Mental Capacity for Estate Planning

As both we and our loved ones get older, we want to make sure that there are plans in place for the future. Plans that include how our property and assets are managed while we are alive and then distributed after our death This means putting an estate plan in place now- while we have the mental capacity to do so.

The status of a person’s mental capacity has become more important as people live longer and the law becomes more complex. There are serious consequences if a person does not have the mental capacity to sign legal documents for basic estate planning. The results can be disastrous if a person signs legal documents without a full understanding of what he or she is signing.

What is Mental Capacity in Regards to Estate Planning?

To properly sign a Will and Revocable Living Trust in Michigan a person must have “sufficient mental capacity” to understand the significance of the documents they are signing. Michigan law defines the elements of “sufficient mental capacity” as follows: “The individual must have the ability to understand that they are providing for the disposition of their property after death, the ability to know the nature and extent of their property, and the ability to know the natural objects of their bounty. In addition, the individual must have the ability to understand, in a reasonable manner, the general nature and effect of their act in signing the will [or trust].” MCL 700.2501(2) and MCL 700.7601

Creating an Estate Plan While You Have the Mental Capacity to Do So

It is crucial to be proactive in regards to estate planning. Waiting until you or a loved one no longer has sufficient mental capacity can have serious consequences, and further complicate an already difficult situation. It’s important to have a basic estate plan in place before it becomes a necessity.

While a basic estate plan usually takes the form of a will or trust, there’s no one-size fits all solution—an experienced estate planning law attorney will help you determine the right strategy for your specific situation. Recommended documents typically include the following:

• Will: The simplest form of an estate plan, a will spells out how your assets will be dispersed and names a Personal Representative (executor) to carry out your instructions. A will must be administered through probate court.
• Revocable Living Trust: Provisions in a Living Trust typically address not only how you want your assets distributed upon your death, but also how you want your assets to be used for your care if you become incapacitated and lack the sufficient mental capacity to take care of yourself and manage your day-to-day affairs. Unlike a will, a Trust is more flexible regarding distribution of assets and isn’t required to be administered by the probate court and become part of the public record.
• Durable Power of Attorney for Financial Matters: In the Durable Power of Attorney document, you designate a trusted person to make financial decisions on your behalf. It can be effective immediately at the time of signing, or can be made effective in the event you become incapacitated and unable to make the necessary decisions to manage your day-to-day affairs.
• Patient Advocate Designation/Durable Power of Attorney for Health Care: In the Patient Advocate Designation, you designate a trusted person, usually a family member, to make healthcare decisions in the event you are incapacitated and unable to make decisions for yourself. It also allows you to include written instructions for end-of-life care treatment if you are in a coma and have no likelihood of recovery.

Why is an Estate Plan Necessary?

Making a basic estate plan avoids unnecessary costs, expenses, time delays, conflicts and family disharmony. It also makes certain that your property and assets end up where you want it to be. Most importantly, making a basic estate plan also helps to ensure that a person you choose will be the person who will take care of you and your finances if you become incapacitated. Having a party that you trust in charge of your affairs can offer peace of mind to you and your loved ones both now, and in the future.

Schedule a Free Consultation with Experienced Ann Arbor Estate Planning Attorney Bill Ager

When you are ready to make an estate plan, or review the estate plan that you currently have in place, it’s essential that you talk with an experienced estate planning attorney. Using forms or online services is full of risks. A do-it-yourself approach can completely defeat the purpose of making an estate plan that fits your needs, particularly if there may be issues of competency or misunderstandings about how property is to be distributed after death.

At Ager Law Office, Bill Ager helps individuals and families with all aspects of estate planning, including Wills, Trusts, Property and Financial Durable Powers of Attorney, and Patient Advocate Designations. From our Ann Arbor office, Bill Ager serves clients throughout Washtenaw County. To schedule a free consultation for a basic or comprehensive estate plan, or for updating your existing plan, call (734) 649-0784, send an email to bill@agerlawoffice.com, or use the online contact form on this website.