Can Someone With Dementia Make a Trust?

Dementia is a progressive neurodegenerative disease that causes the deterioration of certain mental faculties. This can lead to impairments in memory, thinking, and judgment, as well as changes in personality and behavior. The question often arises with such an impairment, whether it’s even possible for someone with dementia to make a trust? 

The short answer is yes; someone with dementia can make a trust as long as they meet the mental capacity requirements to do so. In California, these requirements are explained by Probate Code 812, which states that the person must be able to understand and appreciate the following:

  • The rights, duties, and responsibilities created or affected by making the trust
  • The probable consequences for themselves and others of making the trust
  • The significant risks, benefits, and reasonable alternatives that are involved in making the trust

It’s important to keep in mind that this mental capacity standard is higher than the requirements for “testamentary capacity,” which is what is required for an individual to make a will or amend an existing trust, depending on the nature and extent of the amendment. So, if your loved one with dementia does not have the mental capacity to make a new trust, they still may be able to create a will or amend an existing trust.  As with many issues at law, what testamentary capacity standard applies to any document is a complex analysis of statutory and case law, and one that should not be undertaken without the help of an experienced probate dispute lawyer.

What factors are considered when determining mental capacity?

According to California Probate Code 811, a person cannot be found to lack the capacity to execute a trust unless they have a deficit in at least one of the following mental functions that dementia is known to impact:

  • Alertness and attention
  • Information processing
  • Thought processes
  • Ability to modulate mood and affect

Importantly, the statute states that “the mere diagnosis of a mental or physical disorder shall not be sufficient in and of itself to support a determination that a person is of unsound mind or lacks the capacity to do a certain act.” Probate Code 810 also confirms that a person who has a mental disorder may still be capable of executing a trust and that a judicial determination that a person lacks legal capacity “should be based on evidence of a deficit in one or more of the person’s mental functions rather than on a diagnosis of a person’s mental or physical disorder.”

This means that someone with dementia is not automatically considered incapable of making a trust. Instead, a deficit must significantly impair the person’s ability to understand and appreciate the consequences of their actions in order for them to be deemed lacking in mental capacity.  What that really means is: did their deficit prevent them from understanding the specific act being challenged?  Establishing the answer to that question is what will drive the outcome of any capacity contest case.  

Can a person with dementia create a power of attorney?

Yes, a person with dementia can create a power of attorney document as long as they have enough awareness to satisfy the legal standard of “contractual capacity.”

According to California Civil Code 38, a person who is “entirely without understanding” cannot make a contract of any kind. Additionally, California Civil Code 39 allows the other party to cancel a contract if the person is of “unsound mind, but not entirely without understanding.” 

The law presumes that a person is not of sound mind if they are substantially unable to manage their own financial resources or resist fraud or undue influence. So, as with the standard for making a trust, a person in the early stages of dementia may still meet the necessary criteria for creating a power of attorney, depending on the nature and severity of their symptoms.

What rights does a person with dementia have?

A person with dementia will generally maintain the right to make their own decisions as long as they are competent to do so. This means that a person who is given power of attorney cannot overrule the person’s choices until their dementia progresses to a stage where they no longer have the legal capacity to make decisions.

One of the most common areas where this standard applies is medical decision-making. According to California Probate Code 813, a patient with dementia can provide informed consent to receive or decline medical treatment, as long as they can do all of the following:

  • Respond knowingly and intelligently to queries about that medical treatment
  • Participate in that treatment decision through a rational thought process
  • Understand all of the following:
    • The nature and seriousness of the illness
    • The nature of the medical treatment that is being recommended
    • The benefits and risks of treatment
    • The consequences of lack of treatment
    • The nature, risks, and benefits of any reasonable alternatives

Have questions? We’re happy to discuss.
Call (424) 320-9444 or email hello@rmolawyers.com

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About RMO, LLP

RMO LLP serves clients in Los Angeles, Santa Monica, Ventura, Santa Barbara, San Francisco, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri, and Kansas. Our founder, Scott E. Rahn, has been named “Top 100 – Trust and Estate Litigation” by SuperLawyers, Trusts and Estates Litigator of the Year, and Best Lawyers in America for Litigation – Trusts and Estates. For a free consultation, call (424) 320-9444 or visit: https://rmolawyers.com.