Create an Effective Estate Plan

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Capacity: What is it, and Who Decides Whether You Lack It?

The thought of losing capacity can be terrifying, however, it’s something that must be accounted for when creating an effective Estate plan. We recommend a Will, a Personal Directive, and an Enduring Power of Attorney to most of our Estate planning clients. Because a Will only takes effect upon your passing away, it’s imperative that you have documentation in place that appoints decision-makers, should you lose capacity prior to death.

A Personal Directive appoints an “Agent” to make medical, healthcare, and other personal decisions on your behalf should you lose capacity, while an Enduring Power of Attorney appoints an “Attorney” to handle your property and financial affairs in the event that you lose capacity to do so yourself.

Agent? Attorney?

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Anyone who has watched a James Bond movie or another spy-type television program may think of something along those lines when they hear the word “Agent”. Similarly, anyone who has watched crime shows or legal dramas probably first thinks of an Attorney as a lawyer. However, in most cases, a close friend or family member can be named as your Agent in your Personal Directive, or as your Attorney in your Enduring Power of Attorney, regardless of their occupation.

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What Is Capacity?

People often use the term “capacity” in, well, various different capacities. You may have heard the term “physical incapacity” used to describe someone who isn’t physically able to perform a specific task or a range of tasks, or the term “mental incapacity” used to describe someone who is unable to understand the nature of, or appreciate the consequences of, a specific task or a range of tasks.

When a Personal Directive or Enduring Power of Attorney refers to “capacity”, it usually means decision-making capacity. The Personal Directives Act of Alberta defines capacity as follows:

Capacity means the ability to understand the information that is relevant to the making of a personal decision and the ability to appreciate the reasonably foreseeable consequences of the decision.”

In other words, someone lacks capacity to make a decision under a Personal Directive, and similarly, under an Enduring Power of Attorney, if they are unable to understand the information that is relevant to making a personal decision, and/or, if they are unable to appreciate the ‘reasonably foreseeable’ consequences of that decision.

For example, if your physician suggests a particular surgical procedure to you, there will be information that you’ll need to understand in order to make the decision of whether to undergo said surgery. Relevant information may include the duration of the surgical procedure, the benefits of the surgery, the complications that may arise during or after surgery, the timeline of recovery following surgery, and the types of medications that you may require after surgery. Similarly, there may be reasonably foreseeable consequences of the surgery that you’re able to appreciate. If your doctor tells you that there’s a 5% risk of infection that comes with the surgery, you’re able to, as someone who has capacity, appreciate that infection is a reasonably foreseeable consequence that may arise as a result of the surgery. Of course, there may also be consequences of the surgery that are not reasonably foreseeable. For example, it’s not reasonably foreseeable that the hospital may burn down mid-surgery—an inability to appreciate the possible, but extreme or unlikely consequences of a decision doesn’t indicate capacity loss.

When Does One Lose Capacity?

Based on the above example, an individual will have lost decision-making capacity regarding surgery if they’re unable to understand the information that is relevant to deciding whether they should undergo surgery. In other words, someone who lacks capacity won’t be able to understand the details and information provided to them by their physician regarding the surgery, and/or they won’t be able to appreciate the consequences of the surgery that can be reasonably foreseen.

Is Capacity Loss ‘All or Nothing’?

Capacity in the Personal Directives Act refers to decision-making capacity, and as such, capacity loss is not an ‘all or nothing’ event. In fact, the legislation accounts for two important factors when determining capacity loss:

  • An individual may have capacity to make some decisions but not others; and
  • An individual may lose decision-making capacity with respect to one or more decisions, and later regain capacity with respect to one or more decisions.

In other words, someone who has, for example, gradual cognitive decline may still have the ability to understand the information relevant to making certain personal decisions, and the ability to appreciate the reasonably foreseeable consequences of making those decisions, but may not meet that threshold test for capacity when it comes to making other decisions.

Similarly, someone may lose capacity, for example, following a head injury or stroke, and later regain that capacity after medical intervention or passage of time.

Who Decides Whether You’ve Lost Capacity?

old couple sitting on a bench

Capacity loss, in the context of a Personal Directive coming into effect, must be determined by two individuals, or by one individual upon consultation with a medical professional. There are two situations in which the maker of a Personal Directive is deemed to have lost capacity:

1. If the Personal Directive Designates Someone to Determine Capacity

Many Personal Directives give the maker’s appointed Agent the authority to determine the maker’s capacity upon consultation with a physician or a psychologist.

2. If the Personal Directive Doesn’t Designate Someone to Determine Capacity

If the Personal Directive doesn’t designate someone to determine the maker’s capacity, or if the person designated to determine capacity is unable or unwilling to do so, or cannot be contacted after every reasonable effort has been made, 2 service providers must make a written declaration that the maker lacks capacity. Furthermore, one of the service providers must be a physician or psychologist. Other service providers may include a nurse or someone in the employ of a care home or seniors facility.

Duty to Notify

Once a capacity determination has been made, the person making the determination must provide a copy of the written declaration of incapacity to the maker, the maker’s Agent, and to anyone else who is entitled to receive a copy of the declaration by virtue of the maker’s Personal Directive.

Additionally, once a Personal Directive that names an Agent takes effect, the Agent must, within a reasonable time frame, notify the nearest relative and the legal representative of the maker that the document is in effect.

Do You Have an Up-to-Date Personal Directive in Place?

If you don’t have an up-to-date Personal Directive in place, the experienced Wills & Estates lawyers at West Legal can help you draft a Personal Directive that mirrors your intentions and fits with your overall Estate plan. Contact us today to book your FREE, no-obligation consultation with one of our knowledgeable lawyers. or 403-723-0175 to get started.

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