Wills and Estates Law Update: capacity & the importance of updating your will

Legal Capacity

Solicitors often need to consider the issue of capacity when a client makes a Will or gives an enduring power of attorney. Under the new Powers of Attorney Act (Bartier Perry Bulletin January 2004) solicitors are required to explain the nature and effect of the power of attorney to the donor and satisfy themselves that the donor has the mental capacity to give the power of attorney.

The Law Society of NSW has issued guidelines for determining the level of competence required for granting an enduring power of attorney. These guidelines provide a definition of the competence required, some suggestions for questioning to explore a client's capacity and outline the options for capacity assessments by a medical practitioner or other health professional.

It has been suggested that legal capacity issues are becoming more common as a result of Australia's ageing population and the increase in disability from age related conditions such as dementia.

Legal capacity is important and impacts upon many areas including:

• The solicitor/client relationship
• Planning for incapacity
• Dealing with the effects of incapacity during a person's lifetime
• Challenges to Wills after death on the basis of a lack of testamentary capacity

Keeping a Will up to date

The ever increasing trend towards volatility in relationships highlights the importance for regular reviews of Wills and estate plans. In our practice we recommend that Wills and estate plans be reviewed at regular intervals and particularly if a major change occurs to any of the following:

• Revenue law
• Composition of family
• Spouse or partner
• Assets over which the Will maker has ownership, management or control and in particular if that asset is the subject of specific provision in the Will.

A recent decision of the Supreme Court of New South Wales clearly demonstrates the advantage of reviewing a Will as personal circumstances evolve.

In Hoobin v Hoobin [2004] NSWSC705 (6 August 2004) the deceased testator remarried 3 days before he died and was survived by a wife and 5 children of a former marriage. The deceased had known his second wife for about 6 years prior to his death and had lived in a domestic relationship with her for about 4 years prior to the marriage.

Following the deceased's death his widow applied for Probate of a Will made prior to the marriage in which she was appointed executor and except for some specific legacies was the recipient of the major part of the estate.

In that document the testator described the wife as "his de facto spouse." There was a statement in the Will that no provision was made for his children but there was no statement of reasons for their exclusion.