Wills and disability

There are no special provisions under the National Disability Insurance Scheme (NDIS) that determine personal legal matters such as making a will. The same state and territory laws that govern what happens to your estate when you die apply whether you are able-bodied or have a disability.

In some cases, a test for what’s known as “testamentary capacity” will be carried out by a solicitor, when having a disability is thought to diminish that person’s capacity to make a valid will.

“If the person is infirm or has an intellectual disability or a mental illness for example, they could (but not always) have a reduced capacity to make their will,” says Timothy Morton, estate lawyer and associate director at law firm Farrar Gesini Dunn. 

What is testamentary capacity?

Testamentary capacity is the term used to describe a person’s legal and mental capacity to make a valid will.

“This common law test was created to ensure that the person making the will was of sound mind, memory, and understanding when they made their will,” explains Morton. 

According to the testamentary capacity test, at the time of making their will, a person must have the capacity to:

  • Understand the nature and effect of a will.
  • Understand the nature and extent of their property.
  • Understand who their family is and be able to discriminate between different claims family members might have on their estate.

To determine capacity, a solicitor may also request information from a person’s doctor. If, in their opinion, that person has no capacity, that solicitor may refuse facilitating that person’s will.

Can I make a will for my disabled loved one?

“No one has the right to make a will for you, even if you have a disability,” says Morton. That includes guardians, trustees, parents, and people under a power of attorney, he says.

What happens if someone has no capacity to make a will?

Two things could happen. One is that someone can act on that person’s behalf to make an application to the courts — while that person is still alive — to make what’s called a statutory will. “This is where the court will make a will for that person and decide how the estates are distributed,” says Brian Herd, elder law expert and partner at law firm CRH Law.

“Secondly, if the person is unable to make a will and that person dies, the laws of intestacy apply,” That person’s relatives will have to apply to the Supreme Court for Letters of administration — just as they would an able-bodied person — and the court will distribute the estate according to a predetermined formula.

What happens when a person with partial capacity wants to make a will?

There are varying degrees of capacity in disability, and capacity can depend on the severity of the condition and to what extent it impairs an individual’s insight, judgement, and decision making skills. Someone with dementia for example, may be lucid and coherent one day, and confused and agitated the next.

What’s important is that people with limited capacity are treated like they still have agency and are empowered in their decision making, says Morton. “If they are able to make one particular decision and understand the implications of that decision, they should be empowered to do so,” he says.

Morton describes the case of a woman with dementia and limited capacity who wished to make a six figure contribution to a charity in memory of her husband. In this case, it was necessary to take the case to the ACT Civil and Administrative Tribunal (Guardian Tribunal) to receive a finding that the woman did indeed have impaired decision making capacity, but still had the capacity to make this particular decision.

I’m the parent of a disabled child. How can I ensure my disabled child gets their inheritance without interference from third parties?

In this circumstance, Morton recommends creating a trust within the parent’s will. “Unfortunately, there are instances where people will ingratiate themselves to vulnerable people to take advantage of them. However, a trust administered by a trustee should offer a certain level of protection for that disabled person’s inheritance and allow them to access their inheritance for their needs,” he says.

What is a Special Disability Trust?

Special Disability Trusts plan ahead by preparing for the longterm future care and accommodation needs of a person with a severe disability. These trusts have special government exemptions to ensure the disabled beneficiary is adequately provided for by the trustee.

Under the rules of the trust, the beneficiary can have up to $657, 250 (indexed 1 July each year) exempted from the assets test. Family members that gift money to the trust can also qualify for a gifting concession of $500, 000 so that their gift won’t affect their eligibility for Centrelink benefits.