Capacity Challenges

In a recent unpublished California Court of Appeals decision, a daughter challenged her father’s execution of a new deed. The deed previously reflected that the father owned a piece of real property in Chula Vista, California as tenants in common with his sister. Approximately one week prior to the execution of the deed, the father had been admitted to the hospital with respiratory problems. The new deed reflected that he now owned the property with his sister as joint tenants. Shortly thereafter, he died and the property transferred to the surviving joint tenant by operation of law.  If the deed was invalid, then one-half of the property would’ve been transferred to the daughter through the probate process. So what are Capacity Challenges?

The daughter maintained that her father was not fully aware of his surroundings and could not communicate with family members, rendering his estate distribution invalid.  The trial court disagreed and the decision was upheld by the Court of Appeals.  In reaching their decision, the Appeals Court relied upon a California statute which establishes a rebuttable presumption “that all persons have the capacity to make decisions and to be responsible for their acts or decisions.” Moreover, they noted that a judicial determination that a person lacks the legal capacity to perform a specific act “should be based on evidence of a deficit in one or more of the person’s mental functions rather than on a diagnosis of a person’s mental or physical disorder.”

The Court noted that while it is undeniable that the father was physically infirm at the time of his death, a determination that he lacked the legal capacity to execute the deed is to be based on deficits in his mental functioning rather than on his physical condition.  Accordingly, it could not find any error of law with the trial court’s conclusion that the deed was valid.

When a loved one is contemplating a change in his or her estate plan at a time of illness, it is extremely important to document any revisions in order to successfully respond to any potential challenges.  This should be done by requesting the attending physician offer a medical opinion regarding the person’s capacity at the time of the proposed revisions.  However, it should be noted that even in situations where capacity can be established, the changes could be challenged on the basis of undue influence.