Mental Competence and Legal Capacity Under Colorado Law: a Question of Consistency
| Publication year | 1990 |
| Pages | 1813 |
1990, September, Pg. 1813. Mental Competence and Legal Capacity Under Colorado Law: A Question of Consistency
All practitioners in the area of estate planning and trusts are familiar with clients whose mental faculties appear to be affected by age, alcoholism, family influence and physical or mental condition. However, many attorneys overlook the importance of competence as a threshold issue in planning and are unaware of the varying tests for legal capacity under Colorado law. Nevertheless, the recent decision of the U.S. Supreme Court in Cruzan v. Director, Missouri Department of Health(fn1) underscores the importance of competence in the exercise of fundamental rights, such as the right to refuse medical treatment and the right to make a will.
This article concentrates on the degrees of "legal capacity" and "mental competence"(fn2) that are involved in guardianships, conservatorships and estate planning transactions (such as gifts, wills and trusts). Separate, albeit connected, issues of capacity and competence relating to mental health commitments, the right to die, criminal prosecutions and civil rights (such as voting and marriage) are beyond its scope. The authors hope that the article will facilitate improved understanding between mental health and legal practitioners by providing lawyers with an overview of the definitions of capacity and the approaches to evaluation of mental competence frequently taken by health care professionals.
At first blush, estate planning and medical care may seem to be strange bedfellows. However, they are closely related. The costs of health care and nursing homes have an obvious impact on estate planning: at $25,000 per person per year, which is the present average cost in Colorado for custodial care nursing homes, the expenses of long-term care can decimate even the most artfully planned estate.
In this era of high-tech, high-cost medicine and increased longevity, an attorney's failure to advise estate planning clients about options available for controlling the duration (and therefore the costs) of medical care and nursing homes is naive, if not negligent. Ideally, the most precious legacy clients can leave to their families may be a "holistic" approach to estate planning, in which they address concerns for their health care as well as their "wealth care." As the practitioners' range of services expands to include living wills as well as testamentary ones, they now have the opportunity (and perhaps the obligation) to help their clients with this holistic approach.
In traditional estate planning concerns, such as wills and trusts, Colorado law employs two different tests of capacity. The standard for capacity to create a trust or power of attorney differs substantially from the standard applied to the making of testamentary and lifetime donative transfers. The differences involved can be a trap for unwary practitioners. Until such time as the types of capacity are made consistent, practitioners in Colorado must study the nuances carefully.
In Colorado, as in some other states, capacity to create a trust is governed by the same standards applicable to contracts. Commentators agree that
[a]n owner of property has capacity to create a trust by declaring himself trustee of the property for another if he has capacity to transfer the property inter vivos.(fn3)
CRS § 13-22-101 requires that a person be at least eighteen years old before he or she is recognized as having contractual capacity.
A party to a valid contract also must be "capable of understanding and ap-
preciating the extent and effect of business transactions in which he engages."(fn4) This definition of contractual capacity was invoked in Davis v. Colorado Kenworth Corp.(fn5) In Davis, the plaintiff, who had been adjudicated mentally incompetent, escaped from a state mental hospital. During his hiatus, he married and entered the trucking business. He managed the business successfully for a time, but fell behind in paying some of the bills and sought to have the contracts underlying those invoices set aside, arguing that his incompetence excused his non-performance. Notwithstanding Davis' adjudicated mental incompetence, the Colorado Supreme Court upheld his obligations, concluding that "one may be insane on some subjects and still have the capacity to contract."(fn6)
The essential elements of an express trust, including the grantor's capacity to create, amend or revoke it, must be proved by clear and convincing evidence(fn7) as of the date of the execution, amendment or revocation.(fn8)
The seminal case in Colorado which articulated the definition of testamentary capacity still favored by the courts is Cunningham v. Stender, which held that
a testator, at the time of executing his will, must have sufficient mental capacity to know the natural objects of his bounty, to comprehend the kind and character of his property, to understand the nature and effect of his act, and to make a disposition of his property according to some plan formed in his mind. . . .(fn9)
All of these elements are derived from English common law.(fn10)
Under former Colorado case law, the will's proponent had the burden of establishing a testator's mental capacity.(fn11) The adoption...
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