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BC Testamentary Capacity versus Ability to Manage Financial Affairs under Patients Property Act – It Is Not the Same Test!

A BC committee of the person and estate of another party is a person appointed under the BC Patients Property Act by the BC Supreme Court to make personal, medical, legal, or financial decisions for someone who is mentally incapable and cannot make those decisions. An aging and elderly parent or spouse may not be able to make decisions about their personal, medical, financial, or legal affairs. Without trusted assistance they can lose track of bank accounts, forget to pay bills, or be taken advantage of by dishonest people. This appointment takes away  persons right to make their own decisions and requires evidence from doctors as to the person being incapable of managing their personal and financial affairs. In many cases there is a dispute over which family member should be the committee as their may be family infighting. In other cases the person who is alleged to be unable to manage themselves and their finances denies they have any capacity issues. How is the disputed issue of mental incapacity decided?

These issues are emotional and it is important both sides to these issues have proper legal advice on the potentially divisive issue. Call our highly rated our lawyers at 1 877 602 9900 toll free.

Temoin v. Martin, a recent case from the BC Court of Appeal, examined a daughter’s petition for a declaration that her father was incapable of managing his financial and personal affairs by reason of mental infirmity arising from disease or age. The daughter, Ms. Temoin, also sought a declaration that any will made by her father after June 2,, 2011 was void. Her father is an 87 year old man of substantial wealth. His first marriage ended in divorce in 1964 and he remarried in 1965. He had 2 daughters and 3 grandchildren from his first family, and his second wife brought 4 children into the family. Mr. Martin developed an estate plan in 1997, with the goal of providing equally for both his first and second families. In October 2010, Mrs. Martin became upset that his first family would inherit 51% of his estate and an additional $2.5 million, which was contrary to his promise that his estate would be divided equally. Mr. and Mrs. Martin then embarked on a review and revision of his estate plan and wills.

Ms. Temoin brought her petition under s. 3 of the Patients Property Act, which requires that a petitioner provide affidavits from two medical practitioners setting out their opinion that the testator is incapable. Mr. Martin refused to see any physicians. Ms. Temoin therefore also brought an application for an order requiring her father to attend two medical examinations.

Justice Fisher, the trial judge, stated at para. 64:

There is no question that compelling a person to submit to a medical examination is intrusive to personal autonomy and any order doing so would have to respect the values of the Canadian Charter of Rights and Freedoms. It is an order that should be made in rare circumstances, where there is “proof of incompetence” and where there is a compelling need for protection. The need for protection may be based on evidence that the person is personally or financially vulnerable due to things such as dangerous or erratic behaviour or abuse by others.

Section 3 of the Adult Guardianship Act enacts a presumption of capability: “Until the contrary is demonstrated, every adult is presumed to be capable of making decisions about the adult’s personal care, health care and financial affairs”.  The evidence showed that Mr. Martin continued to be active in his business, although was experiencing diminished cognition. He had also begun to demonstrate noticeable memory loss and declining ability to understand and retain information.

Justice Fisher dismissed Ms. Temoin’s application for the examinations because the evidence did not show that her father was prima facie incompetent or in need of protection. While there was evidence that Mr. Martin had memory problems and some cognitive deficits, he was not prima facie incompetent or in need to protection, nor did the evidence show that he was incapable of managing his affairs. There was also no evidence that Mrs. Martin had taken advantage of her husband in any way.

Justice Fisher was also of the view that s. Temoin’s focus on Mr. Martin’s testamentary capacity, rather than his capacity to manage his financial affairs, had complicated the case. Testamentary capacity is assessed according to a legal test tailored to the issues pertinent to making a will. The test was established long ago in Banks v Goodfellow(1870), LR 5 QB 549 (Eng QB) at 565:

It is essential to the exercise of such power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties – that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

The capacity to manage financial affairs is not the same as testamentary capacity. It is possible, depending on the circumstances, that an individual may be incapable of managing his affairs yet still be capable of making a will. Declarations of incapacity are generally questions of fact based on an individual’s circumstances and medical opinions. It may be that the more complicated or complex the financial situation, the higher the level of cognition will be required to have the necessary capacity.

Justice Fisher believed that an order requiring Mr. Martin to submit to a medical examination in these circumstances would serve an attempt to elicit evidence to bolster Ms. Temoin’s view that her father lacked testamentary capacity, which was clearly not the purpose of any order that the Court could make under the Patients Property Act.

These capacity cases are serious and if you believe someone you love is not able to run their affairs or is being victimized contact our estate litigation department quickly at 1 877 602 9900.