First let me say that I am not a doctor, nor do I play one on TV. This article is meant to discuss what I refer to as sudden incapacity, in a legal context and not a medical one.
The concept of legal incapacity is not a clear one. As an attorney, I cannot prepare an estate plan for someone who has been deemed incapacitated by a physician or psychologist. I am not a doctor (see above) and therefore cannot make those assessments. I am also prohibited from preparing an estate plan for someone who I believe does meet the very basic requirements for legal capacity. These requirements are surprisingly simple to most people. (See CA Probate Code section 812).
As with most things in this world, incapacity is not black and white. It often falls into a gray area. This is a gray area for me as an attorney as well as the medical profession. There are instances where a person has legal capacity wherein they meet the requirements of the probate code but family members believe they are not “competent” to authorize an estate plan. There are also instances where medical professionals can’t make a clear assessment.
What’s worse, some people find themselves in that gray area rather suddenly. One day they are at work, producing well and mentally sharp. The next, they’ve been laid off due to suffering work performance, or they are suddenly forgetful and confused. They are still functioning; they are just functioning at a much lower level. Not low enough to be deemed incapacitated, but not functioning as they normally did.
The signs are different for most people but in my practice I’ve seen short-term memory lapses, confusion about simple concepts, paranoia, poor or irresponsible spending, or losing money or not being able to account where it was spent or what was purchased. None of these in and of themselves shows that someone has lost capacity – heck, we all have bad days and can forget something or misplace a the cat keys. But, when they become a sudden trend it can be frightening to the person and their family.
Consequences during this time run from the mundane to the extreme. Perhaps you just misplaced some cash you had in the house, which would be not such a big deal. Perhaps you started spending recklessly beyond your means or hired unscrupulous financial or tax advisors. When they happen quickly, they are often hard to stop.
As we never know when or who will be stricken with this issue, it is important to plan ahead. Although most estate planners will conclude that you have legal capacity even in the gray area, why take risks? Prepare your estate plan early and discuss the possibility of sudden incapacity with your attorney. There is no proven link that Alzheimer’s is genetic but most people I deal with are more concerned when they have a family history of dementia or Alzheimer’s. If this is the case, discuss it with your estate planning attorney so you can better understand how your plan is affected by sudden incapacity as well as death.
Eric S. Gullotta, JD, CPA, MS (Tax) focuses on estate planning and taxation law. His office is located at 232 West Napa Street, Suite A, in Sonoma. Contact him at 938.7234 or visit Gullottalaw.com.