In an ageing and growing population with life expectancy increasing, it is becoming more and more crucial to test someone's decision-making capacity in the making of Wills. The foundational test for testamentary capacity is found in the case of Banks v Goodfellow (1870) LR 5 QB 549 which is a case from 150 years ago. In light of recent trends in the population and aged care living, it is essential to review whether the test set out in this case is still applicable, or whether a new test for capacity is needed to meet the current circumstances.
What is Capacity
Decision-making capacity in the legal context is recognised as being made up of three distinct categories:
- Physical – the ability to see and read documents
- Legal – being over 18 years of age
- Mental (“testamentary capacity”) – the ability to understand documents (such as Wills) and instruct a solicitor to prepare the documents according to your wishes
The first two areas are generally straight-forward for a lawyer to determine in the circumstances through preliminary investigations and questioning.
The area of capacity that has generated the most contention is the area of mental capacity or “Testamentary Capacity.” The predominant contentions surrounding testamentary capacity is how it is to be assessed and what constitutes testamentary capacity and what does not.
The Banks v Goodfellow Test
The test for capacity in Banks v Goodfellow is a long-standing test and has been articulated in many cases over the years with little changes or adjustments being made.
The test can be summarised as follows – a person has the mental capacity to prepare a Will if they:
- Are aware of and understand the significance of preparing a Will;
- Are aware of (in general terms) their assets and the extent and value of their estate;
- Are aware of the people that may be considered to reasonably have a claim on their estate; and
- Are able to understand the difference between the claims by different people and understand the respective strength of each claim.
It is important to note that the Banks v Goodfellow test was based around a case of psychosis and there are different and unique challenges that other mental diagnoses such as dementia present.
With the growing rate of dementia in today’s population the urgency to establish a test for capacity where there is a diagnosis of dementia is critical.
One of the key trends we can see is the increase of Australians over the age of 65 due to the rise of life expectancy. Along with an ageing population comes increased instances of cognitive disabilities such as dementia and subsequently increased incidences of elder abuse.
The Australian Law Reform Commission’s 2017 report on elder abuse estimates that more than one million Australians will have dementia by the year 2056. This is a significant proportion of the population that will need to have their capacity assessed by legal practitioners to prepare documents such as Will.
Similarly, the Australian Institute of Family Studies estimates 14 percent of Australians aged 65 and over experience some form of elder abuse every day and this is likely to be underreported.
New Regulations that have been brought into effect this year due to the COVID-19 pandemic further exacerbate the issues arising out of testing capacity and the potential for elder abuse. The Electronic Amendment (COVID-19 Witnessing of Documents) Regulation 2020 allows for documents such as Wills, Powers of Attorney and Enduring Guardianship Instruments to be witnessed via audio visual link such as Zoom. It was introduced with the intention to allow documents to continue being signed despite the social distancing and isolations restrictions. As one of the most vulnerable people groups in the COVID-19 pandemic, elderly people are the most likely to require the use of this regulation, however they are also the most vulnerable to manipulation and abuse.
Solicitors relying on the new regulations need to ensure that when witnessing elderly people sign documents electronically, they need to ask critical questions to ascertain capacity, ensure there is no one in the room manipulating them, and need to be able to see their full face, body and hands when signing the documents.
The predominant question is whether the Banks v Goodfellow test remains appropriate for assessing capacity in today’s modern society, and whether the complexities relating to dementia and elder abuse are met through this test.
There is a distinctive lack of cohesion between the assessment of capacity by medical professionals and legal practitioners.
The task ahead in determining how to define and assess capacity is a difficult one, and one that requires collaboration between lawyers and medical practitioners. Lawyers and medical practitioners need to adapt to the current environment and coordinate their efforts.
The Australian Law Reform Commission has recommended that the Law Council of Australia as well as the law societies of each state and territory should develop best practice guidelines for legal practitioners in relation to the preparation and execution of Estate Planning documents such as Wills, Powers of Attorney and Enduring Guardianship Instruments. The guidelines must cover testamentary capacity, and this must be a national, coordinated approach between the legal and medical professions in order to make meaningful progress in difficult this area.
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This is not legal advice.