Christian Chenu

A minor miracle

The 1940s and 50s were a heyday for Christmas movies. Stories of love, kindness and joy took audiences’ minds away from the hardships of the post-war period. It’s a Wonderful Life and White Christmas literally became part of the holiday vocabulary. And a little movie called Miracle on 34th Street (starring Maureen O’Hara and Natalie Wood) provided a glimpse of the daily challenges faced by gerontologists and estate planning lawyers alike.

Only New York could drive Santa to violence

Kris Kringle (played by Edmund Gwenn) is a department store Santa Claus. He’s rather good at his job, to the point that he believes himself to be the real Saint Nick. Most people cannot help but respond to his warmth and sincerity, but others insist he is unwell and disturbed. Following an altercation with a co-worker resulting in fisticuffs, Kris Kringle is given a mental capacity test. Hoping to preserve the good name of Santa Claus by posing as a confused old man, he deliberately fails the test. A formal capacity hearing ensues.

So what test do we apply?

Putting aside the argument that physical violence might be a perfectly rational response to life in New York, Kris Kringle’s committal hearing raises legitimate questions about what test or standard should be applied to determine his competency. The fact that his lawyer actually wins the case suggests that there’s probably some legitimate questions about the judge as well.

The key point to note is this: there is no single standard to apply when assessing a person’s capacity.

You have capacity (unless you don’t)

Under the common law, there is a presumption that a person over the age of 18 has legal capacity to make their own decisions. However, capacity is an opaque concept and means different things in different contexts.

As a legal concept, capacity is ‘decision specific’. The definition of capacity (and by extension, the legal test) to be applied turns based on the transaction at hand. A person may have capacity for some decisions but not others. In its guide to lawyers, the Law Institute of Victoria cites 19 different legal standards that might be applied depending on the matter at hand. Also, a person’s legal capacity will very often be fluid over time and not static.

For will-making (and only for will-making), the standard to be used is set out in Banks v Goodfellow. To have testamentary capacity, a person making a will must understand:

  1. What it means to make a will;
  2. The assets of the estate to be left to others; and
  3. Who might reasonably expect to benefit from the will. The will-maker must also be free of any delusion that might affect their attitude towards those people.

Now what do we do?

There is no single solution to this problem. The correct approach will be determined by the facts at hand and the transaction in question. However, two lessons are clear.

Firstly, from professional experience, matters will be made infinitely easier if the person in question has in place appropriate powers of attorney which they made at a time when there was no question as to their legal capacity.

Secondly, from Miracle on 34th Street, anyone who makes Santa Claus take a capacity test is going straight to the ‘Naughty’ list.

Loch Legal would like to wish everyone a joyful and safe holiday and a happy new year! We will be happy to consider all of your estate planning requirements. Please contact Sophie Cohen (sophie@lochlegal.com.au) on 0411 866 505 or Christian Chenu (christian@lochlegal.com.au) on 0417 015 997 to discuss how we can help.

Miracle on 34th Street (both the original and the 1994 remake) is now streaming on Disney+