Capacity of the client

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Financial Abuse of Older People

Capacity of the client

The rights of older people must be respected. All adults are considered competent to make informed decisions unless proven otherwise. People also have the right to make poor decisions, even in situations of abuse ). 

Capacity is a legal construct, not a medical diagnosis, and it is difficult for the practitioner to determine whether the person has capacity. The tests for capacity vary, according to the type of decision being addressed and depending upon the relevant state or territory.

The practitioner may, however, make an initial assessment, looking for warning signs, using basic questioning and observation. If doubt exists, the practitioner may recommend a clinical consultation or formal capacity evaluation by a qualified person, such as a psychiatrist, geriatrician or neuropsychologist.

A person with capacity has the ability to:

  • Understand information – do they understand key terms? Do they understand the nature and effect of any important documents? Are they able to engage in discussion with you about the information you are providing, about the advantages and disadvantages, about the options? 
  • Retain information – can they remember all the recent personal, family, and financial matters that are relevant to this decision? Is their rationale for their decision consistent or stable over time?
  • Believe information – do they seem to believe or accept the information you have given them, such as the value of assets, options, advantages and disadvantages and possible outcomes? Are they making decisions on the basis of potentially paranoid ideas or false information?
  • Evaluate, process and weigh up information – can they demonstrate to you that they have spent some amount of time considering their options or thinking about their decision? Do they seem to be listening and taking time to process new information you are providing them? Does their decision-making seem impulsive, flippant, poorly considered, or easily influenced by you?
  • Communicate information – can your client explain in their own words what you have told them? (Rather than just saying "yes" or "no" to your questions.) Do their explanations include important and relevant information? Do they ask questions? Have they shown that they are thinking about how your advice applies to them and their personal and financial situation.


A person may have a disability or medical condition, but that does not necessarily mean that they lack decision-making capacity. A medical diagnosis of Alzheimer's disease or other dementia or other cognitive disability does not automatically mean that a person is unable to make their own decisions. Whether or not a person has the capacity to make a decision in a particular matter requires examination by a qualified specialist.

An individual does not have to prove that they have capacity to make a decision. There may however be indicators of incapacity and, if there are, then it is appropriate to recommend an assessment by a medical expert.

For example, if your client does not know, even after having them explained:

  • the issues that face them
  • the approaches available to them appreciate the reasonably foreseeable consequences of their choices
  • if their decisions are based on delusional constructs and cognitive impairment is present only then it can be said they lack capacity.

Lack of capacity may be intermittent. Lack of capacity may also be due to:

  • stress
  • a move to unfamiliar environment
  • infections
  • hearing and sight difficulties
  • educational level
  • language and cultural barriers.

If the lack of capacity is due to the above, you may be able to establish capacity through finding a better time, place or way to communicate.

Indicators of lack of capacity 

The following factors, if present, may indicate a lack of capacity in which case the practitioner needs to be alert, and frame their advice accordingly:

  • Poor concentration: limited ability to interact with practitioner or to repeat advice and ask key questions – client appears overwhelmed by what you are saying or is frequently changing topics during the conversation, going off on tangents, being flippant. You may also sense they are only taking in the gist of what you are saying.
  • Difficulty with recall or memory loss – client does not remember important details about their personal or family history, their past or current financial situation, what and when any previous documents were signed.
  • Ongoing difficulty with communications – client is not explaining themselves or their reasoning well to you, they struggle to recall important words, they say very little or do not seem to understand many terms you are using despite attempts to clarify and use simpler language.
  • Lack of mental flexibility – client is not open to even hearing about other options or potential risks. They may inadvertently return to the same topic of conversation several times.
  • Poor insight or judgement – client clearly lacks insight or judgment into the degree of risk they are placing themselves in, how vulnerable they are, what the value of their assets currently are.
  • Problems with simple calculations that they did not have previously – this might be elicited by asking about financial incomings and outgoings, how much they will have left in the bank after a certain amount had been spent or lent.
  • Sense that "something about the client has changed" – deterioration in personal presentation, isolation, mood or social withdrawal; overly anxious; presenting with a family member or friend when normally they would present alone (this could also be an indication of abuse).