Armanino Blog

Major Changes to Estate Plans? Consider a Letter of Competency

March 26, 2019

Changes to wills can result in messy litigation when an heir is unhappy with the change. Dementia and other health issues that affect one’s mental capacity can be devastating and can complicate estate administration. An heir may claim that the decedent was not mentally competent when the change was made. This is particularly common when an heir is removed from a will entirely or if there has been a change in medical power of attorney. However, there are steps you can take to mitigate these challenges.

Obtaining a letter of competency is one way to mitigate litigation risk. This letter is drafted by a doctor who knows you or your loved one well enough to certify their mental capacity and competency at the time the change was made to the will. This letter can be kept with the estate documents and presented if disputes arise.

Consider a scenario where a parent removed a child from their will and did not have a letter of competency prepared and signed by a doctor at the time the will was changed. Upon the death of the parent who suffered in later years form dementia, child 1, who was removed from the will, sued the rest of the estate heirs. They claimed their parent was under duress from the other heirs and not competent at the time child 1 was removed from the will. The estate executor would need to work with an attorney and the descendant’s doctor to review medical records to try and support the parent was of sound mind at the time they changed their estate documents. The challenging task of proving mental competency after the fact can be avoided by getting the letter of competency from the doctor at the same time changes are made to estate documents.

A letter of competency should include basic identifying information (name, date of birth) as well as a statement of how long the doctor has known the individual, a statement testifying to their ability or inability to make independent decisions regarding any estate documents they are changing, any relevant diagnosis and related details as well as the doctor’s contact information.

Contemporaneous documentation is essential in tax and estate planning. Failure to have contemporaneous substantiation for charitable contributions can result in the denial of the deduction on your tax return. Likewise, contemporaneous documentation for estate planning can reduce future litigation from unhappy heirs.

To ensure you have the necessary documents in place to protect your estate, contact our experts.

Stay In Touch

Sign up to stay up-to-date with the latest accounting regulations, best practices, industry news and technology insights to run your business.

Private Wealth Resources & Insights
Philanthropy and Athletes: Impact Off the Field
How Athletes Can Cement Their Legacy Where It Matters – Their Community

May 22, 2024 | 11:00 AM - 12:00 PM PT
Trust and Estate Planning Guide
Now is the time to identify tax-saving opportunities, protect your legacy and take charge of your estate plan.

May 10, 2024
Is It Time to Reevaluate Your CPA Relationship?
It’s smart to take stock of your accounting firm when you hit certain milestones in your wealth journey.

March 01, 2024