25 January 2022

Mental Competence Is Key For Estate Planning

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It is no secret farmers and ranchers are getting older across the West.

According to a 2016 study by Oregon State University and Portland State University, the average age of farmers and ranchers is now 60. As more baby boomers prepare for retirement, an estimated 10 million acres of farmland will change ownership over the next two decades, making farm succession and estate planning that much more important.

But what happens when the farm or ranch owner is no longer mentally capable of making those decisions?

That was the subject of a lecture May 31 at Providence Benedictine Nursing Center in Mt. Angel, Ore., dealing with mental competency in estate planning. The presentation was part of a memorial series honoring Sister Marilyn Schwab, who helped found the nursing center and served as prioress of the Benedictine Sisters in Mt. Angel.

About 40 guests heard from Maria Schmidlkofer, a Salem attorney focused on estate planning and farm succession, as well as Ho-Yann Jong, a neurologist for Providence Medical Group in Portland, and Amy Friday, a licensed clinical psychologist for the Oregon Passionate Aging and Living Institute in Portland.

Schmidlkofer related a few of her personal experiences working with clients, and highlighted some high profile cases like wealthy New York philanthropist Brooke Astor and L’Oréal heiress Liliane Bettencourt. Both women had Alzheimer’s disease before they died, and disputes erupted whether they were being taken advantage of for personal gain by friends and family.

“Mental competency affects a lot of people,” Schmidlkofer said. “Even if you’re wealthy, it comes up quite a bit.”

Statistics show that 38 percent of people 85 or older have dementia or some type of cognitive impairment, Schmidlkofer said, yet attorneys like herself must begin with the assumption that a client is competent — meaning they have legal capacity to sign a document.

However, to sign a will or a trust requires just the most basic level of competency, Schmidlkofer said, which opens the door to pressures like undue influence, which could invalidate the agreement.

Disability planning is key to any good estate plan, Schmidlkofer said. In some cases, a court-appointed guardian or conservator may be required to step in and help manage finances.

The goal is to protect yourself and protect your assets for future generations, Schmidlkofer said.

“I really think it’s an expression of love for your family when you have your estate planning done,” she said.

Jong went into further detail about how doctors distinguish between normal aging, mild impairment and more serious forms of dementia.

In terms of decision-making, Jong said there is a difference between mental capacity and competency. Competency, he said, is a purely legal term defined by the courts, while capacity is related to a specific decision, specific action and specific context. A person may have the capacity to make some decisions but not others, and that capacity may change over time.

Financial capacity is the ability to manage money and assets consistent with a person’s values and self-interest. It is often the first thing to slip, Jong said, indicating the onset of dementia. A physician’s role is to screen for impairments, educate patients and families about their options and refer them to specialists, like Friday with the OPAL Institute.

Friday was quick to point out that because someone is physically disabled, or has a different set of values, does not mean they are not mentally capable of handling their estate plans.

“We don’t want to confuse normal aging with having a problem,” Friday said.

Qualified professionals can evaluate a person’s basic brain functions to determine if they lack capacity, Friday said. At that point, legal representation may be required in estate planning.

Schmidlkofer advised against a one-size-fits-all approach to estate plans, especially for farms and ranches.

“Every farm has a little different plan,” she said. “You want to make sure you put special guidelines in the document about the farm and what’s supposed to happen to it.”

Click here for the original article from Capital Press.  

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