallucinations. Therefore, the delusion or hallucination itself is not sufficient to constitute incapacity. The person must also give their property differently than they would otherwise do as a result.

It is very important to work with an experienced estate planning attorney when doing estate planning for a person with Alzheimer’s or other dementia in order to protect the integrity of the estate plan and the best interests of the person.


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