Capacity

Capacity, in the context of estates and legal matters, refers to an individual's legal and mental ability to understand, make decisions, and enter into binding contracts or agreements.

Capacity is a critical element in various legal processes, such as creating a will, entering into contracts, making medical decisions, and granting power of attorney.

The determination of capacity is essential to ensure that individuals are protected from undue influence or exploitation and that their decisions are legally valid and enforceable.

Capacity varies depending on the specific legal context. In the creation of a will or other estate planning documents, such as trusts, an individual must have the mental capacity to understand the nature and extent of their property, the consequences of their decisions, and the identities of their beneficiaries.

A lack of capacity can render these documents invalid, leading to disputes over the distribution of assets. This can ultimately lead to a longer and more expensive probate process.

In contractual matters, capacity is equally crucial. For a contract to be legally binding, all parties involved must have the capacity to understand the terms, consequences, and obligations outlined in the contract.

If one party lacks capacity, the contract may be voidable or unenforceable.

In the healthcare realm, capacity is significant when making medical decisions or granting someone power of attorney for healthcare.

An individual must be able to comprehend the nature and consequences of medical treatments or designate someone to make healthcare decisions on their behalf if they become incapacitated.

Consider a situation where an elderly individual, Alice, is diagnosed with Alzheimer's disease, which has significantly impaired her cognitive abilities. 

Alice's family members want to create a power of attorney document to manage her financial affairs and make estate planning decisions on her behalf. However, they must assess Alice's capacity to understand and make this decision.

In this case, a healthcare professional or legal expert may be consulted to evaluate Alice's capacity. They will assess her ability to comprehend the implications of granting power of attorney, including the potential impact on her finances and medical care. 

If Alice lacks the capacity to understand these matters, the power of attorney document may not be valid, and alternative legal mechanisms, such as guardianship, may need to be pursued to protect her interests.

Now what if Alice lost capacity before creating a will? Unfortunately, a will cannot be created once an individual has lost capacity. 

If Alice tries to create a will while having questionable capacity, it’s likely that a will contest will ensue—meaning that heirs or potential beneficiaries appeal to court to dispute the validity of the will.

Even if there’s not a will contest, any will that is created by an individual with questionable capacity will likely be reviewed by the probate court. If the probate court deems that the testator (will creator) did not have capacity when they created the will, then the probate court will determine the will as invalid.

When a will is ruled invalid, the estate will be administered according to the state’s intestacy laws, which may not align with the estate owner’s wishes. This could result in unintended beneficiaries and the exclusion of non-relatives or charitable organizations that the estate owner wanted to benefit.