What is decision-making capacity?

We make decisions every day. Some decisions are trivial such as deciding what to eat, what to wear, when to leave the house to arrive at work, and so on. In contrast, some decisions are important and require more thought - such as appointing an attorney to assist in our legal, personal and financial affairs. In order to appoint an attorney, a person must have "decision-making capacity".

How is decision-making capacity defined legally in Victoria?

Generally, everyone over 18 years old is presumed to have decision-making capacity, unless there is evidence to the contrary.

The test for capacity changes from states and territories and can even vary between the different areas of law. In Victoria, according to section 5 of the Guardianship and Administration Act 2019 (Vic), a person has capacity to make decisions in relation to guardianship and administration matters, such as the appointed attorney in their Power of Attorney, if the person is able to:

• Understand the information relevant to the decision and the effect of the decision; and

• Retain that information to the extent necessary to make the decision; and

• To use or weigh that information as part of the process of making the decision; and

• To communicate the decision and the person’s views and needs as to the decision in some way, including by speech, gesture or other means.

What does this mean in practice?

In practice, this means that if a person’s decision-making capacity is in question, any document or contract they signed may become invalidated. Further, such an individual might not be able to swear an affidavit or appoint an attorney for their medical or financial matters.

The test to assess a person’s capacity is complex because capacity is domain, decision, and time specific. Mostly importantly, the assessment of capacity in relation to legal issues or matters is a legal test and does not solely rely on medical evidence.

What happens if a person lacks mental capacity?

Once it is established that a person lacks the requisite capacity, another person can be appointed to act on behalf of that individual by applying to the Victorian Civil & Administrative Tribunal (VCAT). Through VCAT, a person can be appointed as an administrator, or a guardian, or both. Both roles are important, but they relate to different domains of a person’s life.

An administrator makes financial and legal decisions for the individual, while a guardian makes personal lifestyle decisions for the individual. 

Duties of an administrator include but are not limited to:

• Being an advocate for the person;

• Encouraging and assisting the individual to develop their capacity to make financial and legal decisions; and

• Protecting them from neglect, abuse or exploitation.

• General principles for a guardian to follow include but are not limited to:

• Making and taking part in decisions affecting the individual;

• Expressing what’s important to them; and

• Developing the individual’s capacity to make decisions.
  

The information provided in this article is general advice only. We understand that this is a very difficult and emotional issue to deal with if someone has lost capacity. We work with you to deal with legal capacity issues in a sensitive and caring way. Whether it is setting up an estate plan in advance to avoid potential legal capacity issues or making an application to the court in cases where capacity has been lost, our team can be contacted on (03) 9311 8911.