What does "legal capacity" ensure in trusts?

Legal capacity in the context of trusts refers to an individual's mental ability to create and manage a trust. This encompasses the understanding of the nature and consequences of creating a trust, including the individual's awareness of their rights and the responsibilities associated with trust administration. It is essential that the person establishing the trust, often referred to as the grantor or settlor, demonstrates sound judgment and cognitive ability to make informed decisions regarding the distribution of their assets and the selection of a trustee.

This requirement is in place to protect individuals from being taken advantage of when establishing legal agreements such as trusts. Legal capacity ensures that the trust is valid and enforceable, reflecting the true intentions of the grantor. If an individual lacks legal capacity due to issues such as mental illness, intoxication, or age (for minors), any trust they attempt to create may be deemed invalid. Therefore, it is critical for anyone intending to create a trust to possess the necessary mental competence.