Pennsylvania Fiduciary Litigation : Pennsylvania Trusts and Estates Lawyer & Expert Witness : Patti Spencer Law Firm : Fiduciary Litigation, Planning : Lancaster, Harrisburg, Philadelphia, Pennsylvania

This article from the UK highlights the predicted rise in dementia diagnoses due to the ageing of the population and what that means for will contests.  Click here.

Hat Tip to J. Michael Young, Esq. at Texas Fiduciary Litigation.

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How many families do you know who fought over the settlement of their Mom and Dad’s estate? In my experience, these family feuds are often over things - not money. Who gets the sterling flatware and who gets the drop-leaf table are points of contention that rip apart the family fabric.

Mom and Dad, why on earth do you think that children who fought over who gets the last cookie and who, as recently as last week, fought over who gets to stay in the beach house the third week in August will somehow miraculously change when you die? I have news for you. When you’re gone, they will fight worse than ever. Face up to it now.

Even in estates where there are no tax issues - let’s say the total value of the estate is less than $2 million - disputes over personal property can cause permanent schisms. Each child wants the teapot that was the center of every family dinner and embodiment of all memories of childhood love. The executor has to decide who gets it. What a job that is! The only way for an executor to escape with his skin is often to sell the piece - then everyone can be equally angry.

If tempers can flare over items of sentimental value, watch out when the monetary value of the disputed items rises or when the estate exceeds the federal exemption for estate tax.

Mom and Dad, don’t bring this problem on yourselves. You may have heard at bridge club that you shouldn’t mention these things in the will because then your heirs have to pay tax on them. Even worse, some estate planners might tell you that too. This is wrong. A decedent’s property owned at death is subject to estate and inheritance tax. It doesn’t matter whether the property is specifically mentioned in the will. What these “advisors” really mean is that if it isn’t mentioned in the will, it’s easier to cheat on the taxes by omitting to report the item. This is tax fraud, pure and simple. The same tax is due on a $10,000 bank account as on a $10,000 oriental rug, and it is absolutely fair and just that it be so.

Tempers may also rise when you or your Executor low-ball the value of valuable items, asking for “low” appraisals for “estate tax purposes” to try to reduce taxes. Then the property is divided up among the children using the appraised value. Surprise, surprise -- a child sells the breakfront that was part of his share for double the appraised value and his siblings call foul.

The IRS is not as dumb as you think. Most people who have valuable collectibles - jewelry, artwork, antiques - realize that they must be insured. Your average homeowners insurance policy doesn’t cover the loss of these items unless they are separately listed and valued. If you don’t report the jewelry all the IRS has to ask for is a copy of the homeowner’s policy. The IRS knows that if you live in a $300,000 house, have three expensive cars, belong to the Country Club and have a winter place in Florida then your household furnishings are worth more than a couple of thousand dollars.

If you’re afraid to talk to your kids about it, how do you think your executor (who may be one of the kids) is going to feel about it? The best thing you can do is make list of items and who should receive them. Allow your children to have input. You be the one to settle the disputes. Then make the list part of your will or at least make it a non-binding memorandum mentioned in your will.

If you can’t bear to talk about it, at least put a mechanism in your will for the division of the property. Maybe each child selects items in rotation. Who gets first choice is determined by lot.

Keep this in mind too: putting someone’s name on an item with a tag is legally meaningless. All property is passed under the will or under the intestacy statute if there is no will. It doesn’t matter if “Mom promised it to me” or if “Dad told me it would be mine.” If all the other beneficiaries agree, you may be ok. But if there is any dispute, such oral representations, tags, notes, and letters are completely without any legal effect.

Also, there are the people who say “Grandma gave it to me years ago, I just left it in her house until she died.” Even if this is true, the IRS takes the view that this is not a completed gift. A completed gift of personal property, like a corner cupboard, requires delivery. How can you prove delivery in this instance? Even if you can prove delivery by some ingenious means, to the IRS, it still looks like a transfer with a retained right to the use of the property for life and is still subject to tax in the estate.

If you have a $40,000 grand piano, by all means, dispose of it in your will. If you want your daughter to have it, bequeath it to her. The best gift you can give to your beneficiaries is to make a clear and incontestable disposition of all your property, including jewelry, furniture, collectibles and artwork. The last thing you want to bequeath to your children is a battle that will drive them away from mutually supporting each other.

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This excellent article published in The American Journal of Psychiatry (164:722-727, May 2007) gives advice on how to document your client's capacity. Check it out:

Assessment of Testamentary Capacity and Vulnerability to Undue Influence by Kenneth I. Shulman, M.D., F.R.C.P.C., Carole A. Cohen, M.D., F.R.C.P.C., Felice C. Kirsh, LL.B., Ian M. Hull, B.A., LL.B., and Pamela R. Champine, J.D., LL.M.

The authors state:

"We can expect challenges to testamentary capacity to increase during the coming decades as the number of older adults increases. The increasing complexity of modern families, where asset disposition is sensitive and complicated, may lead to feelings of rejection and injustice and result in more challenges. Finally, the high prevalence of cognitive impairment and dementia in older adults creates a fertile environment for challenges to wills. It therefore behooves psychiatrists and other experts to be aware of the legal, medical, and psychiatric issues that underlie the assessment of testamentary capacity and the role of undue influence—two concepts that are inextricably linked and often combined in legal challenges to wills. "

                                                                   *       *       *        *       *

"The assessment of testamentary capacity and its interrelationship with vulnerability to undue influence bring together the medical and legal domains. The psychiatric and medical experts’ role is primarily to help lawyers and the courts make the best determination of testamentary capacity and to assess the role of undue influence. As the number of older people increases in the coming years, clinicians will likely be involved in these determinations with increasing frequency. Research in this area is needed, and it should involve a collaboration of the medical and legal domains to provide clearer guidelines for the assessment of these complex issues in individual cases (26). Increased awareness within the legal profession of the importance of establishing testamentary capacity at the time of the execution of a will may lead to a greater demand for contemporaneous assessments and possibly avoid a court challenge at the time the will is brought for probate. Proposals to develop "lifetime capacity assessments" for this purpose merit exploration."

 You can download a pdf copy of the article for free.  Click here. 

 

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Growing Old and Issues of Diminished Capacity

The law assumes that adult individuals have mental capacity, that is, they are capable of making rational decisions on their own behalf. Note we say they are “capable” of making rational decisions. The law doesn’t expect or require that they actually make rational decisions. Competent individuals of all ages, old and young, have the right to make foolish, eccentric or idiosyncratic decisions. For better or worse, all of us are free to make bad decisions.

People Vary
A persons’s capacity may change from day to day (or even during the day), depending on the course of the illness, fatigue and the effects of medication. Some folks have good days and bad days. Some are more alert in the morning; some have their best time in the afternoon. Legal competency is not something that a person either has or doesn't have –it can be quite variable.

Standards Vary
Whether or not a person is legally competent depends on the purpose for which the capacity is being determined. The law provides a different standard of competency for 1) making contracts, 2) making wills, 3) having a guardian appointed, 4) and giving informed consent to medical treatment.
Whether or not a person is competent is a legal determination, not a medical one. Medical testimony is important, and is always sought by a court in making the determination of capacity. Since the law has many different defined standards depending on the action being taken, the determination of whether or not a person is competent to do a certain thing is always a legal decision.

Lowest Standard
What surprises most people is that the capacity to make a will, called testamentary capacity, is the lowest level of capacity in the law. All that is required is that the person making the will (1) understand in a general away, the nature of his property, (2) knows who are the “natural objects of his bounty,” that is, the persons who would normally be his heirs, and (3) must be able to comprehend that he or she is making a will.

A person who has had a stroke, or is diagnosed with Alzheimer’s disease, may still have sufficient capacity to make a will even though there is some impairment of speech, some impairment of thought processes, and/or some physical impairment. The fact that a client does not know the year or the name of the President does not necessarily mean that she can not make a will. Since signing a will does not require a great deal of capacity, the fact that the next day the person does not remember the signing of a will does not invalidate the will if he had the minimum required capacity the day before when he signed it.

Undue Influence
A related ground for invalidating a will is a claim that the will was signed by a testator acting under undue influence. Undue influence is the use of coercion to force a testator to make a will. The legal definition requires that the testator’s desires be replaced with the desires of another by pressure or threat. The testator is not incompetent, but the testator is left in the position of feeling "I don't want to do this, but I must." Holding a gun to the testator’s head is clear undue influence. Telling Grandpa that you'd love to have him stay in your house and not go to a nursing home but only if he leaves you a certain something (like everything) in his will could be coercion.

Influencing a person to disinherit one person in favor of the person exerting influence is a classic case. A person can have testamentary capacity but be subject to undue influence. Many people in their terminal illnesses are unduly influenced to make wills in favor of their care giver. More than once a client has been brought to my office by a child requesting that a new will be made disinheriting other children. Is that the parents wish? Or the wish of the child who brought them to the lawyer?

Wills and Fraud
A competent testator can be defrauded. This can look like a capacity problem, but in fact is not. For instance, Son tells Grandpa (who is in the retirement home) that the nice lady who used to live next door to him has died, inducing Grandpa to give the share he was going to give to the nice lady to Son instead. Fraud can come in the commission as well. A child could put a document in front of Grandpa and tell Grandpa that it is the will he asked to have prepared for him which leaves his entire estate to charity. In fact, it is really a will containing quite different provisions, giving his property to the child. Of course, the child doesn’t tell him that. Grandpa can't read so well anymore and trusts his child, so he signs the will. Remember, no one has a right to inherit. Grandpa is entirely free to leave all his wealth to charity, or even to a stranger, so long as he has testamentary capacity and is not under undue influence.

Wills made as a result of fraud are invalid, but the fraud must be proven. The elements to be proven are: means, motive, opportunity and result. Someone must be proven to be in a position to be able to deceive the testator, have the opportunity to deceive the testator, the testator must have been deceived, and the deceiver or his benefactor must benefit from the will that was made, or not made, as a result of the deception.

Witness Credibility is Key
The determination of whether a client has testamentary capacity must be made by the attorney and the witnesses based on information learned in interactions with the client, from family, social workers, and, possibly medical professionals. Because you need a third party to assess capacity and because you need to be certain that the formal legal requirements are followed, it can be risky to prepare and execute legal documents on your own without representation by an attorney.

It is very difficult to overturn a properly made will on the basis of incapacity. The challenger to such a will usually was not present when the will was signed so the challenger can give no testimony about the testator’s capacity at the time the will was signed. Plus, the challenger must overcome the testimony of the attorney, witnesses and notary - not easy to do. Many attorneys, when expecting a challenge build a case by having extra witnesses and interviewing the client in the presence of the witnesses before the will is signed.

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Growing Old and Issues of Diminished Capacity

“Aging seems to be the only available way to live a long life.”
                                                                 – Daniel Francois Esprit Auber


Maggie Kuhn started the Gray Panthers in 1970 as a response to her forced retirement at age 65. The mission of the Gray Panthers was to speak out against age discrimination, the Viet Nam war, and other political oppressions. There is no doubt that stereotyping due to age exists in contemporary society. The Gray Panthers call this kind of discrimination “ageism.” To be told "you're too old" is as disheartening as to be told "you're too young"; both statements make you a stereotype when in fact you are an individual.

No bright line test

Obviously, mere chronological age does not give an answer to the question of whether or not a person is mentally or physically impaired. Nor does a medical diagnosis give the complete answer on the issue of the ability to be in control of one’s own life. When and to what extent a persons capacity to make decisions is diminished is a very difficult topic for lawyers, care-givers, and families.

The right to make bad decisions

How many of us know an older adult insisting on living alone at home when friends, family, and advisors think it’s a bad idea? Is the person incapable of making decisions? Or is it simply a decision that others do not agree with. Concern in a situation like this stems from the fear that the person will be hurt - they will leave the stove on and burn the house down, they will fall down and not be able to get up or summon help, they won’t eat properly and can’t get around to doctor’s appointments and the grocery store. Is a person who chooses to live this way incompetent? Or merely independent?

There is a long-standing American tradition of individualism - of each person being free to make his or her own choices and decisions and choosing his or her way of life. While fostering independence and self esteem, individualism also tends to promote self-centeredness at the expense of family and community. Individualism can mean being free to make bad choices.

Different competency standards

The issues surrounding diminished capacity run from whether or not an older adult should contihnue to drive, to whether he or she can live alone at home, wheter he or she can make a will, make gifts, and otherwise control finances, to whether or not a court-appointed guardian must be appointed. Often, a family’s first encounter with this question is whether or not the older adult should continue driving a car.

Driving competency

Everyone knows Americans have a love affair with their cars. Do you remember the day you got your driver’s license? Learning to drive is a rite of passage. Driving a car for the first time gives a tremendous feeling of freedom, power, control and independence. Getting behind the wheel of your first car is a day most of us will never forget.

Many adults are able to operate a car safely into their 80s and beyond. Many will adjust their driving habits on their own when they realize they are having trouble seeing at night, or when they realize their response time or alertness has diminished. But what about the driver who sees his license as his only way to freedom and independence and who will not give it up? That same sense of freedom and independence that teens acquire with their first license, seniors carry with them to old age.

The AARP gives this list of the top 10 signs that it's time to talk about limiting driving or handing over the keys:

1. Frequent "close calls" (i.e. near accidents).
2. Dents, scrapes, on the car or on fences, mailboxes, garage doors, curbs etc.
3. Trouble judging gaps in traffic at intersections and on highway entrance/exit ramps.
4. Other drivers honking at you.
5. Getting lost.
6. Difficulty seeing the sides of the road when looking straight ahead.
7. Slower response time; trouble moving foot from gas to brake pedal or confusing the two pedals.
8. Getting distracted easily or having trouble concentrating.
9. Difficulty turning your head to check over shoulder while backing up or changing lanes.
10. Traffic tickets or "warnings" by traffic or law enforcement officers in the last year or two.

Improvement before decline

Drivers are not dangerous because they are getting older. In fact, older drivers are more likely to obey speed limits, wear safety belts, less likely to drive while under the influence of alcohol, and report taking fewer risks than other age groups. However, when aging causes declines in motor skills, and in perceptual and cognitive abilities, this does result in poorer driving performance.

Medical ethics

According to the American Medical Association, a physician has an ethical obligation to report unsafe drivers. If the driver poses a clear risk to himself and the community but refuses to give up the wheel, it's the doctor's ethical responsibility to notify the Department of Motor Vehicles. The AMA’s Older Drivers Project has created a Physician's Guide to Assessing and Counseling Older Drivers. The guide includes an office-based assessment of medical fitness to drive, information about medical conditions and medications that may affect driving, recommendations for rehabilitation options and counseling strategies, information about the legal and ethical issues regarding reporting unsafe drivers, and handouts for patients and family members.

Know your limitations

Be honest about your driving abilities. Regulate your driving yourself. Before deciding to stop driving all together, you may want to compensate for diminished driving skills: choose familiar or less challenging routes, avoid freeway driving, rush hours and congestion, driving at night, and making left turns. If you have a loved one who can’t or won’t drive safely or hang up his or her keys - remember that your first care is the safety of that loved one and of others on the road.

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