We are often called on to assist in having a spouse, child or parent appointed as conservator over another family member who is no longer able to manage his or her own personal or financial affairs.  But can the individual, now declared by the court to be incapacitated, still conduct any of their own affairs?  A recent court case points out under what circumstances the ward may still do planning.

Kathleen, a widow, established the Cervantes Family Trust (the Trust) on December 3, 1997. Kathleen was the settlor (creator) and trustee of the Trust.  The beneficiaries of the Trust were Kathleen’s four adult children—Katie, Arthur, Kenneth, and William.  The terms of the Trust provided that after Kathleen’s death, the Trust’s assets would be divided among the beneficiaries in four equal shares.

Kathleen executed two amendments of the Trust in 2002 and 2003.  In June 2004, Kathleen flew from her home in Hawaii to Oregon (via California) to attend Arthur’s son’s college graduation. The parties’ accounts of what happened after Kathleen arrived in Oregon are vastly different. Arthur and his wife drove Kathleen back to California, where they admitted her to a nursing home on June 20, 2004.  On June 23, Arthur filed a petition for appointment as conservator of Kathleen’s person and estate, supported by a declaration from a physician who had examined Kathleen on June 24 and had diagnosed her with dementia.

While at the nursing home, Kathleen went into a diabetic coma and was admitted to a hospital.  After her release from the hospital, Kathleen was transferred to another nursing home, Country Villa.  Kathleen believed that Arthur and his wife had kidnapped and physically abused her.  Kathleen expressed a desire to return to Hawaii and did not want Arthur to be her conservator.  In March 2005, by a compromise between Arthur and William, William was appointed by court order as Kathleen’s conservator.  Kathleen was released from Country Villa, and returned to Hawaii with William.

An attorney in Hawaii began representing Kathleen in connection with revisions to her estate plan.  Kathleen told the attorney she wanted to remove Arthur as a beneficiary of the Trust because he had kidnapped her.  In September 2005, Kathleen signed an amendment to the Trust executed a new will, disinheriting Arthur and his children.  Kathleen died two months later, in November 2005, and in February 2007 Arthur filed a petition to void the third amendment.  After a trial, the court found the Third Amendment was valid and enforceable.

Arthur claimed that the trust amendment was invalid because the conservatorship order meant that, as a matter of law, Cervantes lacked the capacity to execute it.

The court found the amendment was valid and enforceable. The court noted that (as with Mississippi law) the appointment of a conservator constituted a judicial determination that Kathleen lacked the capacity to give away real property.  Appointment of a conservator was not, however, a determination that she lacked “testamentary capacity” – the capacity required to execute a valid will.  Testamentary capacity was determined by a different standard, which depends on soundness of mind.  The trial court properly concluded the amendment was, in reality, the same as a will or codicil and that the facts supporting the finding that Cervantes had capacity.  Cervantes v. Cervantes, 2014 WL 2666780 (June 13, 2014) (unpublished).

These rules observed by the California court are similar to the law in Mississippi.  Our statutes provide that, even though a court determines a person to be unable to manage their own affairs and appoints a conservator for them, that person may still have sufficient mental capacity to execute a valid will or trust.  If you have questions about the levels of capacity necessary to implement any legal planning, give us a call at Courtney Elder Law Associates.