As lawyers, we are required to meet with our clients and take their instructions in order to help them complete the particular legal task(s) they are planning. Sometimes when we do this, we need to take a little extra time to consider our client’s legal or mental capacity to make decisions.
Legal capacity is a client’s capacity to make a decision in relation to legal rights and obligations. Decision making requires that a client:
- understands the decision they are having to make
- can discuss with us the possible options available to them in a way that shows they appreciate the risk and or benefit of that decision
- understands the impact that a decision, or the lack of a decision, may have on them or their loved ones
- is able to articulate and discuss all of these issues with us.
It is important to note that the level of capacity required isn’t the same in every situation. For example, to make a Will the test is whether the client knows they are making a Will and the effect of doing so, whether they understand the extent of the assets they are dealing with and finally, whether they comprehend the moral claims which they ought to give effect to.
However, when giving instructions to complete Enduring Powers of Attorney the test is whether the client understands the consequences of granting a power of attorney and the nature and effect of the power they are giving. This is the test even in a situation where the client is no longer capable of managing their own affairs.
Having these discussions with our clients is difficult. It can be very confronting. In a worst case scenario, our clients can be very offended by us questioning their capacity. This is not our intention. Our sole purpose in making the enquiry is to ensure that whatever legal outcome our clients have set out to achieve has the best possible opportunity of success.
We are aware however that if there is a likelihood that our client’s decision might be challenged, one of the first questions that is often raised is whether our client had the capacity required to make the decision in the first place.
The best way of mitigating this risk, in situations where capacity is not obvious, may be for the client to undertake a capacity assessment prior to completing their legal work. It is best that any assessment be scheduled as close as possible to the appointment to complete the legal work so that there cannot be a suggestion of deterioration in between.
Where capacity may be an issue, with our client’s permission, we can write to our client’s doctor to explain to them the background of the situation, the legal test that is at issue and to request a detailed report regarding our client’s capacity to make the decision they are contemplating.
The good news is that statistics show that most of us will not lose legal capacity in our senior years. However, for the reasons discussed above, if you have concerns about your capacity or the capacity of a loved one who is about to make significant decisions, it is critical that you obtain advice from a team well versed in dealing with these matters. At Harmans we have a specialist seniors team to help you with any queries you may have. Give Phillipa Shaw a call on 352-2293 to arrange an appointment to discuss your situation.
Banks v Goodfellow (1870) LR 5 QB 549
Re Tony (1990) 5 NZFLR 609
Re K  2 WLR 781