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Capacity is a vital factor in making a Will

By  ALEXANDRA ORMOND, Miller Thomson LLP 
  • October 31, 2018

Do you have capacity?

In order to make a valid Will or Power of Attorney in Ontario, the testator or grantor must have capacity. This is important because a finding that a person was not capable when he or she made a Will or Power of Attorney would render the document invalid.

What is the test for capacity when making a valid Will?

There is no standard test for “capacity.” It varies depending on the activity undertaken. The legal test for capacity, as it relates to making a valid Will, comprises three components.

1. The ability to understand the nature and effect of making a Will. This means that the testator understands that he or she is creating a document that has the effect of giving property away to others.

2. The ability to understand the extent of one’s property. The testator must comprehend the nature and extent of his or her assets and liabilities. But this requirement does not go so far as to require the testator to know where each and every dollar is located.

3. The ability to understand the claims of persons who would normally expect to benefit under a Will of the testator. The testator must comprehend the legal and moral claims that may be brought against the estate. For example, if a spouse is excluded, the testator must understand that the excluded spouse could make a dependant’s relief claim.

What is the test for capacity when making a valid Power of Attorney for property?

This appoints a person (or persons) to make decisions about property, finances, assets and investments on the grantor’s behalf. An “enduring” or “continuing” Power of Attorney empowers the attorney to legally make decisions about the grantor’s property and finances on their behalf.

To be considered mentally capable of giving a Power of Attorney for property, it must be clear that: (1) the grantor knows what he or she owns; (2) is aware of obligations to dependants, if any; and (3) understands the authority and power they are giving to their attorney.

What is the test for capacity when making a valid Power of Attorney for personal care?

This appoints a person (or person) to make personal and health care decisions on the grantor’s behalf. It may also instruct doctors and other caregivers regarding the kind of personal or medical care the grantor may want, or does not want, should the grantor ever become incapable of making those decisions.

To be considered mentally capable of giving a Power of Attorney for personal care, it must be clear that (1) the grantor understands that the attorney has a genuine concern for the grantor’s welfare; and (2) the grantor understands the attorney may have to make personal care decisions on their behalf.

How do you prove capacity?

Circumstances surrounding the execution or preparation of a Will or Power of Attorney, such as serious illness, may cast doubt on the testator or grantor’s capacity. Usually, in these instances, a lawyer can assess whether an individual has capacity and may recommend that the individual undergo a formal capacity assessment. 

Often, a letter from an attending doctor is sufficient.

What is a capacity assessment?

A capacity assessment is the formal assessment of a person’s mental capacity to make decisions about property and personal care. Where drafting lawyers or other individuals have concerns about capacity, they will require a certificate of capacity from a capacity assessor.

What if you do not have anyone to appoint as your Power of Attorney?

Acting as a Power of Attorney can be very time consuming and there are a number of duties that must be carried out. This can be quite a burden for the average person. For example, attorneys have a duty to keep accounts of all transactions involving the grantor’s property and may be responsible for consulting from time to time with the grantor’s family members and friends for actions the attorney is taking under the Power of Attorney. 

If you find yourself in a situation where you do not have anyone to appoint as your Power of Attorney for property or personal care, you may consider appointing a trust company to enlist the assistance of experienced professionals.

How do you ensure that you receive proper care should you become incapable?

To reduce the potential for conflict, your Power of Attorney should clearly set out your intentions with respect to how you want your attorney to manage your property and what type of personal care you expect to receive. For example, your Power of Attorney for personal care could set out which residential facility, assisted living facility and/or nursing home you wish to live in should the need arise. To assist your attorney, you could decide which ones you prefer and get on the waiting list.

(Ormond is an associate lawyer at the Private Services Group of Miller Thomson LLP. Her practice focuses on trusts and estates and personal tax planning.)

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