It can be nearly impossible to help a parent plan his or her estate when dementia exists. The problem with dementia is that is qualifies as the type of mental defect that could cause the person to lack the necessary capacity to create a Trust or Will.
The first issue is whether your parent still has enough capacity to create a Trust or a Will. The legal requirements for capacity differ between creating a Trust versus creating a Will. A Will has much lower capacity requirements than does a Trust.
Will capacity is governed by California Probate Code section 6100.5, and that code section allows anyone over age 18 to create a Will; provided that, the person understands (1) the nature of his property, (2) his relationship with his relatives (such as children), and (3) a general outline of his assets. This is one of the lowest capacity requirements under the law. It is possible for someone to be suffering from dementia, but still have sufficient capacity to create a Will. Therefore, you need to ask your parent’s doctor if the dementia diagnosis affects any of the three items listed above.
And dementia can fluctuate so a parent can have capacity one day, lose capacity the next day, and then gain capacity back again. Although over time the dementia will slowly progress and become worse in most cases.
California law also holds that simple Trust amendments follow the same capacity requirements as Wills. For that reason, a person with dementia could create a simple Trust amendment provided they have enough capacity to create a Will.
Trust creation, however, is a bit more rigorous. The capacity requirements for Trust creation are found under Probate Code section 812. Section 812 requires a person to understand and appreciate the rights and responsibilities created by the Trust, the probable consequences to the Trust creator and others, and the significant risks and benefits. These items are far more complex, and require a higher level of capacity, then creation of a Will. Again, a doctor’s diagnosis is needed to determine if your parent can meet the requirements for creating a Trust.
If someone is suffering from dementia and they are not able to meet either the Trust or Will capacity requirements, then you still have the possibility of seeking substituted judgment. Under Probate Code section 2580, any interested person can ask the court to order a conservator to take certain actions, which include the creation of a Trust. Of course, the person first has to be put under a conservatorship proceeding. But once that occurs, then the court can create a Trust on the conservatee’s behalf—referred to as substituted judgment.
The best approach is to work with your parent’s doctor to determine what level of capacity your parent possesses. If your parent has enough capacity to create a Will, then you can at least have a Will prepared and your parent’s intent will be preserved (although probate would still be required with a Will). If, however, there is enough capacity to create a Trust, then try to take that approach. If there is not enough capacity for either, then you should consider creating a conservatorship and then bringing a motion for substituted judgment on your parent’s behalf.