Legal capacity to sign documents

The capacity of a person, especially an older person, to execute legal documents is an important and quite complex topic for lawyers.

If a Will, for instance, is signed by a person who does not have the requisite mental capacity, the Will becomes invalid. This will be so for any legal document, and of course could lead to significant problems sometimes years down the track.

But capacity is relative; a person may not have the appropriate capacity to execute one document, but may have the capacity to sign another document. It depends on all the circumstances and the type of document that has to be executed.

Having a diagnosis of mild dementia will not necessarily lead to the conclusion that there is no legal capacity. There was a recent Supreme Court case in which there was mild dementia, and in fact a doctor gave evidence that the person did not have the appropriate capacity to sign. However, the Court took evidence from a solicitor who drew the document (a Will in this case) and that evidence was that the solicitor spent a great deal of time with the person and went to great lengths to explain everything to her and made sure that she understood what was being said. The Court concluded that at the time of making the Will the person did have appropriate capacity, that, at the time, she did understand the nature of what she was doing. It didn’t matter that she may well have forgotten shortly afterwards everything that had transpired, but at the time she did understand.

However, the same person may not have the capacity to sign a more complex document, which might require a much higher degree of analysis and understanding.

It is not up to the lawyer to make any medical diagnosis. The lawyer may see “red flags” that might point to some incapacity, and may seek to obtain a medical opinion. But if there is doubt, the lawyer is professionally bound to follow the client’s instructions and produce the document based on those instructions. The lawyer may well advise the client that he/she may have doubts about the validity of the document once signed, and advise to undergo a medical examination to establish capacity, but the lawyer cannot force the client to do this.

As the population ages there can be little doubt that the subject of capacity will become increasingly important.

©Peter J. R. Gauld LL.B

Gauld & Co. Elder Law Solicitors

Suite 5, 1st Floor,

838 Glenferrie Road,

Hawthorn, Melbourne, Australia, 3122.

03 9024 3868

0401 230 711

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