Capacity to sign documents

In Estate Planning for older individuals, a key is whether or not they have the necessary capacity to enter into the documents they are signing.

In Tennessee, and I'm sure many other states, the person does not have to have perfect health and mental recollection for that.  Here's a recent case where the court reiterates the standard.  It states

...all that is necessary is “that the contracting party reasonably knew and understood the nature, extent, character, and effect of the transaction."

That's it.  It's not superhuman.  It's not even the standard of the "reasonably prudent man".  It simply whether or not they reasonably know and understood the transaction, at the time of the signing.  

In this case, the issue is over a Power of Attorney, which led to a skilled facility admission, then a death, and then a lawsuit.  Isn't it amazing how a domino effect can wind up in litigation?  It was all from one apparently "simple" document.

Maybe that's why people really should go to attorneys for these sorts of things.

Interestingly, in this case, the signor of the Power of Attorney had already experienced cognitive decline BEFORE signing the Power of Attorney.  Nonetheless, the Court found sufficient capacity to enter into the Power of Attorney.

Interesting.

Thoughts?  Comments?

One more interesting and sad note is that this case just came out today, May 6th, 2021.  The attorney who drafted the Power of Attorney passed this past February.  He had to have been, at least a little anxious about the outcome.  This opinion would have been a relief to read.  

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