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

I always thought there should be some procedure to validate a will before the testator's death.  After all, the testator is the best source of evidence about his or her intent.  And the best time to assess a testator's capacity or susceptibility to undue influence is at the time the will is made, right?  It always seemed bass-ackwards that these issues had to wait for probate when the best evidence was no longer available.  Maybe not anymore  - if the theory of this California case is adopted in other jurisdictions:

This excellent article is a must read:

"Barred by Lunatics Law: How a preexisting substituted judgment order can preclude posthumous challenges to a will in California (and possibly elsewhere): the lesson of Murphy v. Murphy"  By Samantha E. Weissbluth, senior counsel, and John P. Mounce, summer associate, Foley & Lardner LLP, Chicago, published in "Trusts and Estate Fiduciary Litigation Update," August 20, 2008

The authors describe the case:  "The decision, in Murphy v. Murphy, 164 Cal. App. 4th 376 (Cal. App. 1st Dist., June 26, 2008), held that a posthumous challenge to a will was barred by collateral estoppel insofar as those issues were in fact litigated or could have been litigated in a substituted judgment proceeding while the decedent was still alive.

The common law substituted judgment doctrine as applied to property issues dates back to the English Lord John Scott Eldon’s Court of Chancery in the early 1800s. It was built upon a tradition of the king holding for safekeeping the property of “lunatics” within his realm."

In Murphy, a son, William Jr.,  was disinherited.  The holding, as reported by the authors:

"On appeal, the court found that William Jr. was collaterally estopped from litigating the validity of his father’s estate plan—because he had had the opportunity to do so in the substituted judgment proceeding.

The court first noted that the issues presented by William Jr.’s claim (undue influence, fraud and the existence of the oral testamentary agreement) involved the same underlying “factual allegations” as the issues under consideration at the substituted judgment proceeding, even though they weren’t actually litigated there."

The court, with a rather long chain of reasoning, concluded that any matter that was “within the scope of the action, related to the subject-matter and relevant to the issues” was close enough to be barred, and William Jr.’s claims met such standards. 

Their advise:

"Those of you with clients in dicey family situations in which you worry about a posthumous contest might want to weigh the risks, costs and public nature of a conservatorship proceeding (or some kind of declaratory judgment action if permitted in your state) to try and bulletproof your client’s plan."

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Appointment of a Legal Guardian


If an individual lacks the mental capacity necessary to make rational choices, there are two ways recognized by the law for proving a substitute decision maker: (1) the individual, while he was still competent, designated someone to be their agent, also known as an attorney-in-fact, by signing a power of attorney, or (2) the state, acting through the courts, may appoint a substitute decision maker known as a guardian (also sometimes called a “conservator”), for the incapacitated individual.

Power of Attorney

A "power of attorney" is a document which is signed by an individual (the "principal") appointing another person or persons (called the "attorney-in-fact" or "agent") to act for and on behalf of the principal. If the power of attorney authorizes the agent to act for the principal in almost all circumstances, it is called a "general" power of attorney. If the power of attorney is effective even if the principal is disabled or incompetent, it is called a "durable" power of attorney.

A person executing a durable general power of attorney naming a husband, wife, child, or other family member as attorney-in-fact authorizes that family member to manage his or her financial and personal affairs even after incapacity, avoiding the need for any guardianship.

Spouse Has No Legal Authority

Just because you are married does not give you legal authority over the property and person of your spouse. It is absolutely essential that you give your spouse, or some other person you trust, power of attorney. If your spouse becomes incapacitated and you don’t hold his or her power of attorney, you cannot sell the home you own jointly, cannot make withdrawals from your spouse’s IRA or other retirement plan, and cannot act for your spouse in any other legal capacity. If you don’t have a power of attorney, the only other alternative is a court appointed guardian.

Guardianship

The court procedure is termed a “guardianship” in Pennsylvania, In some other states, the procedure is referred to as a “conservatorship.” The individual for whom a guardian has been appointed is called a “ward.” Sometimes the ward is referred to as an “incapacitated person,” which has replaced the old-fashioned and offensive nomenclature of an “incompetent person.” The court appoints a guardian after hearing evidence that a person is incapacitated and deciding that there is a need for a guardian. The law requires due process for the proposed ward. The proposed ward, or alleged incapacitated person, must be given formal legal notice of the proceeding, has a right to be present at the hearing, and has the right to be represented by a lawyer.

Who is incapacitated?

The Pennsylvania guardianship statute defines an incapacitated person as follows: “Incapacitated person" means an adult whose ability to receive and evaluate information effectively and communicate decisions in any way is impaired to such a significant extent that he is partially or totally unable to manage his financial resources or to meet essential requirements for his physical health and safety. Whether or not an individual is incapacitated within the meaning of the statue depends on their actions, not on a diagnosis. A medical diagnosis of dementia or Alzheimer’s is not enough to meet the statutory definition.

The most common reason for guardianship is that the incapacitated person cannot pay bills. Another reason for guardianship is that an unscrupulous individual is taking advantage of the alleged incapacitated person by inducing him or her to give away money or to sign documents under undue influence. A guardianship proceeding can stop this and the guardian can recover stolen assets.

Sometimes incapacitated people do not receive proper medical care, or they become incapable of dressing, bathing, toileting and obtaining food. Sometimes large amounts of “stuff” accumulates in the homes of incapacitated people. A guardian can take care of all of these situations.

Who can be the guardian?

The court may appoint any qualified individual, bank, trust company, or non-profit corporation. A person who has a conflict of interest with the ward is generally not an appropriate person to appoint as a guardian. Similarly, anyone providing residential services to a proposed ward is not a suitable guardian.

Once appointed, it is the duty of the guardian to protect the rights and best interests or the ward. The guardian must respect the expressed wishes and preferences of the incapacitated person to the greatest possible extent and must encourage the ward to participate in all decisions to the maximum extent of his abilities. As you can imagine, ensuring the best interests of the ward may mean that the guardian will not follow the wishes of the ward. For example, the ward may want to continue to live in her home, but the guardian may determine that assisted living or skilled care is required. The guardian can admit the ward to a facility even over the ward's objections.

Expense of a Guardianship?

Court appointment of a guardian can be very expensive. There are court fees, attorney fees, fees for the doctor or other persons who give testimony about capacity. Often there is an attorney for the petitioner who is requesting that the guardian be appointed and another attorney for the proposed ward. If the court appoints a guardian, the fees are paid from the incapacitated person's property.

After the guardian is appointed, annual reports are required to the court and there are restrictions on what the guardian can do without court approval. The guardian is entitled to a fee for services. Often a family member will serve without taking a fee, but if an agency, bank or trust company serves, they charge for their services.

Avoid Guardianship with a Power of Attorney
Making a power of attorney which appoints an agent to make personal and financial decisions can make guardianship proceedings unnecessary. Making a power of attorney is much less expensive and much less stressful than the court-appointed guardian process.

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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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