Testamentary Capacity and Statutory Wills

Most people understand the importance of making a will. However, it is easily forgotten that the loss of mental capacity could also diminish our ability to make a Will. This is known as loss of ‘testamentary capacity’ and could occur instantly, for example, as a result of a road traffic accident, or gradually, through a neurological illness such as dementia.

So, what happens when you no longer have testamentary capacity but need to make a Will or update a Will?

What is Testamentary Capacity?

Firstly, let’s deal with what is meant by testamentary capacity. The legal test for this was established in the case of Banks v Goodfellow (1870) and must be applied as follows:

In order for a testator to be considered to have testamentary capacity he must, at the time of making the Will:

• Be able to understand the nature of his act and its effects;
• Be able to understand the extent of the property of which he is disposing;
• Be able to comprehend and appreciate the claims to which he ought to give effect, (i.e. the testator must understand who he might like to gift to and what claims those or other people may have against the estate as a result of his actions); and
• not be suffering from a mental disorder which would inhibit his ability or cause him to dispose of his property in a way that he would not have done had he been of sound mind.

Why Might a Person Need a Statutory Will?

Under the Mental Capacity Act 2005, the Court of Protection has powers to authorise the making of a Statutory Will on behalf of a vulnerable person (P) who lacks testamentary capacity. This may be necessary if, for example:

• P does not have a Will;
• P’s estate has increased in value (e.g. as a result of an award for damages);
• P’s estate has reduced in value (e.g. due to high costs for care);
• For the purposes of tax-planning;
• The validity of P’s Will is in question;
• A change in the circumstances of P or the named beneficiaries.

Anyone who wishes to make an application to the Court of Protection on behalf of someone else for a Statutory Will must seek permission from the Court, however, the following people are exempted from seeking permission:

1. P;
2. A Deputy appointed by the Court;
3. An attorney under a registered Enduring Power of Attorney;
4. The donor or donee of a Lasting Power of Attorney;
5. Persons who may become entitled to P’s estate under the rules of intestacy or under an existing Will; and
6. A person for whom the vulnerable person might be expected to provide if they had capacity.

How do you get a Statutory Will?

An application should be made to the Court (once permission is granted, if applicable) and the application can be made on an urgent basis, if necessary. The Court will require sight of medical evidence confirming that P lacks testamentary capacity, the relevant application forms and a witness statement submitted by the person making the application.

The statement should provide the Court with all the significant details of the matter, the proposed draft Statutory Will, the reasons as to why the proposed Statutory Will is in P’s best interests, a thorough breakdown of P’s assets and debts and P’s likely future needs based on their current condition.

It is important to note that the issued application must then be served upon the relevant Respondents, and consideration will need to be given as to who these individuals may be. The Respondents will usually include beneficiaries under the current Will or proposed Statutory Will.

What does the Court consider?

It is the Court’s duty to consider the application and decide whether a hearing is required. More complex cases will necessitate a hearing and, where money is involved, the application can become contentious.  The Official Solicitor is often invited to act for P to represent their interests in the proceedings.

The Court must consider the following issues of best interest:

1. P’s past and present wishes and feelings and, in particular, any previous Wills made by P;
2. The beliefs and values that would be most likely to influence P’s decision if he had capacity; and
3. Any other factors P would likely consider if he still had capacity.

Per rule 156 of the Court of Protection Rules 2007, it is generally mandated that costs of proceedings are paid from P’s estate.