The British Columbia Law Institute recently released its Consultation Paper on the common-law tests of capacity.
The committee behind the Consultation Paper studied and made tentative recommendations related to nine common-law tests of capacity. The areas reviewed were the test of capacity to:
- make a will;
- make an inter vivos trust;
- make a beneficiary designation;
- nominate a committee;
- enter into a contract;
- retain legal counsel;
- form the intention to live separate and apart from a spouse; and
- enter into an unmarried spousal relationship.
The Consultation Paper contained 31 proposals for reform in the above areas. The committee looked to other jurisdictions to recommend the novel “statutory will procedure”. This procedure involves an application to a court for the court to make a will for a person who does not have the requisite mental capacity to do so themselves. This was meant to address hardships and undesirable results. The committee gave two examples of why this type of reform is needed.
First, it can address situations where a person with diminished capacity may outlive their close family members resulting in their estate being distributed to a distant relative under intestacy rules. With this procedure (which includes notice to all interested parties), trusted, but unrelated caregivers or friends may benefit under the person’s will.
The second example concerns a situation where a child is a victim of an attack by a parent. The attack can leave the child with reduced mental capacity but a large financial award after a lawsuit. Because the child cannot make a will, that award would flow to the parent because of the rules of intestacy. Statutory wills are meant to address the above scenarios.
The Consultation Paper made various further proposals. The BCLI invites comments on the Consultation Paper until June 15, 2013. Thereafter, it will issue its final report.