Legal Document Signing Requirements for Collectors with Dementia

Specialized Vehicle Solutions caters to car collectors and enthusiasts who are passionate and knowledgeable about their assets. Asset protection is an often forgotten aspect of asset ownership that should be considered before major purchases, like rare cars. Collectors need to prepare in the event they lose competency, as the rules differ greatly for assets when a person is cognitively impaired. Accordingly, we have written this quick reference to legal document signing requirements for collectors should this unfortunate situation arise.

What is dementia? Dementia is a disease of the nervous system that affects the function of the brain. Dementia is not a single illness, but rather a collection of symptoms that cause changes to cognitive function. Cognitive function involves how a person thinks, remembers and makes decisions, as well as reasoning, problem solving and managing the skills necessary for daily activities. As dementia progresses, it will affect a person’s: Legal capacity is defined as a person’s ability to understand the general nature and effect of a transaction. So, to have legal capacity to sign a contract, a person must be able to understand a basic explanation of the contract’s contents. It is important to note that a person does not need to understand the specific details of a contract or understand all the implications of a contract to be legally capable of signing. Legal capacity also looks at whether a person can communicate an intention to enter a contract and make a decision on that intention. If a person does not have legal capacity, the contract or agreement may not be validly created and can be reversed in the future. An inability to sign paperwork may cause significant difficulties for car enthusiasts. Therefore, it is vital for collectors to plan ahead and make appropriate arrangements.

The following is a summary of general legal document signing requirements for persons with dementia: It is essential to note that dementia has highly variable effects. Therefore, the capacity of each person will be different and will be affected by the formality of the task, social context and relationship to another party. For example, in some cases, a person will have the ability to enter a verbal agreement, however this skill may not translate to a formal, written agreement. In addition, the relationship between the person and the other party will play an important role in the assessment of capacity. A person may be fine to enter an agreement with a family member, however the same person may not be able to enter a contract with a stranger. On the other hand, a family member or carer may not be considered a ‘party’ to a contract. In this case, they would not be obliged to assess the person’s capacity to sign a contract in every day situations.

If you are looking for signs that you need to be prepared to meet the legal requirements discussed above, there are a few indicators: If your collector’s intuition is telling something is ‘off’, then take the time to properly formulate a plan for asset ownership. Having a plan will ensure your loved ones do not miss out on important opportunities or miss critical deadlines. Does someone with dementia have capacity to sign a contract or agreement? In the context of car collectors, a person with dementia might have capacity to enter a verbal agreement with a family member or close friend about a rare car, however they would not be able to sign a formal agreement. This will require a family member or trusted person to act on the collector’s behalf. A person with dementia lacks the understanding to formally assign their legal rights to a person they may have appointed under a Power of Attorney. However, a family member or carer will often act in the best interests of the collector and make important decisions, even though a formal assignment of authority has not been made. This is a vital role of a family member as it allows the collector to continue enjoying their passion. Therefore, even though a collector may not be able to sign a contract, they can still be closely involved in the process. Having an involved family member or carer will mean a person with dementia can still enjoy their passion and collectible cars can be signed, purchased and sold whether or not the collector can formally sign a contract. Unfortunately, the capacity of a person with dementia to enter a contract may not always be clearly visible. So, if there is any doubt, it is best to progress with caution and to seek legal advice or take other precautions to protect yourself. There are numerous scenarios to consider when a collector is no longer in control of their assets. For example, Dow Jones (DJ) and Bob (B) go to Toyland Exclusive Concessions and DJ is looking to ask B for a revision of their agreement in buying a modified race car. However, a family member notices two things: 1. that DJ is not acting like themselves and 2. that B is not acting like the honest person that they always knew B to be. Consequently, they step in and prevent the transaction from occurring. In addition, the family member will speak with B’s family, taking into consideration the fact that DJ had been acting strangely. As such, ask B whether they know that DJ was no longer competent. B’s family will then speak to B and seek medical assistance. Furthermore, the family member will take care of the modified race car transaction with DJ and B so as not to risk further loss to either party. This is just one scenario, however it demonstrates how capacity can affect the sale of a collector’s car. Accordingly, it is essential for persons with dementia and their family members to plan for this scenario.