The Trustee’s Guide to Dementia and Incapacity

Helping a parent or loved one who has dementia is always a challenging task. Considering and executing an estate plan for someone with a diminished capacity has an added element of difficulty. Depending on your loved one’s individual case, they may lack the legal ability to execute and sign vital estate planning documents like wills and trusts.

California law distinguishes the capacity necessary to create or change a last will and testament from the required mental state needed to form or adjust a trust. This article will help discuss some of the particulars to help you navigate the tricky world of estate planning and dementia.

Can Someone With Dementia Create a Trust?

The short answer is yes, but with significant caveats. A trust is a legal creation by a grantor who places property into the trust for one or more beneficiaries. The grantor is the individual who starts the trust and owns the assets before it becomes trust property.

A grantor with dementia can create a new trust, provided they still have the legal capacity to undertake such a momentous decision. California law outlines the capacity required for someone to create a trust in Probate Code Section 812.

To create a trust, the grantor must have the abilities to understand and appreciate:

• The responsibilities created by a trust
• The consequences of creating the trust, for both the grantor and others
• The inherent risks in trust creation, as well as the reasons to take these risks

Simply put, trust creation is a complicated endeavor that is not to be taken lightly. Therefore, California’s probate law requires a grantor to have sufficient mental capacity to understand the actions they are taking.

Can Someone With Dementia Change a Trust?

While trust creation requires a higher level of legal capacity, changing an already established trust is less burdensome. For someone with dementia, amending a trust only requires the same showing of capacity as you need to draft a last will and testament.

California law Probate Code Section 6100.5 governs the capacity for will creation. Anyone 18 years or older can sign their last will and testament or execute a trust amendment as long as they:

• Understand the nature of their property
• Know the relationship they have with their relatives and beneficiaries
• Can understand the general extent of their assets and wealth.

This standard is far less rigorous than what is required to create a legal trust. Therefore, it is always a smart idea to discuss trust creation earlier when there are no questions regarding you or your loved one’s legal capacity.

Does a Person With Dementia Have Legal Capacity?

There are varying levels of legal capacity as defined by the law. As seen above, the capacity level required to create a trust is more stringent than to change a trust or execute a will.

Dementia is not a linear disease. Often, a patient will have good days and bad. While your loved one may be lucid and have legal capacity on a Tuesday, their condition may not be sufficient for legal standing by that weekend. 

It takes an expert to not only diagnose dementia but understand the disease’s effect on your loved one’s legal capacity. Talk with your parent’s doctor and rely on their judgment whether there is enough capacity for significant estate planning tasks.

How Do You Prove Mental Incapacity?

If, after consulting with your loved one’s doctor, you determine they can execute a trust, proceed with caution. Have the doctor memorialize their patient’s condition at the time the trust was created.

Follow the same process for changing a trust or signing a will. It is crucial that the doctor is not a named beneficiary so that their diagnosis and opinion are impartial. 

However, if you and your parent’s doctor determine they do not have the legal capacity for any estate planning task, you may seek a legal conservatorship. This route requires having a court declare your loved one lacks legal capacity to handle some aspect of their affairs, such as estate planning.

Once you are appointed your parent’s conservator, you may create a trust on their behalf. This is referred to as a substituted judgment. 

When Should a Trustee Contact a Trust Litigation Attorney?

A trust litigation attorney can help you navigate this process at any stage. Though not a doctor, an experienced trust lawyer will have intimate knowledge of legal capacity. It is always advisable to speak to an attorney earlier in the process, especially if you have concerns about dementia.

You will also need to speak to a trust litigation attorney any time you believe your parent or loved one has created a trust that does not reflect their actual wishes. Unfortunately, abuse and coercion of dementia patients during estate planning is part of reality, and it can take a lawsuit to unwind a rushed or manipulated trust creation or amendment.