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Safeguarding Your Loved One’s Financial Future: Understanding Mental Capacity and Protecting Against Poor Decisions

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Elder Law is complex. As they age, many people maintain their full faculties and can continue to make decisions for themselves without question. For others, that does not happen. As people age, their mental capacity and ability to navigate big decisions about finances and business transactions can become limited, and that puts their future and their estate at risk.

Consider Katy Perry and Orlando Bloom, a super Hollywood couple that recently entered a legal battle over a key piece of very valuable real estate in Montecito, California. The couple purchased the lavish estate for $14.2 million in 2021. They purchased the property from an elderly man who later claimed that he made the decision when he was not in a state of mental capacity to allow for it.

The verdict in the case was recently announced, and found that disabled veteran Carl Westcott did not provide any substantial evidence to prove that he did not have the mental capacity to enter into these decisions, and, therefore, Perry and Bloom should take ownership of the property.

The case is riddled with various factors that could make anyone who has an elderly parent concerned. For example, in a recent report from the New York Post, Westcott’s attorney shared that his client was suffering from degenerative brain disease as well as postoperative delirium after having a complicated surgery just six days prior. It also noted he had symptoms of dementia and was on painkillers at the time when he agreed to sell the property to Perry in 2020.

Judge sides with Katy Perry to oust disabled veteran from his home

Even amid all of these claims, the judge ruled against Westcott. Los Angeles County Superior Court Judge Joseph Lipner ruled on the case and stated,

“While Dr. Gary Small testified towards the end of direct examination that he believed Westcott lacked the capacity to contract on July 15 and July 18, 2020, he failed to provide a compelling explanation of how he reached that conclusion.” He continued, “Dr. Small’s testimony did not provide a sufficient basis for the court to conclude that Westcott lacked the competence to sign the sales contract.”

Whether or not Mr. Westcott should have made such decisions or if Perry and Bloom are in the right, one thing is clear. For the Westcott and the family, it is a tragic decision that could have significant implications.

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What Is Mental Capacity?

The key factor in this case is mental capacity, a core component of elder law. In short, mental capacity is a person’s ability to understand information and to make decisions about their well-being and life. It also indicates whether a person has the ability to communicate accurately the decisions about their life. In some cases, mental capacity could indicate a person is ill, on medications, or in a coma. Other times, cognitive changes and limitations impact a person’s ability to make those decisions.

Mental capacity aims to identify whether a person has the ability to reason, make deliberate decisions, and hold appropriate values in doing so. It is not a simple yes or no situation, but it often revolves around the way a person acts, speaks, and interacts with others.

How to Protect an Elderly Loved One from Making Poor Business and Financial Decisions

It is not ideal to simply strip away a person’s ability to make their own decisions. When a person is able to understand, reason, and rationalize their desires, by all means, they should have the right to do so. Yet, over time, a person’s ability to do this is likely to change, and as a result, that could mean they are unable to make decisions that protect their own well-being. Knowing when this happens is not easy to do, but your elder law attorney can offer help and guidance as you navigate the process.

Every situation is a bit different, and speaking to a Power of Attorney and Elder Law Attorney is the best tool you have to know when to take legal steps. There could be a few things to do now to help protect your family member:

  • Communicate early on with them about your goals and objectives.
    Know what their wishes and goals are. The sooner you do this in a person’s life, the more you’ll have the necessary tools and resources to support their future needs.
  • Get involved when they ask you to do so.
    That means having a good understanding of their financial well-being, debts, income, and investments. It also helps to get your name put on checking and savings accounts when your loved one still has the ability to make those decisions.
  • Consult a professional.
    If your loved one is not willing to trust one family member or the other or does not want to create any bias, encourage them to hire an attorney to do this on behalf of the family or their needs.

How a Florida Power of Attorney Can Protect Your Senior Loved One

One of the legal strategies available to help you minimize the risk of your family member being taken advantage of is to use a Power of Attorney. This is a legally binding agreement that allows you to be assigned as the person’s legal decision-maker. That means that, in situations where they cannot make their own decision, you make decisions for them.

Ultimately, the task of acting as a power of attorney means making decisions based on what your family member’s wishes and best interests are. You can have them established for a range of goals, including financial and healthcare decision-making.

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How To Put A Florida Power of Attorney Into Effect

What is most important now is to take legal action. Set up an appointment with our Power of Attorney and Elder Law Attorneys to discuss your situation. Let us explain the steps involved in this component of protecting someone with diminished mental capacity through a Florida Power of Attorney,  and help you navigate the process.

The Siegel Law Group is dedicated to helping our South Florida clients maintain the best quality of life at all stages of their lives. Call our office at (561) 576-6206 to schedule a complimentary consultation or submit our online contact form to schedule a consultation today. If you have any questions, do not hesitate to contact us. 

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