It is no secret farmers and ranchers are getting older across the West.
According to a 2016 study by Oregon State University and Portland State
University, the average age of farmers and ranchers is now 60. As more baby
boomers prepare for retirement, an estimated 10 million acres of farmland will
change ownership over the next two decades, making farm succession and estate
planning that much more important.
But what happens when the farm or ranch owner is no longer mentally
capable of making those decisions?
That was the subject of a lecture May 31 at Providence Benedictine
Nursing Center in Mt. Angel, Ore., dealing with mental competency in estate
planning. The presentation was part of a memorial series honoring Sister
Marilyn Schwab, who helped found the nursing center and served as prioress of
the Benedictine Sisters in Mt. Angel.
About 40 guests heard from Maria Schmidlkofer, a Salem attorney focused
on estate planning and farm succession, as well as Ho-Yann Jong, a neurologist
for Providence Medical Group in Portland, and Amy Friday, a licensed clinical
psychologist for the Oregon Passionate Aging and Living Institute in Portland.
Schmidlkofer related a few of her personal experiences working with
clients, and highlighted some high profile cases like wealthy New York
philanthropist Brooke Astor and L’Oréal heiress Liliane Bettencourt. Both women
had Alzheimer’s disease before they died, and disputes erupted whether they
were being taken advantage of for personal gain by friends and family.
“Mental competency affects a lot of people,” Schmidlkofer said. “Even if
you’re wealthy, it comes up quite a bit.”
Statistics show that 38 percent of people 85 or older have dementia or
some type of cognitive impairment, Schmidlkofer said, yet attorneys like
herself must begin with the assumption that a client is competent — meaning
they have legal capacity to sign a document.
However, to sign a will or a trust requires just the most basic level of
competency, Schmidlkofer said, which opens the door to pressures like undue
influence, which could invalidate the agreement.
Disability planning is key to any good estate plan, Schmidlkofer said.
In some cases, a court-appointed guardian or conservator may be required to
step in and help manage finances.
The goal is to protect yourself and protect your assets for future
generations, Schmidlkofer said.
“I really think it’s an expression of love for your family when you have
your estate planning done,” she said.
Jong went into further detail about how doctors distinguish between
normal aging, mild impairment and more serious forms of dementia.
In terms of decision-making, Jong said there is a difference between
mental capacity and competency. Competency, he said, is a purely legal term
defined by the courts, while capacity is related to a specific decision,
specific action and specific context. A person may have the capacity to make
some decisions but not others, and that capacity may change over time.
Financial capacity is the ability to manage money and assets consistent
with a person’s values and self-interest. It is often the first thing to slip,
Jong said, indicating the onset of dementia. A physician’s role is to screen
for impairments, educate patients and families about their options and refer
them to specialists, like Friday with the OPAL Institute.
Friday was quick to point out that because someone is physically
disabled, or has a different set of values, does not mean they are not mentally
capable of handling their estate plans.
“We don’t want to confuse normal aging with having a problem,” Friday
said.
Qualified professionals can evaluate a person’s basic brain functions to
determine if they lack capacity, Friday said. At that point, legal
representation may be required in estate planning.
Schmidlkofer advised against a one-size-fits-all approach to estate
plans, especially for farms and ranches.
“Every farm has a little different plan,” she said. “You want to make
sure you put special guidelines in the document about the farm and what’s
supposed to happen to it.”
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