Mental competency is an extremely important subject in the estate planning world. After all, if the person creating the documents isn’t competent, then the validity of those documents comes into question. Below we will discuss testamentary capacity when it comes to setting up a will or trust under the California Probate Code, which governs both will and trust law for California.

Testamentary Capacity

Firstly, one must have what's called testamentary capacity when setting up their will or trust. Testamentary capacity is a difficult subject to nail down as it is open for interpretation and argument, as you will see. In essence, to have testamentary capacity when setting up your will or trust, you do need to understand your estate; you must understand the nature and extent of your assets; and who you will be leaving your estate to (the target of your estate). These are typically shown through some express language in either the will or trust. Additionally, you cannot suffer from undue influence, coercion, or duress. Doing so would invalidate one's capacity.

Testamentary Capacity in Practice – Eyford v. Nord

Recently, a case came down from the California Court of Appeals called Eyford v. Nord. This was a case that touched on testamentary capacity in setting up a trust with a bit of a twist on it.

The issue addressed what if the settlor, the person setting up the trust, initially lacked testamentary capacity, yet regains capacity when later creating their trust? The settlor lacked capacity in the past, regained capacity later on before setting up a trust.

The Facts & Challenge to Capacity – Eyford v. Nord

Here, the settlor left her entire state to St. Jude Children's Hospital. In so doing, she disinherited her two granddaughters. She set this trust up back in February of 2016. There were medical records from October of 2015, the settlor did have some lacking mental capacity and some confusion, and that was all stemming from an infection that she had and was suffering from during that time period.

The medical records did go on to show the settlor’s cloudiness and confusion did clear by the time she was discharged. However, just to further complicate the situation, the settlor underwent a mini mental examination later in the month of October, where it did find that she was still suffering from some mental cloudiness and some confusion. Later at trial, the expert witnesses testified that these were not the sort of symptoms to cause delusions. Keep that word in mind – delusions.

The granddaughters brought suit to contend the trust was invalid because the settlor, their grandmother, lacked the capacity to set up that trust. To support their position, they had an expert come in and say the settlor here was suffering from delusions at the time she set up the trust, bolstered by the fact that there were these medical records showing she lacked capacity and therefore, the trust is invalid. There should be no gift to St Jude Children's Hospital, and grandma’s estate goes down to the granddaughters.

Countering Claims of a Lack of Testamentary Capacity

To counter this, however, as I mentioned before, there was expert testimony that while the settlor did suffer from some mental cloudiness, it was not the sort to cause delusions at the time she established her trust. Additionally, the drafting attorney and a few others testified that the settlor had the requisite capacity when establishing her trust. Going further, there were also other witnesses that testified the settlor did express her wishes to disinherit her granddaughters as far back as November of 2015 – months before setting up the trust. She actually accused them of being thieves and only in it for the money.

Delusions and a New Rule of Law

This case ultimately hinged on the word delusions under the California Probate code. One lacks the testamentary requisite capacity if they are suffering from a condition that might cause delusions or hallucinations when setting up their trust. The granddaughters lost the case here because they failed to prove that the settlor was actually suffering from delusions or hallucinations at the time she set up her trust.

With that holding, the courts found that one can lose their testamentary capacity for a period of time, but if they regain it, they can still establish estate planning documents, in particular a will or a trust.

Typically, if there is ever a question as to testamentary capacity, we need to look at the probate code for guidance. However, this situation was a little unique. Someone lost capacity, regained it, set up their trust, and now somebody is challenging it later on.

The Rule for California

Here in California, so long as the person had the requisite capacity at the time of executing their will or trust, then those documents are valid. It does not matter what happens after. Does it really matter what happens before? Now, those might be factors to consider, but again, so long as the records show that the person had the requisite capacity and there are witnesses to testify to that fact, particularly a medical doctor or the drafting attorney, and so long as those conditions are met, those documents are valid, which is exactly what happened here.

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