Mental Depression And Asset Protection Federal Law
Mental health and the law interact in numerous ways. The law requires a person to be mentally competent to enter into a legal agreement. The term "competence" implies that an individual is mentally capable of entering into a binding contract, transferring assets, or participating in a legal proceeding.
Federal law recognizes several methods of legal structures for asset protection. One such means is through asset-protection trusts set up with the purpose of avoiding or mitigating the effects of divorce, taxation or bankruptcy of the beneficiary. But such trusts are often limited in their effects by the courts. This form of asset protection necessitates the creation of a trust which is a legal instrument that can be construed to be a contract.
Major depression is a disabling condition which adversely affects a person's life. Depression can be of varying degrees but can seriously impair a person’s ability to make rational judgments. In the United States, approximately 3.4 percent of people suffering from major depression commit suicide. Up to 60 percent of all suicides can be traced to some form of mental depression or mood disorder.
Contract acts in several countries in the world do not recognize one made by a person with a mental disorder. Hence, it may be assumed that any Asset Protection Trust created by a person suffering from mental depression can be held in question as the person may not be considered ‘competent’ in law.
Should such a situation can arise where a depressant’s interests are to be protected. The court might assume the responsibility and appoint a person to act on his behalf. Such a person would hold a power of attorney.
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