Mental capacity when signing a Will and other legal documents

 

Am I sound mind enough to sign a legal document or a Will?

Do I have the mental capacity to sign a legal document?

Is it assumed I am of sound mind when signing a Will?

Yes. There is a presumption of sanity. It applies to all deeds and gifts signed by you while you are living (inter vivos).

• See:
  • Attorney–General v Parnther [1792] EngR 2455; (1792) 29 ER 632, 634
  • Murphy v Doman [2003] NSWCA 249; (2003) 58 NSWLR 51, 58 [36] (Handley JA, with whom Tobias JA agreed).

 The law in Australia presumes every person of full age (18 years of age) can manage his or her affairs. This is until the contrary is proven.

However, where it can be shown that a deed is signed by a person who lacks mental capacity, the deed is voidable at the suit of the person affecting the transaction. See

• Ball v Mannin [1829] EngR 165; (1829) 6 ER 568, 572
• McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) [1904] HCA 51; (1904) 1 CLR 243
• Gibbons v Wright [1954] HCA 17; (1954) 91 CLR 423

Who has to prove I am of unsound mind? Who has the onus of proof to prove I am crazy?

The onus for proving a lack of mental capacity is on the person who seeks to have the deed set aside.

The standard of mental capacity required by the law for a deed is ‘issue-specific’. In other words, you work it out concerning the particular transaction contained in the contract.

As observed by the High Court in Gibbons v Wright:

The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation. (page 437)

(1954) 91 CLR 423

Similarly, Lindsay J. in Scott v Scott stated:

It is not, literally, a matter of imposing, or recognising, a different ‘standard’ of mental capacity in the evaluation of the validity of different transactions. What is required, rather, is an appreciation that the concept of ‘mental capacity’ must be assessed relative to the nature, terms, purpose and context of the particular transaction. Nothing more, or less, is required than a focus on whether the subject of inquiry had the capacity to do, or to refrain from doing, the particular thing under review.

[2012] NSWSC 1541

Mental capacity hinges a lot on whether you understand the nature of the transaction

The requisite degree of capacity is very much part of your capacity to understand the nature of the transaction when it is explained. See:

• Gibbons v Wright (n 20) 437 (Dixon CJ, Kitto and Taylor JJ)
• A v N [2012] NSWSC 354, [389]–[391] (Ward J)

Do I have to understand everything in the Will or contract?

No. It is enough if you understand the ‘general purport’ and ‘broad operation’ of the transaction. But not necessarily its precise legal consequences. See:

• Hanna v Raoul [2018] NSWCA 201, [47]–[50] (Beazley P, with whom Macfarlan and White JJA agreed), [161] (Macfarlan JA), citing Gibbons v Wright (n 20) 438 (Dixon CJ, Kitto and Taylor JJ).

Mental incapacity unrelated to the contents of the Will may not be enough to render the Will invalid: Banks v Goodfellow (1870) LR 5 QB 549, 570–1; Bull v Fulton (1942) 66 CLR 295

 

The fundamental statement of the test for testamentary capacity is stated by Cockburn CJ in Banks v Goodfellow (1870) LR 5 QB 549, 565. He states:

“It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties — that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.”  

Is my motivation or finances relevant to my mental capacity?

No. They are not. These factors are not relevant, your:

• motivation for entering into a contract
• understanding of the financial implications of doing so
• appreciation of available alternatives  

These are not matters that decide on your capacity.

Ward J helps explain the appropriate enquiry into your capacity in A v N:

[T]he question as to capacity is not whether [the person signing the deed] in fact understood (though that would be of relevance when considering the allegations of undue influence or unconscionable conduct and the like) or whether he acted in a rational manner in making the decisions that he did, but whether he was capable of understanding had an appropriate explanation been given.

[2012] NSWSC 354.

Debelle J in Dalle-Molle v Manos states:

[T]here are two aspects of the principle. The first is that the mental capacity is directed to the particular transaction into which the person proposes to enter. The second is that the person must have the capacity to understand the nature of that transaction when it is explained.

(2004) 88 SASR 193

Can I or my family argue that the contract is not valid because I was of unsound mind at the time of signing?

Yes. You argue non est factum.

Non est factum (Latin for “it is not my deed”) is a defence. It allows you or your family to escape the performance of an agreement “which is fundamentally different from what he or she intended to execute or sign”. See Petelin v Cullen [1975] HCA 24.

A non-est factum claim means that the contract’s signature is signed by mistake. This is without your knowledge of its meaning. How could you know? You were of unsound mind at the time! Or, so your argument goes.

A successful plea makes the contract void ab initio. This is another Latin expression meaning ‘from the beginning. It is as though the contract never came into existence.

The Australian High Court in Petelin v Cullin states:^[32]

The principle which underlies the extension of the plea to cases in which a defendant has actually signed the instrument on which he is sued has not proved easy of precise formulation.

The problem is that the principle must accommodate two policy considerations which pull in opposite directions: first, the injustice of holding a person to a bargain to which he has not brought a consenting mind: and, secondly, the necessity of holding a person who signs a document to that document, more particularly so as to protect innocent persons who rely on that signature when there is no reason to doubt its validity.

The importance which the law assigns to the act of signing and to the protection of innocent persons who rely upon a signature is readily discerned in the statement that the plea is one ‘which must necessarily be kept within narrow limits’ and in the qualifications attaching to the defence which are designed to achieve this objective.

(1975) 132 CLR 355

But to establish a plea of non est factum, you bear the onus to produce clear and positive evidence that you are :

• under some form of disability; and
• that there is a fundamental or radical difference between the document as it was and what you believed it to be. See Saunders v Anglia Building Society [1971] AC 1004

The 101-Year-Old and the Carer: A Warning on “Creeping” Influence

Australia is greying. We are living longer, which is a blessing, but it creates a “perfect storm” for estate disputes. As you age, you do not always lose your mind all at once. Instead, there is often a slow slide into physical frailty and a quiet reliance on others.

In my years of practice, I have seen that the greatest risk to your Will is not a sudden stroke; it is the gradual, subtle pressure placed on a vulnerable person. The Supreme Court of New South Wales, Waters v Frank; Frank v Waters [2025] NSWSC 1389 is a textbook example of what happens when we do not protect the elderly from “creeping” influence.

Waters v Frank

Dr Waters lived to the ripe old age of 101. In 2009, he did the right thing: he made a Will leaving his estate equally to his two daughters. Simple. Fair.

But as he aged, a paid carer became “closely involved” in his daily life. Between 2011 and 2019, Dr Waters signed a series of new Wills. Each time, his daughters’ shares shrank. Each time, the carer’s share grew. By the time he signed his final Will at age 99, the carer had become the primary beneficiary.

After he died, the court stepped in. One daughter challenged the Wills, alleging “suspicious circumstances” and “undue influence.”

Why the Court ripped up the later Wills

The Court did not find that Dr Waters had suddenly gone “mad.” Instead, they looked at the pattern. They revoked the 2019 Will and reinstated the 2009 Will because:

• Suspicious Circumstances: The way the later Wills were prepared did not pass the “smell test.”

• Knowledge and Approval: Those trying to defend the new Wills could not prove Dr Waters actually understood and “approved” the changes he was signing.

• Probate Undue Influence: Because of his extreme age and total dependence on the carer, his free will was eroded. He wasn’t acting for himself; he was acting to please the person he relied on for his daily survival.

Dr Brett Davies’ Lessons for Australian Families

Vulnerability doesn’t always come with a doctor’s certificate. You do not need a diagnosis of dementia to be “vulnerable.”

• Isolation is the Enemy: If an elderly relative starts relying on only one person—and that person starts “helping” with legal appointments—alarm bells should ring.
• The “Slow Salami” Tactic: Changes to a Will do not have to be dramatic to be fraudulent. Watch out for incremental changes that consistently benefit the person “helping” the Will-maker.
• Independence is Protection: For all our clients, you get a letter setting out how to sign the Will. One of the rules is that the beneficiaries are not in the house during the Will signing.

Children v Professional Carers

If your ageing parent is becoming “attached” to a new helper and suddenly wants to change their 20-year-old estate plan, you must act. Encouraging them to get truly independent legal advice, from the accountants and financial planner, isn’t being “greedy”—it’s protecting their dignity and ensuring their hard-earned money goes where they originally wanted, not where they were pressured to send it.

Don’t let your legacy be decided by the person who happens to be holding the pen when you’re 100 years old.

When is an Appointor of sound mind to sign a Family Trust Deed of Variation?

Get a Doctor’s Certificate to say the person signing is of sound mind

When you build a Will or POA on Legal Consolidated’s website, we direct you, in the cover letter, to get a doctor’s note to say you are of sound mind.

For Wills and POAs, we require you to do this, even if you are young, leaving everything to your spouse and then your children. YOU ALWAYS NEED A DOCTOR’S CERTIFICATE.

There are special rules when you sign a Superannuation Binding Death Benefit Nomination.

Is there a single test of mental capacity in Australia?

In Australia, there is not a single legal definition of capacity. The legal understanding of capacity varies depending on the specific decision at hand. Different legal tests assess capacity, such as the ability to enter contracts, create Wills, or give instructions to an accountant, financial planner or lawyer. You can lack capacity in one aspect. But it does not mean you are lacking it in others. For example, someone might lack the capacity to manage finances but still be capable of making a Will.

Furthermore, everyone may need support in decision-making, with varying levels required depending on the decision. For example, an individual might need assistance understanding a tax return, which their accountant will need to explain, but can clearly express their will and preferences regarding a decision, like making a Will.

What tests by the accountant, financial planner and lawyer apply to capacity?

Various legal tests for capacity exist, tailored to different types of transactions. You must determine if a client comprehends the general nature of their actions. This involves understanding specific situations, evaluating consequences, reasoning through choices, and communicating consistent decisions.

To assess capacity, financial planners, accountants and lawyers may ask questions like:

• Does the client understand the relevant facts and issues?
• Are they aware of their options and obligations?
• Can they compare the likely outcomes of different choices?
• Do they recognize their decision-making abilities and limitations?
• Are they aware of potential exploitation?
• Do their conclusions align with the available information?
• Can they explain their decision-making process?
• Are their desired outcomes consistent and recallable?

These inquiries help gauge whether an individual possesses the capacity to make informed decisions.