How to assess financial capacity

This post is part of a series on financial capacity assessment and teaching.

There has been much written on the topic of how to do a financial capacity assessment, but I want to highlight a few resources I’ve come across so far.

The first is Incapability Assessments: A Review of Assessment and Screening Tools by Deborah O’Connor. This is a superb summary of capacity assessment in general (i.e. not just financial capacity) from a variety of angles, including philosophical and legal perspectives, and has an excellent survey of different capacity assessment tools. It also has a Canadian (well, BC) perspective to boot. O’Connor makes a point often repeated in analyses of assessment tools: standardized tools can add value to what is inherently a “holistic, person-centred assessment” requiring more than a checklist or procedural assessments. In my opinion it serves as a wonderful jumping off point for anyone who is interested in thinking seriously about capacity assessment.

The next is Ghesquiere, McAfee & Burnett, 2019’s Measures of Financial Capacity: A Review. This paper does what it says on the tin: it summarizes and compares published standardized assessment tools for financial capacity. It is also the most recent published review paper of measure I could find. I think O’Connor’s article does a better job of explaining the strengths and weaknesses of various popular tools, but it is more selective in scope — this paper reviews a much wider selection of tools.

For nuts-and-bolts guidance on doing clinical capacity assessments (again, not just financial capacity), I have found no better Ontario-specific resource than the Ontario Capacity Assessment Office’s 2005 paper, Guidelines for conducting assessments of capacity. It neatly summarizes Applebaum’s tenets of decisional capacity in the Ontario legal landscape, and then discusses how to prepare for, conduct and record a capacity assessment. It has “worksheets” to help structure informant and client interviews with specific questions, and to record the results of those discussions in an organized way. It also has a section on “Formulating an opinion” which does some work — but, not enough, in my opinion — to set out how to turn all of this data into an opinion about a client’s mental capacity. Interestingly, it does not suggest the use of any standardized assessment tools.

Although written from a UK legal perspective, I think Beale et al, 2024’s paper Mental capacity in practice part 1: how do we really assess capacity? deserves as mention as it does a lovely job of addressing common problems that come up in medical decision-making capacity assessments and much of their advice generalizes to the Canadian context and to financial capacity assessment. Worth the read (as is their companion article on capacity in suicidal individuals).