As the elderly population in the United States continues to grow, issues of diminished capacity may become more and more common in your legal practice. Although attorneys are not mental health professionals, you must have a rudimentary system in place to determine whether the client has the capacity to contract for your services, and/or whether the client has the capacity to complete the legal transaction.
Model Rule 1.14, Client with Diminished Capacity, first recognizes the goal of maintaining a normal attorney-client relationship, but also allows for the attorney to use his/her discretion to determine if protective action should be taken. The test for whether protective action should be taken requires the existence of diminished capacity, a risk of substantial harm, and an inability to act in one's own interest. An attorney may consult with individuals and entities who have the ability to take action to protect the client, but he/she can only reveal confidential information to the extent necessary to protect the client's interests.
The comment to Rule 1.14 suggests the attorney look at the client's ability to articulate reasoning leading to a decision, variability of state of mind and ability to appreciate consequences of a decision, the substantive fairness of a decision, and the consistency of a decision with the known long-term commitments and values of the client. The attorney may also seek guidance from a mental health professional.
Legal Standards of Diminished Capacity
Standards of capacity in legal settings vary depending on the transaction.
The testator must have the capacity to know the natural object of his/her bounty, to understand the nature and extent of his/her property, and to combine these elements to make a disposition of property according to a rational plan. Capacity is only required at the time the will is executed and does not require that the testator be capable of managing all of his/her affairs or making day-to-day business transactions.
Donative capacity is similar to testamentary capacity, except some states have a higher standard, requiring not only that the donor understand the nature and purpose of the gift, but also that the donor knows the gift is irrevocable and will result in a permanent reduction in the donor's assets.
The party must be able to understand the nature and effect of the act and the business being transacted. A higher level of understanding may be needed if the contractual arrangement is complicated.
Capacity to Convey Real Property
The grantor must be able to understand the nature and effect of the act at the time the conveyance is made.
Capacity to Execute a Durable Power of Attorney
The capacity to execute a durable power of attorney is generally the same as contractual capacity, although some courts have held that the standard is similar to testamentary capacity.
Capacity to Make Health Care Decisions
From the Uniform Health Care Decisions Act:
"Capacity" means an individual's ability to understand the significant benefits, risks and alternatives to proposed health care and to make and communicate a health-care decision.
Capacity in health care decisions is linked to informed consent, which is required for any health care decision. A person may have capacity to make a treatment decision, but the decision will lack informed consent if it was either involuntary or unknowing.
Capacity to Mediate
The party must understand the nature of the mediation process, who the parties are, the role of the mediator, the parties' relationship to the mediator, and the issues at hand.
Guardianships and Conservatorships
State guardianship and conservatorship laws rely on broad definitions of capacity. There are four standard tests of incapacity: disabling condition, functional behavior as to essential needs, cognitive functioning, and finding that a guardianship is necessary and is the least restrictive alternative. Generally, state law uses some combination of the four tests to determine capacity for guardianship and conservatorship purposes.
In the state of Virginia, a person lacks capacity if he/she cannot:
(i) Meet the essential requirements for his/her health, care, safety, or therapeutic needs without the assistance or protection of a guardian; OR
(ii) Manage property or financial affairs or provide for his/her support or for the support of his/her legal dependents without the assistance or protection of a conservator.
In the state of Maryland, a person lacks capacity if the court finds by clear and convincing evidence that the person:
(i) lacks sufficient understanding or capacity to make or communicate responsible decisions concerning his person, including provisions for health care, food, clothing, or shelter, because of any mental disability, disease, habitual drunkenness or addiction to drugs; AND
(ii) no less restrictive form of intervention is available that is consistent with the person's welfare and safety.
District of Columbia
In the District of Columbia, a person lacks capacity if his/her ability to receive and evaluate information effectively or to communicate decisions is impaired to such an extent that he/she lacks the capacity to manage all or some of his or her financial resources or to meet all of some essential requirements for his/her physical health, safety, habilitation or therapeutic needs without court-ordered assistance or the appointment of a guardian
Assessment of Capacity
When observing a client for possible signs of diminished capacity, you should keep the following things in mind:
- Focus on decisional abilities, not cooperativeness
- Pay attention to changes over time – history is important
- Beware of ageist stereotypes
- Consider whether mitigating factors, such as stress, grief, Depression, medical issues, education and/or cultural traditions, could explain the behavior
As with every attorney-client interaction, be sure to document your observations about your client's capacity.
For further information, see Assessment of Older Adults with Diminished Capacity, Part 1 (PDF) and Part 2 (PDF), or contact the Elder & Disability Law Center through this Web site, by phone at 202-769-0207, 866-399-4324, or by e-mail .