As we celebrate the July 4th holiday, I am reminded that at the birth of our country, and for quite some time thereafter, most of our citizens farmed the land. Although farmers are now a small minority of our population, good estate planning can help prevent the further reduction of the number of family farms.
It is estimated that as many as 10 million acres of farmland will change hands in the next two decades. The future of farms and ranches will face many of the same issues faced by aging family business owners in cities and suburbs: what happens when owners are no longer able to make competent decisions? The Capital Press expands on this topic in “Mental competence a key factor in estate planning, experts say.”
Mental competency impacts many people. Statistics show that 38% of those 85 or older have dementia or some type of cognitive impairment. However, attorneys must start with the assumption that a client is competent or that they have legal capacity to sign a document. Signing a will or a trust requires the most basic level of competency. However, this can lead to pressures, like undue influence, which could invalidate the agreement.
Disability planning is important to any estate plan. In some instances, a court-appointed guardian or conservator may be required to help manage finances. The objective is to protect the individual and her assets for future generations. It’s an expression of love for the family, when estate planning is completed.
Doctors distinguish between normal aging, mild impairment, and more serious forms of dementia. As far as decision-making, there’s a difference between mental capacity and competency. Competency is a purely legal term defined by the courts; capacity is related to a specific decision, specific action and specific context. A person may have the capacity to make some decisions but not others. That capacity may also change over time.
Financial capacity is the ability to manage money and assets consistent with an individual’s values and self-interest. It’s frequently the first thing to go, which can mean the onset of dementia. A doctor can test for impairments, educate patients and families about their options and refer them to medical specialists.
Because someone is physically disabled or has a different set of values, it doesn’t mean they aren’t mentally capable of handling their estate plans. Don’t mistake normal aging with having a medical issue. Qualified professionals can evaluate a person’s basic brain functions to determine, if they lack capacity. At that point, legal representation may be required in estate planning.
An estate planning attorney who has worked with farm or ranch families will be able to help create a plan that is suited to each family’s situation. Even if the acreage, crops and livestock are the same, every family is different, and there is no one-size-fits-all answer. Planning to give the land to the next generation, or distribute it through various means will provide the family with peace of mind, knowing what is to come in the future and having a plan in place to achieve it.
Reference: Capital Press (Salem OR) (June 4, 2018) “Mental competence a key factor in estate planning, experts say”