Where there’s a will — there’s a way… To determine capacity

An ageing population – Australia’s population is ageing.

In 2012, life expectancy for males had risen to 79.9 years and 84.3 years for females. In fact, 45%of males and 58.8% of females (born 2010–2012) are expected to survive until at least 85 years.

Increased demand for retirement and nursing home care — More than 175,000 Australians live in retirement villages.

Australia has approximately 2,800 residential aged care facilities. There are more than 160,000 elderly people receiving care; by 2023, the number is projected to increase to more than 250,000. The highest area of growth will be residents aged over 95.

Mental health of people in care — Dementia is the major reason that people are admitted to residential aged care. Estimates say that approximately half of aged care residents suffer from dementia. It is projected that the number of people who suffer this disease will increase from 220,000 in 2013 to 730,000 in 2050.

How do you know if someone has the legal capacity to execute a Will/estate plan?

Fundamentally, when you want to make a Will, you must be capable of understanding:

  • the nature of your acts and their effect;
  • the extent of the property you are giving away; and
  • the claims (for example: immediate family members) which may be made against your estate.

Further, no mental illness can influence the terms of your Will/estate plan. If a mental illness results in a distribution which would not have been made in sound mind, then your Will will be void (after death, this is a very costly exercise to prove).

Someone I know requires a Manager and/or Guardian — what should I do?

You should contact your advisor for assistance as the test for capacity to make decisions in everyday life, guardianship (personal and health) and management (financial) orders, vary across the Tribunals.

It is important that you (or your advisor) understand the various tests to ensure that proper, and adequate, evidence is prepared to support the Orders being sought for your family member or friend.

How does this affect you?

If your advisor is not experienced in estate planning and does not recognise the signs of a lack of capacity, then your (or your family member’s) estate plan may result in a distribution which was never intended (had capacity not been lost).

If the beneficiaries of the challenged estate plan do not agree to enter into a settlement which rectifies the issues, then you may find yourself involved in protracted and costly litigation proceedings.

What should you do?

If you have concerns about a family member’s, client’s, or your own (in the early stages) capacity you should:

  • obtain a medical report from the usual doctor which addresses cognitive abilities and disorders of the mind (such as a Mini Mental State Exam); and
  • arrange a consultation with our experienced estate planning lawyers, who can assist you with your concerns.

For more information contact:

Alisa Taylor | Partner
(02) 6279 4444

Michelle Gold | Senior Associate
(02) 6279 4444