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San Antonio Express-News
December 26, 2006

Presumption of Competence

copyright 2007, Paul Premack

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Dear Mr. Premack: My brother is very old and frail. I have been appointed Guardian of his person because he needs someone to care for him but has no finances except his social security. But an issue has come up with an inheritance he might receive, and the attorneys want various papers to be signed. Can my brother give me power of attorney to handle these matters for him? I am concerned about his “competence”. – H.R.

When a person desires to make a power of attorney, the key issues are that person’s ability to understand what the power of attorney is, and that person’s desire to authorize an agent to provide assistance. Essentially, the person needs to have the same capacity necessary to enter into any contract.

When a court grants Guardianship over a person, the court is ruling that person legally incapacitated in some way. All Guardianship orders, however, must specify the nature and extent of the incapacity and must specify what powers are being taken away from the ward. A Guardianship “of the person” involves issues of self-care, and does not grant the Guardian authority to handle any type of financial issues.

As such, the fact that your brother is under a Guardianship has not stripped him of the legal right to sign a power of attorney, or to manage his own financial affairs. The court has not ruled on his capacity to handle his finances, and Texas law does not allow us to presume a person is incapacitated just because of age.

A case decided by the Texas Supreme Court (McKinney v. Fletcher) creates a legal presumption that the elderly are competent until proven otherwise. In the case, a stockbroker assisted an elderly client to transfer stock to her nephew. A year later, her niece decided she was unhappy with the transfers and started a Guardianship over her elderly aunt. The Judge ruled that her aunt was incapable of handling her own finances at the time she appeared in court.

The Guardian “of the estate” then sued the stockbroker. The jury decided that the aunt had legal capacity at the time she worked with the broker, but that the broker was negligent for carrying out her instructions. The niece argued that the broker should know, because of the client’s age alone, that she would not understand the transaction.

On appeal, the court acknowledged that there is a real risk an elderly person may not understand a complex financial transaction. It chose, however, to balance that risk against the need to provided services to everyone in the same manner, regardless of age. As such, the court decided there is no responsibility on the part of “service providers in general or stockbrokers in particular” to determine the competence of their clients.

The court stated that, “A service provider should not be put to choosing between refusing to assist an elderly person with legitimate transactions and incurring liability for providing such assistance when the provider lacks any qualification for determining competence.” Thus, age alone does not create a presumption of incapacity.

You should put your brother in touch with a Certified Elder Law Attorney to discuss the option of creating a durable power of attorney. A medical assessment might be necessary, but if your brother understands what a power of attorney is and what it would accomplish, he should still have legal authority to create one.
Prior Column: Surviving Spouse Homestead Rights
Next Column: Who can File Will for Probate? 
Disclaimer: This column answers a specific legal question asked by an individual in Texas. The answer may or may not match your individual situation. Be careful not to treat this column as specific legal advice, as it may not meet your individual needs. It may give you a solid basis for discussion with your own attorney.  You should consult with your personal attorney before you take any action on this or any legal issue. Also, please be aware that laws change, so  this column is valid only as of the date it was published. This communication does not create an attorney-client relationship between the author and the reader.

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