Doctors don't get the last word on capacity claims. Woody v. Vickrey (NC App, April 6, 2021).
Updated: Sep 30, 2021
Is the expert testimony of a court-ordered, board-certified forensic psychiatrist sufficient to quash a capacity claim in a trust caveat? (Answer: No.)
The April 6, 2021 Court of Appeals decision in Woody v Vickrey (from my local bar in a Chatham County trial) reminds practitioners that the centuries-old, legal test remains the binding standard for assessing legal capacity (not medical). The test elements require the person to generally be able to identify: (1) their family, (2) their property, (3) the impact of the will/trust on who receives their property, and (4) that items 1-3 existed simultaneously. See the NC pattern jury instructions on capacity (860.15) for more detail. Capacity test elements amount to knowing what you own and to what extent you are deviating from your prior estate plan (be it with or without a prior will/trust).
In Woody v. Vickrey a settlor executed a Revocable Living Trust (RLT) in 2008. In 2017 this RLT was revoked and a new estate plan (new: POA, Will, RLT) with entirely different fiduciary appointments and beneficiaries. The trustee of the 2008 RLT (denying the legitimacy of the 2017 actions) took defensive measures (deeding land) to safeguard trust property, triggering the present lawsuit. One particular claim involved a question of whether the decedent knew what they were doing in 2017, i.e., a “capacity” claim. The trial court in Chatham County ordered a professional medical opinion from a board-certified forensic psychiatrist, which when rendered undercut propounders' claim that the settlor had capacity to validly execute the 2017 RLT. On appeal this portion of the trial proceedings was reversed on the grounds that the trial court failed to apply the correct legal standard, which is the 4-part test laid out above (not mere deference to a medical opinion).
A medical doctor is simply not qualified to administer a legal capacity test for a Will/Trust, as it involves applying facts to law in determining the underlying intestate result being drafted around. A psychiatric evaluation may be important, but it is not dispositive. (While not directly discussed in the opinion, this case also provides an opportunity to recall that even a person with highly diminished capacity may still execute valid estate planning documents during a lucid interval.)
Warning signs. Proceed with caution when overhauling an estate plan in the presence of diminished capacity and facts which may suggest the possibility of undue influence (here: evidence showed that the new fiduciaries/beneficiaries moved in with and isolated the settlor from neighbors and family 1 month before the new estate documents surfaced benefiting them). Touching base with the original attorney (if any) who drafted prior documents can be vital to understanding who is who in a family dynamic.
Fees. Resolution of this case will likely result in legal fees that exceed the personal property available, so under N.C.G.S. § 6-21(2) the main asset (family land) will likely be poised for sale to pay attorneys fees, even if the caveators lose (so long as the claims are brought with “substantial merit” and in good faith). See In re Will of Barron (NC App 2012).
Alternative Options. Trustees in similar situations should know they have other options, such as seeking dispute resolution counsel (list of NC trained Collaborative Law attorneys here) before bridges between parties catch fire in litigation posturing. Even if a lawsuit is deemed necessary or preferable, consider whether filing a declaratory judgment action (expressly provided for an exception the Clerk's jurisdiction in NCGS 36C-2-203(c)) may be the less explosive approach that still gets parties before the courts.