Capacity – an essential ingredient

Whether preparing a Will, Codicil or Power of Attorney the person creating the document must have the necessary capacity to know and understand the nature of the document for it to be valid. Assessing capacity with an ever-aging population and greater awareness of dementia in its various forms requires a sensible approach to the drafting of such documents.

Wills

The test for capacity to execute a valid Will is reconfirmed in the appeal judgment of Clitheroe v Bond, 2022 EWHC 2203 (Ch). The decision reconfirms the case of Banks v Goodfellow (1870) which requires the maker of a Will to: –

• Understand the nature of making a Will and its effects.
• Understand the extent of the property to which they are disposing.
• Be able to comprehend and appreciate the claims to which they ought to give effect.
• Have no disorder of the mind that perverts their sense of right or prevents the exercise of the natural faculties in disposing of their property by will.

The High Court upheld its earlier judgment disallowing the appeal and rejection of two Wills on grounds of testamentary incapacity. Jean Clitheroe (the deceased) made two Wills, the first in 2010 and the later in2013, shortly before her death. Both Wills disinherited her daughter, Susan Bond leaving her £400,000.00 Estate to her son, John Clitheroe. She gave instructions to her solicitors explaining her reasons for excluding Susan. 

Susan challenged the Wills after her mother’s death arguing Jean suffered from severe grief after the death of another of her daughters in 2009 and experienced severe depression and insane delusions. John agreed this was true but denied Jean was deluded. Jean never had a psychiatric assessment prior to her death and the evidence before the Court was based on expert evidence and retrospective capacity assessment. At the first trial, Susan’s arguments were preferred and the Wills found to be invalid. This implied Jean died intestate and her Estate was divided equally between her two surviving children.

John appealed arguing that rather than applying the Banks v Goodfellow criteria, the correct test to be applied was set out in the Mental Capacity Act 2005 whereby a person must be assumed to have capacity unless it is established that he lacks capacity and a person is not be to treated as unable to make a decision unless all practicable steps to help him to do so have been taken without success. This appeal was dismissed, the court confirming the Banks v Goodfellow test remains the correct test.

In an Australian case the Supreme Court of New South Wales handed down judgment in Lim v Lim (2022). The Court decided a properly executed Will was invalid on the grounds of lack of capacity and want of knowledge and approval. The deceased died 16^th November 2019 aged nearly 90 and had 5 children.  She had no contact with one of them. Her last Will was dated 16^th October 2019 and an earlier Will dated 29^th July 2011. A son challenged the validity of the 2019 Will arguing the correct valid Will was the earlier one dated 2011 in which he took a greater share. 

The 2019 Will named the 4 of the children with whom she still had contact as executors leaving her estate equally to them all. The Will contained a clause noting that a translator had attended with her translating the Will in the Mandarin Chinese language due to the deceased’s imperfect knowledge of the English language.

At trial evidence was presented that the deceased had not been wearing her hearing aids on the day of the meeting with her solicitor and translator when the Will was executed and 3 of the 4 children were present at the meeting also.

The earlier 2011 Will provided for the Claimant’s son to be sole executor and trustee. Her estate was to be divided amongst 4 of the 5 children in disproportionate shares: 62% to the Claimant, 30%, 3% and 5% to the others. The explanation for the unequal distribution was the Claimant had been living and caring the for deceased for many years in her own home and agreed to continue to do so into her old age. A similar execution clause relating to a translator’s presence was give noting the deceased was unable to read or speak the English language, Hainanese dialect in the customary Chinese language understood by her. The difference in the execution clauses and the level of the deceased’s understanding of Mandarin was said to be a material issue in dispute.

The solicitor did not obtain a capacity report and there was little medical evidence available for the Court to determine the deceased’s capacity at the time of the Wills. Post death expert evidence suggested there was doubt as to the deceased’s capacity in 2019. 

The Court concluded there were concerns regarding capacity in 2019 and the Claimant had satisfied the court as to the existence of these concerns. The court insisted the Banks v Goodfellow test was not a memory test nor an exercise of judgement but an assessment of capacity. The Court was satisfied the deceased had capacity to understand the nature of the act of making a Will in 2019 and was aware of the persons she should consider as recipients to her Estate, but she was unable to assess and weigh up that information. The solicitor failed to ask any questions about prior Wills or why she was departing from the terms of the 2011 Will. Considering the evidence, the court said it was difficult to conclude that the deceased had the capacity to give any or real consideration to the competing claims upon her Estate by each of her children. Along with other confusing clauses contained in the will and a comment by the deceased, that it was for her children to sort out any issues, the court decided that she may not have had capacity to evaluate the respective strengths of the children’s claims.

Lasting Power of Attorney (LPA)

Capacity is also an essential ingredient when creating a Lasting Power of Attorney. In the case of The Public Guardian v R I & Others (2022) the Court of Protection had to decide whether a LPA executed in 2009 was valid due to concerns whether the donor had the mental capacity to execute it at the time.  The donor, D had a learning disability and diagnosis of schizophrenia. Until 2014 he lived with his mother and had some, albeit limited independence. When his mother became unwell in 2014 and could no longer support D he moved to a care home. D’s mother died in 2015. 

Concerns were raised by the care home manager in 2019 regarding the management of D’s financial affairs by his surviving attorneys being D’s two brothers. As part of the investigation a Court Visitor met with D who concluded D lacked mental capacity to manage his finances and to cancel the LPA. A consultant in old age psychiatry was of the opinion it was likely D lacked the mental capacity to execute the LPA in the first place because of his learning disabilities. An LPA requires endorsement by a certificate provider which verifies they know the donor and the donor has a required understanding of an LPA and its effects and is not under pressure to sign. 

To give effect to a Lasting Power of Attorney the donor is required to understand: –

1. The effect of the LPA. 
2. Who the attorneys are.
3. The extent of the attorney’s powers.
4. When the attorneys can exercise those powers.
5. Details of the assets the attorneys shall control
6. The donor’s entitlement to cancel the LPA, as long as he has capacity
7. The advantages and disadvantages of executing an LPA

In applying the principles, the Judge decided on the balance of probabilities D lacked mental capacity to execute the LPA. Although satisfied D was not under pressure to sign and there was no suggestion of any wrongdoing on the part of D’s mother or brothers, the Court decided an independent Deputy should be appointed to manage D’s finances going forward. 

Summary

In situations where a person is believed to have suffered historically or at the time of making their Will or LPA with a form of mental health disability they are likely to be encouraged to obtain a supporting medical report or certificate confirming testamentary capacity for a Will or adequate capacity under the Mental Capacity Act 2005 for an LPA. Such independent assessment is likely to prevent costly and unnecessary disputes and expensive litigation later down the line.