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.  

Comments

Post a Comment

Popular posts from this blog

My advisor helped me leave my estate to my cat.

Image
This is a true story, from a lady who was in my office witnessing a client signing her Will.   It is also an example of the unlicensed practice of law.   I am both an attorney and an insurance agent. I have two (2) licenses. One (1) was hard to get. One (1) wasn’t. Guess which one (1) fits each category.   There is a lot of argument in the insurance and financial world about helping clients draft their Wills, Trusts and Powers of Attorney while getting paid to do so. Why?  Money .   Tennessee defines the practice of law as: As used in this chapter, unless the context otherwise requires: (1) “Law business” means the  advising or counseling for valuable consideration  of any person as to any secular law,  the drawing or the procuring of or assisting in the drawing for valuable consideration of any paper,   document or instrument affecting or relating to secular rights, the doing of any act for valuable consideration in a representative capacity,  obtaining or tendin
Read more

Shh! Don't talk about Fight Club!

Image
  SUPER NERDY ALERT Did you ever watch the movie "Fight Club"?  If so, the persistent line throughout the movie is "Don't talk about Fight Club!"  Why?  Well, watch the movie. As many of you know, the i ntersection of law and insurance simply fascinates me.   Here's an instance of that:   All U.S. states have a State Guaranty Association.   These associations insure life and health insurance companies in case of failure.  Failure is rare, but it happens from time to time.  As both an insurance agent and an attorney, I have seen the results of this.  In that situation, the Guaranty Association worked out very, very well.  Consumers need to know that this program exists.  Who better to tell them than their insurance agent? For banks, consumers know that the Federal Deposit Insurance Corporation (FDIC) exists.  For their brokers, they know that the Securities Investor Protection Corporation (SIPC) exists.  How?  It's plastered all over the front door and t
Read more

The shadow of expungement

Image
Recently a question was asked regarding expungement (expunction) of criminal records.  This reminded me of a scenario I've seen a few times that might be helpful to someone here. I have seen expungement (expunction) leave a “shadow” on a person's record. Here's the scenarios I've seen:  The “conviction” was expunged, but the arrest record with the police department wasn’t included in the destruction of the file. The arrest warrant was missed whenever the court expunged the conviction.  Since the entire court file gets destroyed, the arresting agency, which keeps its own records, has no order to show that the arrest should be removed from the record.  That scenario created a real issue for the individual since the file was destroyed with the court but not the arrest with the police department.  I’ve also seen one (1) conviction get expunged, but a companion conviction not be expunged. In that instance the companion sentence referred to the now expunged case.  My preferen
Read more