If someone wishes to make a Will or appoint a Power of Attorney, they must have the requisite capacity. The determination as to whether someone has this capacity at law is time and task specific, and different from medical tests for capacity. The considerations for capacity at law are also different when making a Will or appointing various forms of Powers of Attorney, so we will review them separately.
Capacity to Make a Will
The 1870 English case Banks v. Goodfellow sets out the legal test for capacity to make a Will that, with some refinement over the years, is still used today. The analysis requires the client to demonstrate the following criteria:
- The ability to understand the nature and effect of making a Will;
- The ability to understand what property and assets one has; and
- The ability to understand the claims of anyone who would normally be expected to benefit from the Will, including any dependants.
Capacity concerns become legally relevant when someone is looking to make a Will as the drafting lawyer must ensure that the person understands the above criteria. If the lawyer determines that the client likely does not have capacity, they have a professional obligation to inform the client and will likely require a formal capacity assessment to be completed by a capacity assessor before acting.
It can also be an issue after the testator has passed if family members are concerned with how the Will was made. The latter can lead to estate litigation if there is a dispute over the validity of a Will.
Capacity to Appoint a Power of Attorney
For information on the various types of Powers of Attorney, see lawyer Brandon Doughty’s blog post.
To determine one’s capacity to make a Power of Attorney for Property the individual must generally be able to demonstrate an understanding of the following:
- The approximate value of their property and assets.
- What the Attorney will be able to do – i.e. that the person they are appointing will have the power to manage their assets and make financial decisions on their behalf.
- If they have any obligations to dependants.
- That the person they’ve appointed has an obligation to account for what they do.
- That the person they’ve appointed has a fiduciary duty to act in their best interest.
- That they should appoint someone they trust, as an Attorney has broad powers to control one’s finances that come with a risk of abuse.
- That the Power of Attorney can be revoked, but only while one still has capacity.
For a Power of Attorney for Personal Care, capacity requires the person to demonstrate an understanding that the Attorney has a genuine concern for their welfare and may have to make personal care decisions on their behalf.
How concerns around capacity are treated is an important process in many respects. Ensuring that the individual seeking to make a Will has capacity allows the lawyer to become aware of potential vulnerabilities and to identify influence by any bad faith actors. There are also unfortunate scenarios in which someone’s health declines rapidly and though they had capacity but yesterday, now they do not. Capacity is at once a legal test, a medical test, and a deeply personal reality. So, conversations around capacity should be guided by respect for the autonomy and dignity of the person.
This blog post was written by Heather Austin-Skaret, a Partner in the Real Estate, Wills and Estates, and Estate Litigation teams, and Articling Student Meghan Boyer. Heather can be reached at 613-369-0356 or at [email protected].
