Mental Capacity Assessments To Ensure Valid Legal Transactions

While there is a basic common law presumption that every adult person has mental capacity to make their own decisions, there are some cases where doubts may be raised with respect to one’s legal level of mental capacity.

There are a number of different legal tests to ascertain mental capacity, depending on the circumstances. The mental capacity of a person must be assessed relative to the nature, terms, purpose and context of the particular transaction. An assessment resulting in a finding of capacity or incapacity at one point in time does not preclude a different and opposite finding at another point in time.

The different legal tests for mental capacity mean that a client may have the mental capacity to make some decisions, such as deciding whether to make small purchases like groceries, but may lack the mental capacity to make other decisions such as deciding whether to enter into more complicated financial arrangements.

Despite the many different legal tests for mental capacity, the fundamental issue is whether the client is able to understand the general nature of what they are doing. If a client has ongoing difficulty in demonstrating this level of understanding then this may indicate a lack of mental capacity, which warrants further exploration.

In some cases, the signs of a person’s lack of mental capacity will be straightforward, however in other cases, it will not be obvious that a person may lack mental capacity.

People whose cognitive capacity is impaired may be vulnerable to exploitation and may not be able to protect their own legal interests.

In instances where there may be concerns for a person’s legal mental capacity, a formal assessment may be requested. The formal assessment can assist not only in confirming that a person has the capacity to make particular arrangements, but also serve as a form of “insurance” to protect against possible legal challenge to the validity of the legal transaction involved.

The contents of this article are general in nature. For advice specific to your circumstances, please contact your legal practitioner.

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