Lost Capacity & the Draft Will

There is a growing number of people who have lived for many years following a diagnosis of dementia; others who have an acquired brain injury, in these circumstances they may have no Will or a Will which is out of date.

In recent years there have been significant changes that impact management of assets which are not addressed by a Will made before the loss of capacity.  In some cases, an insurance payout following an accident  (that results in an acquired brain injury) may be distributed through an out of date Will into the injured person’s estate on their death.

Statutory Wills predominantly fall into the following categories “lost capacity” cases – where a person having made a will loses testamentary capacity; “nil capacity” cases – where a person never had testamentary capacity because of mental infirmity from a very young age;”pre-empted capacity” cases – where a person who was still a minor and therefore lacked testamentary capacity was still able to form relationships and express reasonable wishes about property before losing testamentary capacity.

A lost capacity case is one in which the incapacitated person is an adult who has lost capacity as a result of, for example, dementia or a brain injury; they are probably the easiest cases to consider.

The person in this situation is likely to have significant relationships with family and friends, may have discussed their testamentary wishes or had a Will before losing capacity. The previous, outdated will can be used by the court as a yardstick against which to consider the previous testamentary intentions of the person and the proposed will (for example, after the death of a beneficiary).

MP is 90 years old; has long been divorced from her (now deceased) husband with an estate worth an estimated  $100 million. MP had three children by her former husband; one daughter died in tragic circumstances, her son has five children and her daughter has one child.

Throughout her life, MP sought to control her children’s relationship with their father – leading to periods of estrangement. For many years she ostracized her son and his family, although she retained her relationship with her daughter it had some rocky patches. MP favoured her daughter’s son.

On 25 March 2017 MP suffered a fall after which she was admitted to hospital; 6 months later she suffered another fall and was readmitted to hospital. During this time MP had a reconciliation of sorts with her son who became involved with managing her affairs in collaboration with his sister.

In May 2017 MP appointed her daughter as her enduring guardian, after some consideration the daughter accepted the appointment in September 2017. However MP continued to make independent decisions about her financial affairs; in October 2017, she executed a deed by which she pledged to make a gift of $US15 million, by three annual instalments, in favour of Israel’s Tel Aviv University.

Similarly, she engaged several professionals to decide whether (and, if so, in what terms) to make a will; a draft will was produced in May 2017, which MP declined to sign. MP disclaimed the draft in emails she wrote on May 2017, August 2017 and April 2018

In April 2018 MP suffered a stroke which has left her almost totally incapacitated; she lives in a nursing home and has lacked testamentary capacity since the time of her stroke.

MP falls into a more difficult category of lost capacity cases as she did not make a will, despite having testamentary capacity to do so. Therefore the court’s main concern is to ascertain the actual or reasonably likely, subjective intention of the incapacitated person.

MP was a protected person who engaged a professional adviser to prepare a draft will favouring her grandson; this Will was emphatically rejected by her before she was incapacitated by a stroke. The grandson applied for a statutory will for MP in substantially the same terms as the draft will.

The Court noted that MP showed no concern regarding the prospect of dying intestate concluding that in terms of section 22(b) of the Succession Act 2006 it could not properly be satisfied that had MP had testamentary capacity that it is reasonably likely that this or any other proposal for a Will, would have been made.

‘In my opinion, in a lost capacity case in which the incapacitated person has never made a will, the Court ought not to start with a presumed intention against intestacy. The Court must be satisfied by the evidence that is “reasonably likely” – in the sense of “a fairly good chance” – that the person would have made a will at some time or other, had not testamentary incapacity supervened.’.

MP was 90 years old and her estate had an estimated value of $100 million; she had engaged estate planners in order to manage her assets but wasn’t happy with the Will that they drafted.

How would your family be placed if you were to suffer a catastrophic injury?

• Do you have arranged income protection, life insurance or both?

• Do you have and Advance Care Directive or Power of Attorney in place?

• Have you made a Will?

Perhaps it’s time to take steps to do these things today.

 

 

 

 

 

 

 

 

 

 

 

 

 

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