Elder Incompetency: What you Need to Know to Avoid Court Proceedings

With the increase in life expectancy comes new challenges on how to take care of our elder loved ones especially when they become mentally incapacitated. To put it simply, mental incapacity AKA incompetency can be defined as the inability of a person to make reasonable decisions regarding one's financial and personal affairs.

To help you better apprehend the kind of dilemmas that can be created by the incompetency of an elder, below are two examples of tricky situations resulting from the incompetency of an aging parent:

Mom who is 89 years old can no longer safely live at home. Her children determine that she should be in an assisted living center and the proceeds from the sale of her home will provide the funds to pay for her care. the children contact a realtor and a buyer is found. However, at the time for mom to sign the documents to close the deal, it becomes apparent that she lacks the mental ability to understand the consequences of her actions and the sale cannot be concluded.

Mom dies and dad is elderly and severely impacted by the death of his long-time wife. Shortly after mom's death, dad enters into a meaningful relationship with a younger woman who convinces dad to pay for her lavish spending sprees: buy her a new Mercedes and buy a home for her adult unemployed children.

1). The legal definition of incompetency in the state of California

In California, incompetency is regulated by California Probate Code § 810-13 and is defined as:" A (…) determination that a person is totally without understanding, or is of unsound mind, or suffers from one or more mental deficits so substantial that, under the circumstances, the person should be deemed to lack the legal capacity to perform a specific act…”.

As a result, one may be considered incompetent /mentally incapacitated if they ----

Lack an understanding of time, place, and situation;

Lack the ability to concentrate;

Lack the ability to understand or communicate with others;

Lack the ability to recognize familiar objects or people;

Lack the ability to reason;

Lack the ability to plan, organize and carry out actions in their own best interests;

Lack the ability to reason logically;

Lack the ability to control their moods;

Lack the ability to understand the consequences of their actions;

Experiencing delusional thoughts or having hallucinations.

Please note the conditions described above can be either alternative or cumulative.

2). How is incompetency determined?

A judge will make the final decision regarding an individual's competency. The Judge will rely on the medical records of the individual. Many Counties in California have a Court Investigator's Office and someone from that office will meet in person and prepare a report to the Judge regarding their findings. This is to assist the Judge in making a decision.

If the person is determined to lack the ability to manage their affairs, the Court will appoint a "conservator" who will be empowered to make financial and/or health care decisions on behalf of the incompetent person. Usually, the Court will restrict the incapacitated person's ability to enter into contracts, but may also prohibit the person from voting or marrying.

3). How to avoid court proceedings if you were to become incompetent

Estate planning is the only way to avoid that a judge will appoint a responsible person or organization (called the “conservator”) to care for another adult (called the “conservatee”) who cannot care for himself or herself or manage his or her own finances.

As a reminder, estate planning allows one to determine how an individual’s assets will be preserved, managed, and distributed in the event they become incapacitated. As a result, there are several estate planning documents that would enable a trusted person to step in and manage one's affairs without court involvement:

1. Durable Power of Attorney for Property Management - this document allows someone to make financial decisions and can go into effect immediately or at some point in the future -- e.g. when the signer becomes incompetent as determined by their physician.

2. Advance Health Care Directive - This document allows someone to make medical decisions when a patient is unable to communicate with his/her doctor.

3. Trust - A trust can hold assets that can be managed by a successor trustee if the person creating the Trust becomes incompetent and/or resigns.

To conclude, although it is understandable that no one likes to think of a time when they will not be able to manage their own affairs, having a plan for incapacity can save money, court involvement, and time for you and your loved ones and will ensure that the person deciding on your behalf is the person you want, rather than someone appointed by a judge.

To At MPSV we are familiar with issues involving incompetency. If you or someone you know is dealing with this issue, feel free to give us a call to see how we can help.