Financial Decison-Making Capacity
What is Financial Decision-Making Capacity?
Financial decision-making capacity refers to a person's ability to understand, reason about, and make decisions regarding their own financial and property affairs.
A person is considered to have financial decision-making capacity if they are able to:
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Understand information relevant to a financial decision and its likely consequences
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Retain that information for long enough to make the decision
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Weigh and use that information in the process of making the decision
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Communicate the decision in any way, including through speech, gesture, or other means
Capacity is not an all-or-nothing concept. A person may have capacity to make some financial decisions — such as managing day-to-day expenses — but not others, such as decisions involving significant property transactions or investments. Capacity is also recognised as potentially fluctuating over time.
When is Financial Capacity Assessment Needed?
A formal assessment may be requested in a range of circumstances, including:
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Where there are concerns that an older adult or person with a neurological or psychiatric condition may no longer be able to manage their finances independently
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When a financial institution, legal professional, or treating team requires documentation of a person's capacity before proceeding with a significant transaction
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To inform applications to the Victorian Civil and Administrative Tribunal (VCAT) for the appointment of a financial administrator
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In the context of discharge planning, where a person's ability to manage finances independently in the community is in question
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Where a person is resisting formal financial supports and there are concerns regarding their ability to appreciate the need for assistance
What Does Assessment Involve?
A formal assessment may be requested in a range of circumstances, including:
A neuropsychological assessment of financial decision-making capacity involves a comprehensive evaluation of the cognitive abilities that underpin financial decision-making. The assessment is also informed by clinical interview, collateral history from relevant informants, and review of available medical and legal documentation. Findings are integrated to provide an opinion regarding the person's capacity across specific financial decisions relevant to their circumstances, consistent with the legal framework applicable in Victoria.
