What You Need to Know Right Now About Mental Incapacity Law

All adults have the authority to make decisions for themselves, and that authority usually isn’t ever transferred to someone else. However, not every person has the capacity to make these decisions. If a person is unable to legally make decisions even with necessary information and assistance, then the authority to make decisions on their behalf will need to be transferred to another, capable person.

Mental incapacity applies to someone who is deemed incapable of understanding, communicating, or retaining necessary information. If your loved one doesn’t have the capacity to make these necessary decisions and is in need of a power of attorney or guardian/conservator, it’s important to plan for incapacity. This will require a basic understanding of mental incapacity law. If you are uncertain how to proceed, read on to gain insight into mental incapacity law and how it may apply to your situation.

Understanding Mental Incapacity

Mental capacity means a person has the ability to understand information and process it in such a way as to make decisions accordingly. It also means a person has the ability to retain the information long enough to make informed decisions and communicate these decisions to others. In order for a person’s decisions to be considered legal and valid, the law requires them to have the mental capacity to make those decisions. This typically applies to consent to medical treatment, health care, making contracts such as wills, and handling financial matters. It also means that they have the ability to appoint someone else to make decisions on their behalf in the future.

If a person does not have the capacity to understand the information provided, remember it long enough to make a decision, or communicate this decision to another person—they are defined as having mental incapacity. This also applies to someone who cannot understand the main issues or consequences involved in their decision.

How the Law Defines Mental Capacity

Mental incapacity law states that a person must be of “sound mind” and have the capacity to enter into binding contracts. This is particularly true for wills and health care decisions.

A person has the “capacity to contract” if they can understand the nature of the contract’s terms and conditions and comprehend the quality and consequences of the transaction. The law also recognizes someone to have the “capacity to make a will” if they are of “sound mind.” This refers to their legal and mental ability to make or alter a valid will. They should understand the nature of what they are doing, the extent of their property, the claims of the persons who are the objects of their bounty, and the scope and reach of the provisions of the will.

Being of sound mind also applies to having the capacity to make informed health care decisions. They have the capacity to consent to decisions regarding health care unless they cannot receive, evaluate, or communicate decisions and, as a result, cannot take reasonable actions to prevent illness or injury.

Durable Power of Authority

Mental incapacity law allows for durable power of attorney. Essentially, when a person is unable or no longer willing to manage medical or financial affairs, this document allows their attorney-in-fact to act on their behalf. The person you appoint is known as your agent, or attorney-in-fact, and takes over your affairs when you direct them to or when you are no longer able to manage your affairs. A durable power of authority is often planned in advance for such a time as when you may become incapacitated. It’s a good idea to plan for the future and have a durable power of attorney in place.

Under some state laws, this document will not become valid until a specific future event, established by the principal, occurs. An agent can buy and sell property, file tax returns, apply for government benefits, manage bills and accounts, and manage other aspects of the principal’s affairs. They do not have to be an attorney and are chosen by the principal.

Transferring Authority to a Guardian or Conservator

Sometimes it’s necessary for a court to appoint a guardian or conservator. This is often the case when the incapacitated person has not authorized a durable power of authority.

Before taking the step to pursue a guardianship or conservatorship, the court must first deem the person “financially incapable.” That is, the person is unable to effectively manage financial resources. This may be due to a physical illness or disability, mental illness, chronic use of drugs or controlled substances, confinement, or other forms of incapacity. If they cannot obtain, administer, or dispose of real and personal property, intangible property, benefits and income, or business property due to an inability to effectively receive and evaluate information, the court may deem them incapacitated.

If the court has decided they are financially incapable, then a conservatorship may be pursued. Authority will be transferred to a guardian or conservator, giving them the legal ability to make decisions on behalf of the incapacitated person. This guardian will manage such affairs as personal property, health care, and residency.

Additional Documents for Incapacitated Persons

There are three other main documents that authorize decisions for incapacitated persons, upheld by mental incapacity law. These include:

  1. Declaration for Mental Health Treatment: This document enables you to make decisions in advance regarding certain mental health treatments and allows you to appoint someone as your representative to make treatment decisions as outlined in the declaration.
  2. Advance Directive: This document expresses your wishes regarding what, if any, artificial life support you wish to receive and appoints a third party to make decisions regarding health care treatments.
  3. Property Held in Trust: This document outlines the arrangements made for the management and distribution of your assets during life and after death.

If you have specific legal questions regarding mental incapacity and would like to consult with an attorney, our team at Warren Allen LLP is here to offer professional legal advice and help get you started in planning for your future, no matter your current age, health status, or financial assets. Contact us today to start planning, and secure peace of mind for your future decisions.

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