Testamentary capacity is not reserved for people who are wise, or fair or reasonable, or whose values conform to generally accepted community standards

The question of testamentary capacity can be a complex matter particularly when a testator has been diagnosed with dementia but experiences lucid intervals. What are the tests that should be applied? What should be done when there are contrary assessments of capacity between medical and legal practitioners?

This paper extracts key aspects of the case of Muir v Rosemary Laycock (by her litigation guardian Charles Laycock) [2025] VSC 287, to identify a range of complex matters which reinforce the importance of ensuring that comprehensive file notes must be prepared when dealing with potential capacity clients.

The matter related to whether the will of Charmian Louise Watt, made on 18 October 2010, should have been admitted to probate. The will was challenged on the grounds that Ms. Watt lacked testamentary capacity.

Ms. Watt’s closest living relative was Rosemary Laycock, her niece, who had been appointed as her guardian and attorney pursuant to an enduring power of guardianship and enduring power of attorney.

Ms. Watt died in 2020 aged 95 and had been diagnosed with dementia six weeks prior to executing the will in 2010. She was further assessed in April 2011 and diagnosed as lacking testamentary capacity.

Ms Watt continued to drive into old age and lived independently at her home in Armadale. In September 2023 she was advised by VicRoads that her driving licence had been suspended on medical grounds. At this time, her niece, Ms. Laycock raised the question of Ms. Watt moving into permanent residential care. Consequently, Ms. Watt became angry with Ms. Laycock because she believed Ms. Laycock had been involved in the suspension of her licence, and she was distressed at the prospect of being placed in care.

In September 2010 Ms. Watt contacted Mr. Michael Muir, a Solicitor and provided him with instructions for the preparation of her will. The instructions provided that Ms. Laycock was bequeathed a relatively small bequest of 2.5% of Ms. Watt’s estate.

On 12 November 2020 Ms. Laycock filed a caveat with the Registrar of Probates contending that Ms. Watt lacked testamentary capacity shortly before and at the time of executing the will. She also asserted that Ms. Watt did not know and approve the contents of the will and that it was signed in suspicious circumstances.

Testamentary Capacity:

The classic formulation of the legal test for testamentary capacity is Banks v Goodfellow in which Cockburn CJ stated that:

It is essential to the exercise of [testamentary] power that estate or 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 letter 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.

In considering the application of Banks v Goodfellow to contemporary cases the Court cited Haberfield v Larsson, in which Cavanough J considered the effect of cognitive impairment upon testamentary capacity. His Honour cited with approval the following passage from the judgement of Kourakis CJ in Roche v Roche:

As with other 19th century common law principles governing the legal effect of mental illness, the statements in Banks v Goodfellow no longer reflect modern medical knowledge. It is now recognised that there are a broad range of cognitive, emotional and mental dysfunctions, the effects of which are difficult to identify precisely or delineate from the exercise of ones ‘natural faculties’ and the reasoning capacity of the ‘sound’ mind. Moreover, rules as to testamentary capacity must recognise and allow for the natural decline in cognitive functioning and mental state which often attends old age.

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A testator may have testamentary capacity even if his or her cognitive functioning is impaired in the sense of not being as acute as it once was or because he or she falls within a very low percentile of the community for that functioning. However on both the original Banks v Goodfellow formulation and its modern restatement, more is required than a capacity to identify those persons who have a socially acceptable claim on the estate. A capacity to appreciate that there are competing claims on the estate and to make a deliberative choice, even a badly reasoned or capricious one, to ignore or compromise those claims is necessary.

It is also important to remember that the issue is one of capacity. It is not necessary that the testator in fact turn his or her mind to the extent of his or her estate, recall all who have a claim on it, and weigh their claims. It is merely necessary that a testator have a capacity to do so if he or she wishes. A testamentary disposition is not invalidated if a testator with that capacity decides on a capricious and indeed random disposition.

Does dementia prevent a testator from having testamentary capacity?

The Court stated that:

The fact that a testator is suffering from dementia does not prevent the testator from having testamentary capacity. As Ashley J observed in Norris v Tuppen:

The presence of dementia does not necessarily tell against a testatrix having competency. Dementia may manifest itself in imperfect recollection, yet leave intact the awareness and ability [required].

Where a testator suffers from dementia but has lucid intervals, the Court’s inquiry as to testamentary capacity is directed to whether the will was made in such an interval.

Applying Banks v Goodfellow:

As to the first element of the test in Banks (capacity to understand the nature of the act of making a will and its effects), it is not necessary to establish that the testator was capable of understanding the legal effect of all of the clauses of the will.  However, it must be shown that the testator understood they were executing a will and the practical effect of its central clauses, including the dispositions of property made.

As to the second element of the test in Banks (capacity to understand the extent of the property which the testator is disposing), no high level of precision is required to be demonstrated in relation to the testator’s knowledge of their property as at the date of execution of the will.  It is not necessary that the testator must have knowledge ‘of each particular asset or knowledge of the value of that asset, or even a particular class of assets.’

The third and fourth elements of the test in Banks (awareness of those who would have a natural claim to the estate and the ability to evaluate and discriminate between such claims) are often grouped together. The testator must be aware of those who might reasonably be thought to have claims upon his or her bounty, and the basis for and nature of those claims, and have the ability to evaluate and discriminate between the respective strength of those claims.

Harsh Bequests:

In considering a number of judgements relating to bequests which may on the face of it appear to be unfair or harsh, the Court stated that:

The fact that a will contains a bequest which, viewed objectively, is harsh will not, of itself result in a will being invalid. As Gleeson CJ observed in Griffith:

Where an alleged delusion concerns a fact, or state of affairs, bearing upon a judgment as to the moral claim one person has upon another’s bounty, and the question of its falsity is capable of objective determination, the task of the court is relatively straightforward. However, there may be cases in which one person’s estimation of another’s claims may seem harsh and unwarranted, and perhaps even unnatural, but it is impossible to assign a reason for that, or to point to any false belief. Testamentary capacity is not reserved for people who are wise, or fair, or reasonable, or whose values conform to generally accepted community standards. A person may disinherit a child for reasons that would shock the conscience of most ordinary members of the community, but that does not make the will invalid.

Conflict between medical evidence and evidence of the solicitor who prepared the will:

The Court stated that:

Where there is a conflict between medical evidence and evidence from the solicitor who prepared the will, greater weight may be given to the solicitor’s evidence. As the Court observed in Gooley v Gooley:

It is clear that while the Court may be assisted in its assessment by medical experts, the question of testamentary capacity is ultimately a question of fact for the trial judge, and lay evidence may equally be relevant … It has generally been said that neither expert medical evidence nor the opinions of attesting witnesses as to competency are on their own decisive …

An experienced solicitor’s evidence is capable of being “valuable evidence of testamentary capacity” because an “experienced solicitor… gets used to dealing with people making wills and [is] usually attuned to red lights that flash when a person who is of suspect capacity comes across their path” … Equally a solicitor’s evidence may, depending on the circumstances, have considerable weight where the solicitor does not have a specific recollection of a will being signed but gives evidence of his or her usual practice …

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However the Court ought not accept the evidence of a solicitor as to testamentary capacity or knowledge and approval where the solicitor’s usual practice or conduct in relation to the making of any particular will is deficient, including where the solicitor has not asked the client open-ended questions to allow a proper assessment to be made

Knowledge and approval of the contents of a will

The Court stated that:

In order to establish that a document is the last valid will of a testator, it must be proved that he or she ‘knew and approved its contents at the time it was executed so that it can be said that the testator comprehended the effect of what he or she was doing’. In other words, the requirement of knowledge and approval requires that ‘the will contains the real intention and reflects the true will of the testator’. Knowledge and approval does not require the testator to have a precise legal understanding of the will. Rather, it is sufficient ‘if the testator is shown to know and approve the gravamen of the will.’

The concept of knowledge and approval is distinct from testamentary capacity. As observed in Re Estate of Church: ‘the will-maker may have testamentary capacity, but it may be found that he or she did not know and approve of the contents of the will, notwithstanding that he or she understood its contents, if the person did not exercise his or her capacity to comprehend and appreciate the claims to which he or she should give effect.’ Evidence relevant to testamentary capacity will also be relevant to knowledge and approval.

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Evidence that a will has been prepared by a solicitor and read to the testator is ‘powerful evidence’ in establishing that the testator knew and approved of its contents, but it is not conclusive. The ‘most satisfactory’ evidence of actual knowledge of the contents of the will is ‘evidence of instructions given by the testator for the will, or that the will was read over by or to the testator.’

Conclusion:

In concluding the matter, the Court stated that:

Putting to one side the question … of whether at the time she executed the will (Ms. Watt) was affected by paranoia or delusions I am satisfied that (Ms. Watt) understood:

(i)           the effect of making a will;

(ii)          was aware of the general nature and value of her estate;

(iii)         was aware of those who would have a natural claim to the estate; and

(iv)         was able to evaluate and discriminate between such claims.

I am also satisfied that (Ms. Watt) knew and approved the contents of the will at the time it was executed and comprehended the effect of what she was doing.