Dillman: Understanding legal capacity and how to test for it

Professionals working with older adults will inevitably face the challenge of determining whether a client or potential client has legal capacity. Adult guardianships in Indiana are expected to increase 300% by 2030 (Jenuwine, 2011) meaning elder law issues will inevitably bleed into all our work regardless of what type of law we practice.

If you’ve run into capacity issues in your practice, you are aware that determining functional capacity is a nuanced issue. In the state of Indiana, there is an internal tension with respect to capacity.

Indiana Code § 29-3-1-7.5 defines an incapacitated person as an individual who:

1. Cannot be located upon reasonable inquiry.

2. Is unable to:

A. Manage in whole or in part the individual’s property

B. Provide self-care, or

C. Both

because of insanity, mental illness, mental deficiency, physical illness, infirmity, habitual drunkenness, excessive use of drugs, incarceration, confinement, detention, duress, fraud, undue influence of others on the individual or other incapacity; or has a developmental disability.

On the other hand, it has been Indiana common law since the 1800s that a person has testamentary capacity, which is the mental capacity to create a will, if they know:

• The extent and value of his or her property

• The number and names of the persons who under normal circumstances would inherit — i.e., their natural heirs, and

• What those persons might deserve given their treatment of testator.

These authorities could create conflict if someone fits the statutory definition of “incapacitated” but also fulfills the requirements for testamentary capacity. For example, I’ve had a client who suffered a stroke and could not provide self-care — meaning he could not dress, toilet or bathe himself. Per I.C. 29-3-1-7.5, he fits the definition of an incapacitated person. However, when I brought the client into my office, I was able to communicate with him clearly. He could communicate his wishes, he knew the extent and value of his property, he knew his heirs, and he understood what he wanted to do with his wealth upon his death. We determined he had the capacity to create an estate plan for himself.

This tension in Indiana law suggests that the only way to advocate for our clients is to unpack cognitive diseases, understand the continuum of capacity and create a protocol to evaluate the decision-making abilities of our clients based on their individual functional abilities. Very rarely is someone completely and totally incapacitated, rendering them unable to perform any function whatsoever. So, as practitioners, we need to develop the tools necessary to evaluate what our clients can and cannot do competently rather than merely observing decline and deciding nothing can be done. This extra effort will become more and more critical as the incidents of dementia-related diseases continue to rise.

Continuum of cognitive impairment

Cognitive impairment is nuanced and should be looked at on a continuum. Mild cognitive impairment (MCI) is an early stage of cognitive ability loss in individuals who continue to perform most activities of daily living independently. This can progress into mild dementia, then moderate dementia and finally, severe dementia, where there is an impairment in two or more cognitive functions that interfere with an individual’s activities of daily living (Ramos, 2022, slide 10).

What is dementia?

Dementia is defined as a primary and progressive decline of intellect and/or comportment due to a structural brain disease to the point that customary social, professional and recreational activities of daily living become compromised. Dementia is a disease process and an umbrella term that describes a collection of symptoms that are caused by disorders affecting the brain, such as Alzheimer’s disease, vascular dementias, Lewy body, frontotemporal dementia and others, including Parkinson’s disease, Huntington’s disease, head trauma and more (Ramos, 2022, slide 11).

A common question we all deal with in our practice and even in our daily life is how to tell the difference between normal signs of aging and early stages of dementia. This can be difficult to determine, but often, signs of dementia will include:

• Memory loss that disrupts daily life.

• Trouble planning and problem-solving.

• Difficulty completing familiar tasks.

While normal signs of aging might be:

• Occasionally forgetting appointments and names.

• Making occasional errors on household bills.

• Occasionally needing help with a computer or smartphone (Ramos, 2022, slide 13).

How to test for functional capacity

At our firm, it is protocol to evaluate anyone who we believe may have capacity issues. For our life care planning clients, we often perform a capacity evaluation even before any capacity issues manifest, because we know we will be working with these clients for the duration of their lives and it is valuable to have that baseline evaluation to look back on years later and compare with subsequent evaluations.

One of the best resources I know of as a legal practitioner confronting capacity issues daily is the American Bar Association’s “Assessment of Older Adults with Diminished Capacities: Handbook for Lawyers.” It provides assessments for older adults with diminished capacities and guidance on those issues. At the beginning of a representation, here is what a typical process may look like when determining capacity of a client:

1. Physical evaluation: In my experience, one of the biggest symptoms that disguises itself as diminished capacity is hearing loss. Often individuals with hearing loss have developed coping mechanisms for their hearing loss, such as checking out of the conversation entirely or nodding and smiling because they don’t want to admit they can’t hear. If hearing loss is an issue, I do my best to set up the client for success by minimizing background noise, making direct eye contact, speaking slowly and distinctly without shouting, and arranging seating that is conducive to conversation. Also, it’s important in every meeting to follow up with written summaries and materials for the client to review when they return home to a comfortable space.

The same can be said for vision loss. If the client suffers from vision loss, I will provide increased lighting, documents in large print and extra time to read documents as well as any devices, such as reading glasses or magnifying glasses.

2. Cognitive evaluation: I will then assess the client’s testamentary capacity through several interviews.

The first interview conducted is a legal professional assessment using the worksheet available in the ABA/American Psychological Association Handbook. The sheet includes a series of questions that help guide the conversation in a direction where a legal professional can evaluate capacity.

Next, I will ask my staff — paralegals, administrative staff, other attorneys — to spend time in intentional conversation with our client to find out more about this person: who they are, what they enjoy doing and more. I will then request that the staff immediately write down their notes and observations from the conversation and enter them into the client’s file. Remember, lay witness testimony is admissible on capacity cases in the state of Indiana, so these notes are important to defend your assessment of the client’s capacity.

3. Undue influence: Finally, we perform an undue influence screening. When it comes to older adults, it’s important to recognize that the older you get, the more you rely on others. For example, you may rely on others for transportation, for socialization and visitation, or for care needs. Thus, the older you are, the more likely you are to be influenced by that reliance. Influence does not equate to undue influence automatically. As advocates for older adults, it’s important to accept and embrace this influence and realize that influence is not bad as long as it’s in the best interest of your client.

To conduct the undue influence screening, I like to use the who, what, when, where, how method.

• Who brought you today? Whom do you rely on most?

• What do they do for you?

• When did they start doing these things for you?

• Where do you live and whom do you live with?

• Where do you travel to most?

• How do you feel about this person?

At the end of the assessments, if I still have concerns regarding my client’s cognition, or if I know there are family dynamics at play that may lead to a contested matter in the future, I will turn to a medical professional to provide a third-party evaluation. This may be in the form of a physician’s letter, a physician’s statement or a neuropsych referral.

And of course, the most important step is to record and document everything — observations, assessments and notes all make it into the file.

The most important thing to keep in mind is that someone’s capacity is not a packaged deal — someone can have the capacity to contract but not have capacity to live independently. Teasing out the notion of capacity using functional analysis, understanding that capacity is on a continuum, and appreciating that circumstances and environment impact capacity at any given time is important to evaluating a client. When someone is deemed incapacitated, that finding strips that person of fundamental human rights. We owe it to our clients and our community to be diligent in our efforts to allow our clients to retain their autonomy as long as possible and advocate for their independence as they age.•

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Lisa Dillman is an attorney at Applegate & Dillman Elder Law. The firm specializes in elder law and life care planning, a holistic approach to dealing with legal, financial, medical and emotional issues involved in growing older. The firm has offices in Indianapolis, Carmel and Zionsville. Find out more at www.applegate-dillman.com. Opinions expressed are those of the author.