Common Questions

Determining Competency

What is a durable power of attorney? A power of attorney is a legal document that lets you (the “principal”) appoint someone (the “agent”) to act on your behalf in financial matters. (You need a separate document, an Advance Health Care Directive or “living will,” to designate an agent for medical decisions.) A durable power of attorney (DPOA) remains in effect even after you become incapacitated, letting your agent continue to handle your affairs when you cannot. This is enormously helpful for the family if a person becomes unable to handle their own affairs.

See our legal research guide on “Powers of Attorney” for more details on powers of attorney generally.

To create and sign a DPOA, you must be “competent,” also referred to as “of sound mind.” That means you must have the mental capacity to understand the benefits, risks and effect of signing the document. You can revoke your DPOA as long as you are of sound mind, but not once you become incompetent, so your understanding of the meaning and effect of the document before signing is crucial.

Who decides if a person is “competent” to sign a DPOA? It is quite common for children or caregivers to disagree over whether the signer was competent when signing. These disputes can lead to lasting bitterness between family members, and occasionally to court cases. So who determines whether a person is “competent” when signing the form?

According to California Powers of Attorney and Health Care Directives, published by CEB, the attorney representing a principal in the drafting of a DPOA for financial management typically determines the mental capacity of the client. Of course, you can create a DPOA without an attorney. Many people use a standard DPOA form such as California’s Uniform Statutory Form Power of Attorney, and never consult an attorney. In that case, no one is obliged to evaluate your capacity before you sign. That’s usually fine, because challenges to a DPOA are quite rare.

Sometimes, however, you can predict that someone might want to challenge the DPOA after you become incapacitated. For instance, if your children don’t get along, or already squabble about your care and finances, they will probably continue after you become incapacitated. If you think this is likely, the Nolo Press book Living Wills and Powers of Attorney for California recommends that you do use a lawyer. The lawyer will go over your particular situation, help you decide what options to take, and if necessary, testify as to your capacity later on. Other suggestions, from Nolo’s article “Preventing Challenges to your Financial Power of Attorney,” include signing in front of witnesses, then having them sign statements that you appeared competent; getting a doctor’s written, dated opinion that you are of sound mind; and making a videotape of a statement of intent to create a DPOA. Keep any of these items with the original DPOA itself in a safe place.

What does it mean to be “competent?” The “capacity” required to execute a DPOA is set by California statutes. It uses the same criteria as the evaluation whether a person is capable of making a contract, and is discussed in California Probate Code (Prob. C) § 4120 and California Civil Code (CC) § 1556.

A person is mentally competent as long as they can understand the rights, responsibilities, risks, or benefits involved in decisions, and the potential consequences of what they decide. The Due Process in Competence Determinations Act (DPCDA), particularly Prob. C § 810-813, sets the standards for determining whether a person has the capacity to enter into a contract. Having a mental or physical disorder does not automatically mean a person is incapacitated; there must be a specific inability to understand and make decisions.

Some of these standards include:

  • Level of arousal or consciousness.
  • Orientation to time, place, person, and situation.
  • Ability to attend and concentrate.
  • Short- and long-term memory, including immediate recall.
  • Ability to understand or communicate with others, either verbally or otherwise.
  • Recognition of familiar objects and familiar persons.
  • Ability to understand and appreciate quantities.
  • Ability to reason using abstract concepts.
  • Ability to plan, organize, and carry out actions in one’s own rational self-interest.
  • Ability to reason logically.

What if you think a loved one was not competent when the DPOA was signed? Sometimes, after a parent becomes incapacitated, a child or caregiver presents a new DPOA signed by a parent without the rest of the family’s knowledge. The family may be concerned that the parent was unable to understand the document, or was even tricked or coerced.

If this happens in your family, you may be able to go to court to challenge the document. To make a determination, a judge would probably question those who knew the person at the time, using the criteria listed above. For more information on challenging the document, you may want to look at Capacity and Undue Influence: Assessing, Challenging, and Defending, an action guide also published by CEB. Step 17, “Assess Capacity to Execute Contracts, Conveyances, and Agency Appointments,” has a helpful discussion of practical questions to ask to evaluate how well someone can manage their affairs.

If the judge decides the person did not have the capacity to make the DPOA, the most recent prior DPOA will be effective. If there is no DPOA, you may need to set up a formal conservatorship.

However, if the person indeed had the capacity to execute the DPOA at the time, the DPOA is valid. Even if you think the person made a bad choice, if they had capacity, it is their choice, and remains in effect.

For more research on this topic, all of the codes and books mentioned in this article can be reviewed at the law library. You will find books on powers of attorney and living wills in both our Self-Help and General collections at KFC 110 as well as through our subscription databases on the Law Library’s computers.

You can download a copy of California’s Uniform Statutory Power of Attorney form, as well as other free legal forms, from our website at www.saclaw.org/forms/.

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