Legal Implications of Dementia and Alzheimer's Disease

See the Alzheimer’s Association website, Alzheimer’s & Dementia-Stages of Alzheimer’s, https://www.alz.org/alzheimers-dementia/stages

Generally, Alzheimer’s patients suffer from an impaired ability to make decision This impairment has serious consequences for the patient and his or her family mem beers and caregivers. From a legal standpoint, family members and caregivers must be concerned with whether the patient possesses the mental capacity to engage in certain transactions or make certain decisions or has the legal competency to retain his or her autonomy.

An autonomous individual has a number of different capacities, including the legal capacity to:

enter into a contract’
prepare (or have prepared on his or her behalf) and execute a Last Will and Testament.
make gifts of his or her property.
consent to medical treatment; and
manage his or her financial or personal affairs or appoint agents to make such management decisions on his or her behalf.

Each of these capacities involves a distinct combination of functional abilities and skills. Accordingly, the mental capacity-or level of alertness or functional ability-for each one is different. Not surprisingly, the legal capacity for each task is also different.

Testamentary Capacity

To execute a Last Will and Testament, a testator needs to be of “sound mind.”35 This means that the testator understands the Last Will and Testament and the effect of executing such an instrument; knows the general nature and extent of his or her property, the person or persons to whom he or she wishes to give the property, and the person or persons dependent upon him or her for support; and must be able to keep the above-mentioned information in his or her mind long enough for him or her to understand how they relate to each other, and then to form a reasonable judgment about how he or she wishes to dispose of his or her property when he or she dies.36 At probate or in a will contest, the proponent of a will bears the burden to prove the testator’s capacity.37 Testamentary capacity is a lower standard than contractual capacity. Texas law does not require testators to be capable of managing all of their affairs or daily business transactions. What is important to the execution is the time of execution: A testator may lack capacity immediately before and immediately after signing a will. but not at the time of execution.33 However, the testator’s capacity can be negated by a showing that he or she suffered from an “insane delusion”-an irrational perception of particular persons or events-if the delusion materially affects the Last Will and Testament 39 Generally speaking, then, for the Last Will and Testament to be valid and for the testator to be considered as having had the requisite testamentary capacity at the time he or she executed the instrument, the testator must “know” and “understand” facts, and must possess knowledge or understanding based on reali1ty material to the disposition.

Capacity to Contract

Because this text is about elders (sometimes referred to as “seniors” or “senior citizens”), we shall limit our discussion of the capacity to contract to the capacity of elders to enter into contracts.

In Texas as elsewhere, only people with the requisite mental capacity may enter into valid contracts. That having been said, we note that all Texans who enter into contracts are covered by a presumption of competency.28 Unless a court of competent jurisdiction has adjudicated someone incompetent, that person retains all his or her rights under Texas law and has full legal capacity to enter into a contract.29

But what, exactly, does “capacity to enter into a contract” entail? The Texas legislature has thus far failed to address the matter. Meanwhile, Texas courts have developed a definition: A contracting party has capacity for executing a contract if the person can appreciate the effect of what he or she is doing and understands the nature and consequences of his or her acts and the business he or she is transacting.30

Notwithstanding this development, the courts address the matter of mental capacity to contract on a case-by-case basis. The more complicated a transaction, the higher the level of mental capacity required to engage in the transaction. Accordingly, someone who cannot understand a highly complex transaction-and thus would lack the capacity for entering into a contract concerning this transaction-may still have the requisite capacity to engage in simpler contracts.31

In analyzing mental capacity to contract, Texas courts have also said that we can look to certain circumstantial evidence to assess whether a party had capacity at the time he or she entered into the contract.32 This circumstantial evidence includes: (1) the person’s outward conduct and whether it is manifesting an inward and causing condition; (2) any pre-existing external circumstances that tend to produce a special mental condition; and (3) the prior or subsequent existence of a mental condition from which the person’s mental capacity (or incapacity) at the time in question may be inferred.33 However, the courts have been rather loosely applying these factors.l-1 and one would do well to proceed with caution.

Donative Capacity

It is easy-too easy-for an unscrupulous person to take advantage of an elderly per son suffering from Alzheimer’s disease or some other form of dementia and then somehow get that person to make him or her a large gift. To prevent this, it would make sense for the law to establish rules for donative capacity beyond the realm of wills.

To date, neither the Texas legislature nor any Texas court has articulated any rules governing donative capacity. However, some states have adopted a higher standard for donative capacity than for testamentary capacity, requiring that the donor knows the gift to be irrevocable and that it would result in a reduction of the donor’s assets or estate. To the extent Texas follows these standards, donative capacity in Texas would require a higher degree of cognition and understanding than contractual capacity, if only because, unlike a contract, it is difficult to evaluate whether a donation is “fair.”·11

Capacity to Consent to Medical Treatment

Capacity in health care is based on the doctrine of “informed consent.” This concept dictates that patients have the ultimate right to prevent unauthorized contact with

their bodies, and that health care providers have a duty to disclose relevant information to allow their patients to make informed decisions. Consent to treatment must be competent, voluntary, and informed. Though persons may have mental capacity, if their decisions were either involuntary or unknowing, they may not meet the standard.’12

Power of Attorney

Texas has no statutory requirement regarding the requisite capacity for executing a power of attorney. However, Texas courts appear to use the contract standard for determining whether principals had the requisite capacity to execute powers of attorney. 3 That being said. someone who challenges the principal’s mental capacity when signing the power of attorney has the burden of showing that the principal “did not understand the nature or consequences of his [or her] act at the moment the power of attorney was executed.’ 4

Estate Planning for Patients With Alzheimer’s Disease and Other Forms of Dementia

People typically put off estate planning until they experience a health crisis. Because of the emotional toll of the ongoing crisis, such a time is not best for engaging in estate planning. When the potential client is suffering from Alzheimer’s disease or some other form of dementia, the memory loss and other conditions that accompany the disease make it extremely difficult for an attorney called upon to assist the individual to put together an estate plan.

That said, to the extent the individual has recently begun exhibiting symptoms of Alzheimer’s disease-which would indicate that the disease is probably in its early stage-his or her family members, acting on the patient’s behalf, would most likely be the ones who contacted the attorney to discuss the issue of estate planning. Of course, this raises ethical issues, ranging from a determination of who is the client to conflicts of interest issues. Assuming the attorney can overcome the ethical issues, he or she can develop an estate plan that should include at least three parts-a durable power of attorney, a Last Will and Testament, and a set of medical advance directives. Depending on the value and complexity of the patient’s assets and the availability of funds to pay for it, the plan may also include a revocable living trust.

The Texas Durable Power of Attorney

Like all other durable power of attorney statutes, the Texas statute allows an adult principal to designate another person as attorney in fact or agent to make financial decisions on the principal’s behalf.15 The Texas statute provides that the power may be either “regular” or “springing.” The “regular” durable power of attorney grants authority to the agent to act as soon as the principal executes the document.16 TI1e “springing” power of attorney grants the agent authority to act only if the principal

for more, see Dementia and Elder Law pdf