Chapter 4-4 Legal Implications of Dementia and Alzheimer's Disease

• Jurisdiction: United States

4-4 Legal Implications of Dementia and Alzheimer's Disease

Generally, Alzheimer's patients suffer from an impaired ability to make decisions. This impairment has serious consequences for the patient and his or her family members and caregivers. From a legal standpoint, family members and caregivers must be concerned with whether the patient possesses the mental capacity to engage in certain transactions or make certain decisions or has the legal competency to retain his or her autonomy.

An autonomous individual has a number of different capacities, including the legal capacity to:

• enter into a contract;

• prepare (or have prepared on his or her behalf) and execute a Last Will and Testament;

• make gifts of his or her property;

• consent to medical treatment; and

• manage his or her financial or personal affairs or appoint agents to make such management decisions on his or her behalf.

Each of these capacities involves a distinct combination of functional abilities and skills. Accordingly, the mental capacity—or level of alertness or functional ability—for each one is different. Not surprisingly, the legal capacity for each task is also different.

4-4:1 Capacity to Contract

Because this text is about elders (sometimes referred to as "seniors" or "senior citizens"), we shall limit our discussion of the capacity to contract to the capacity of elders to enter into contracts.

In Texas, as elsewhere, only people with the requisite mental capacity may enter into valid contracts. That having been said, we note that all Texans who enter into contracts are covered by a presumption of competency.³⁸ Unless a court of competent jurisdiction has adjudicated someone incompetent, that person retains all his or her rights under Texas law and has full legal capacity to enter into a contract.³⁹

But what, exactly, does "capacity to enter into a contract" entail? The Texas legislature has thus far failed to address the matter. Meanwhile, Texas courts have developed a definition: a contracting party has capacity for executing a contract if the person can appreciate the effect of what he or she is doing and understands the nature and consequences of his or her acts and the business he or she is transacting.⁴⁰

Notwithstanding this development, the courts address the matter of mental capacity to contract on a case-by-case basis. The more complicated a transaction, the higher the level of mental capacity required to engage in the transaction. Accordingly, someone who cannot understand a highly complex transaction—and thus would lack the capacity for entering into a contract concerning this transaction—may still have the requisite capacity to engage in simpler contracts.⁴¹

In analyzing mental capacity to contract, Texas courts have also said that we can look to certain circumstantial evidence to assess whether a party had capacity at the time he or she entered into the contract.⁴² This circumstantial evidence includes: (1) the person's outward conduct and whether it is manifesting an inward and causing condition; (2) any pre-existing external circumstances that tend to produce a special mental condition; and (3) the prior or subsequent existence of a mental condition from which the person's mental capacity (or incapacity) at the time in question may be inferred.⁴³ However, the courts have been rather loosely applying these factors,⁴⁴ and one would do well to proceed with caution.

4-4:2 Testamentary Capacity

To execute a Last Will and Testament, a testator needs to be of "sound mind."⁴⁵ This means that the testator understands the Last Will and Testament...