Capacity To Make A Will: What You Need To Know

Whether you have ‘capacity’ to make a decision may significantly impact your ability to conduct your own affairs.

Capacity is a particularly important legal concept when making a new will or a power of attorney. Understanding what constitutes capacity will assist you to avoid legal difficulties in the future.
 

Wills and legal capacity – Banks v Goodfellow

A question lawyers are often asked is whether someone with dementia has legal capacity to make a will.

Whilst dementia may appear to be an obstacle, this is not necessarily the case. Your lawyer can often find practical solutions to problems that may appear to be critical to capacity, such as dementia.

In determining whether capacity is an issue under a will, Victorian Courts continue to use the test outlined in the British case of Banks v Goodfellow (1870) LR 5 QB 549. Briefly summarised, the test requires that the will-maker must have a clear understanding of their affairs, their assets, the act of making the will and be of generally sound mind.

It is important to note that documents made without capacity will likely be found to be invalid should their legal merits be tested in court. In the case of wills, the consequences of this may be extreme, as the wishes expressed in a will may not come to pass.
 

Powers of attorney

What is a power of attorney?

A power of attorney is a legal document in which the person signing the document provides power to another person or persons to make a decision on their behalf. The document provides power whilst the person giving the authority is still alive. For example, an enduring power of attorney is commonly made by a person who is finding the once easy tasks of daily routine more difficult. These may include attending Centrelink or a bank. The authorised attorney can attend on their behalf and do all the necessary tasks, such as paying bills.

In producing powers of attorney lawyers are guided by the meaning of capacity outlined in the Powers of Attorney Act 2014 (“the Act”.) The test for determining capacity under the Act is whether the person is able to understand, retain, weigh and communicate information as it related to their decision.

The strict requirements mandated by the Act have been designed to provide greater protection to the execution and powers afforded by these documents. Under this legislation a medical practitioner or authorised witness (such as a legal practitioner) must be present at the time in which the person signs. This to ensure that the person signing has capacity and also circumvents the potential of elder abuse.
 

Mental vs physical considerations

Where abilities to recall information, converse, analyse and convey are in question, this will naturally affect capacity determinations.

Older, disabled or sick individuals may suffer from conditions which affect capacity. Although some mental health conditions may appear to be critical, this is not necessarily the case with proper care and diligence by your lawyer. Furthermore, despite capacity often being thought of as a purely mental matter, physical conditions are also relevant. For example, an individual may wish to enter a contract, but due to a physical disability is unable to communicate orally or utilise a pen to express their wishes.
 

Summary

In many cases, having capacity can be the difference between entering into a binding or non-binding legal act.

As lawyers we exercise legal judgement in considering the characteristics of our clients and how they relate to capacity. When you are suffering from any disability or any hindrance that may be affect perceptions around ability to make decisions, it is fundamental to get comprehensive legal advice. In many circumstances your lawyer can provide you with a number of options to assist you to get the desired outcome.

Alternatively, you may have concerns about the capacity of a loved one and the impact of their decisions on your affairs. For example, you may have been unexpectedly omitted from their will. We may be able to assist you to resolve the consequences of a decision made by a loved one.

Grant Mackenzie

Grant Mackenzie

Grant has been a partner at Phillips & Wilkins since 1990 having joined the firm in 1983. He is a member of the Law Institute of Victoria Elder Law Committee.