In estate litigation, many cases come down to capacity. In Ontario, adults are assumed to be capable until it is proven otherwise. Capacity is a broad subject, and evaluating it depends on the area of decision-making in question. For example, someone’s capacity to create a will is different from their capacity to manage their personal care. We’ll highlight the process of evaluating capacity in a few key areas related to estate litigation: testamentary capacity, capacity to manage property, and capacity to grant a power of attorney for property.
Testamentary Capacity
In estate litigation cases, testamentary capacity deals with someone’s capacity to create or amend a will. The principles used to assess testamentary capacity have historically been defined by the 18th-century British case, Banks v. Goodfellow. This case outlines a legal framework for evaluating testamentary capacity. It establishes that in order to write or amend a will, one should be able to:
- Understand the nature of the act and its effects
- Understand the extent of the property of which they’re disposing
- Comprehend and appreciate the people that it will affect
- And be able to do so without the influence of mental disorders
According to this legal precedent, someone with a mental disorder may still be able to make a decision, as long as their disorder doesn’t affect that specific decision. In Banks v. Goodfellow, the testator (the writer of the will) suffered from delusions that only arose in specific circumstances. Since the delusions were not related to his estate, the court concluded that he was capable of executing a will.
Evaluating Capacity to Manage Property
The capacity to manage property involves the ability to make decisions regarding one’s finances, bank accounts, and real estate. The framework for evaluating the capacity to manage property is the Substitute Decisions Act. According to this act, a person does not have the capacity to manage their property if they can’t understand the factors that are relevant to the task and can’t understand the effects of their decisions. This would include things like knowing the value of their assets, understanding the processes required for routine money management (paying bills, banking, budgeting, etc.), and understanding the effects of financial decisions on both themselves and others.
Evaluating Capacity to Grant a Continuing Power of Attorney for Property
A continuing power of attorney for property is the authority to make financial decisions on another person’s behalf — except for writing their will — even after the person has become incapable. This role is different from a power of attorney for personal care and is specifically focused on managing property and finances.
The capacity to grant a continuing power of attorney for property is less strict than the capacity to manage property. That means that if someone is incapable of managing property, they may still be able to grant a power of attorney to manage it for them. The framework for evaluating the capacity to grant a power of attorney is outlined in the Substitute Decisions Act.
The act stipulates that in order to grant a power of attorney, one should know the approximate value and nature of the property, their obligations and owings, the extent of the attorney’s decision-making power, their own authority to revoke the power of attorney, and the potential for the attorney to mismanage the finances or misuse their authority. This capacity has less to do with the specifics of managing property and more to do with the broad details regarding the role of an attorney.
Capacity Assessments
To evaluate capacity, judges will use the frameworks above and review the appropriate evidence, including capacity assessments, health documents, witness testimonies, and other documents relevant to the case. Capacity assessments are conducted by a certified capacity assessor.
During a capacity assessment, the assessor will ask the subject questions that probe their respective knowledge of the area in question. For example, questions like “Can you tell me approximately how much you spend in a month?” or “Who does your cooking/grocery shopping/cleaning?”
In cases where the subject is deceased, assessors will review the evidence retrospectively. They’ll use the same sources as a contemporaneous assessment, including health documents, witness testimonies, and past capacity assessments. Since capacity is primarily a legal issue, a judge has final say with respect to a determination of someone’s capacity.
Capacity cases can be complicated; we’ll help you understand them and navigate your estate litigation case. Contact our Estate Litigation Team for more insight and guidance.
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
