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Capacity in Wyoming for Estate Planning

Posted by Gayla Austin | Sep 20, 2020 | 0 Comments

In the last year the owner of the Broncos, Pat Bowlen, died at 75.  He had stepped down five years before and it was public knowledge that Mr. Bowlen sadly had Alzheimer's disease.  Mr. Bowlen had signed a trust in 2009, and the Denver Post reports recently that there is a controversy regarding whether Mr. Bowlen had capacity to sign his trust that year. 

Let's look at the law in Wyoming as to whether Mr. Bowlen would have capacity.  Because Mr. Bowlen's trust is in Colorado, his Colorado lawyers will make the determination.  

The Alzheimer's Association reports that 1 in 8 American aged 65 and over have Alzheimer's disease.  

Lawyers do not conduct formal assessments of capacity but rather identify cases to refer for formal assessment in conjunction with a legal standard.  The legal capacity to act is contextual.  Capacity may be affected by mental disorders, physical impairments, medications, substance abuse, situational or environmental factors.  

Diminished capacity manifests as mental function deficits.  It may be loss of attention, ability to concentrate and lack of alertness.  Deficits may also appear as disorganized thinking, uncontrolled thoughts, and inappropriate moods like anger, anxiety, despair, fear, panic and hopelessness.  A mental deficit only matters if it significantly impairs the ability to understand and appreciate consequences of  the specific action to be taken.   

The role of the attorney is to observe the client, evaluate the client's understanding in relation to the elements of the legal capacity to act, and draw preliminary conclusions about the client's capacity to act.  Some of the checkpoints of client capacity: 

1.  Ability to understand relevant information 

2.  Ability to appreciate impact of information; 

3.  Ability to reason using information relevant to self; 

4.  Ability to express choice; 

5.  Ability to explain reasoning underlying decision; 

6.  Appreciation of impact and outcome of decision; 

7.  Consistency of choices, desires and goals short and long term. 

Signs of possible impaired capacity include short term memory loss, language and communication problems, problems comprehending abstract concepts and lack of cognitive flexibility, problems making calculations, problems with hygiene, emotional instability and impulsivity and delusions and hallucinations.  

However, whether the client is impaired or not, the attorney is required to maintain a normal lawyer-client relationship with the client. 

To determine whether the representation can continue, questions are (1) who is the proposed client; (2) what ethical rules apply to the representation (3) what activity does the client wish to undertake (4) what is the required level of capacity and (5) where does the client fall within the capacity spectrum.    It is important to note that a person with dementia may still be able to gift or sell property.  Similarly, an incompetent person under a guardianship may still be able to make a will.  

Incompetency v. Incapacity 

"Incompetency" is a determination made by a court, and is defined as when a person is unable unassisted to properly manage and take care of oneself or ones property due to the  medical conditions of advanced age, physical disability, disease, use of alcohol or controlled substances, mental illness, mental deficiency or intellectual disability. 

"Incapacity" depends upon the circumstances and is more flexible and is defined as being unable to manage property or business due to the inability to receive and evaluate information or communicate decisions even with technological assistance.  Incapacity may be partial or complete.  Incapacity is a legal, not medical determination.  Over time capacity may change for better or worse.  Determination of capacity should evaluate the risk of the person suffering harm as a result of their inability to manage their affairs.  Labels identifying persons by age, poverty, or medical diagnosis, should not be used in place of finding incapacity.  

Rather, the ability to articulate reasoning, variability of state of mind, ability to appreciate consequences, fairness of a decision and consistency with long term commitments are used to determine the extent of diminished capacity.  

A lawyer may then need to seek guidance from an appropriate diagnostician but the lawyer needs to provide the legal definition of capacity needed for the contemplated action.  

Psychological screening by a physician tests executive functions, which refers to (1) cognitive flexibility (2) concept formation (3) planning (4) organization (5) self monitoring.  

The medical diagnosis must be linked to a legal standard.  Legal capacity is task specific and a person may have capacity for one action but not another.  For example, a person may have testamentary capacity but not contractual capacity.  The client may be incompetent and under guardianship but still have testamentary capacity.   In Wyoming, there is a different capacity requirement for signing a will and signing a trust, and it depends on the type of trust.  

In Wyoming, capacities are defined by case law for testamentary capacity, contractual capacity, capacity to execute a trust, donative capacity and capacity to execute a power of attorney.  

For Mr. Bowlen, the statutory requirement for Colorado determining which type of capacity is required to sign a trust (testamentary or contractual) combined with whether there is a requirement in Colorado for psychological screening would be used.   It will be compelling to learn whether Mr. Bowlen will be determined by the Colorado courts as to whether he had capacity to sign his trust.   If he did not have capacity, along with other factors, could result in his trust being found invalid. 

This post provides the assessments that would be used in Wyoming for capacity.    

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