Financial capacity assessments: signs someone may need one

A financial capacity assessment looks at whether a person can manage their money and make financial decisions for themselves. It can cover everyday tasks like paying bills, and bigger decisions like selling a home or lending money to family.

Families often start to worry when bills go unpaid, savings drop or a new person becomes involved in a relative’s finances. This guide explains the warning signs, what the assessment involves and the options that follow.

What financial capacity means

Financial capacity is the ability to manage money and make financial decisions in line with your own values and interests. It includes two broad levels:

• Everyday money management, such as paying bills, budgeting, using a bank card and checking statements.
• Bigger financial decisions, such as selling property, making investments, signing contracts, giving large gifts or lending money.

A person may manage one level well and struggle with the other. Researchers describe financial capacity as complex and multidimensional. A review in The Gerontologist by Ghesquiere and colleagues identified 10 structured measures of financial capacity. It noted that the right approach depends on the person and the specific skills in question.

Like other types of capacity, financial capacity is decision-specific. The law presumes adults have capacity. Making a choice that others think is unwise does not, by itself, mean a person lacks capacity.

Signs someone may need an assessment

Changes in the way a person handles money are sometimes the first sign of a problem with thinking or memory. Signs worth paying attention to include:

• unpaid bills, overdue notices or services being cut off
• paying the same bill twice, or losing track of what has been paid
• new confusion with online banking, cards or PINs
• large or frequent cash withdrawals that the person cannot explain
• unusual gifts, loans or transfers, particularly to a new friend or helper
• responding to scam calls, emails or lottery offers
• difficulty counting change or understanding a simple bill
• new people pushing for changes to a will, power of attorney or bank accounts
• the person seeming worried, secretive or unsure about their own finances.

These signs are not proof

There can be other explanations. Low mood, poor eyesight, grief, a recent move or simply unfamiliar technology can all make money harder to manage. Some people have always been relaxed about bills. A good assessment considers these possibilities before drawing any conclusion. It is also worth asking the GP to check for treatable causes, such as medication side effects, infection or low mood, which can affect thinking for a time.

When financial abuse is a concern

Sometimes the main worry is that someone else is taking advantage of the person. The Australian Institute of Family Studies reported that about one in six (15%) older Australians living in the community had experienced abuse in the previous 12 months, with financial abuse affecting about 2%.

For advice about elder abuse, call 1800ELDERHelp on 1800 353 374, which connects you to the service in your state or territory. It is not a crisis line. If someone is in danger, call 000. For 24-hour crisis support call Lifeline on 13 11 14. If the abuse involves a family member or partner, 1800RESPECT (1800 737 732) can also help.

How to raise your concerns

Talking about money can feel personal, and many people fear losing their independence. It can help to:

• choose a calm time and a private place
• describe what you have noticed, such as a missed bill, rather than making judgements
• ask how they feel about managing things and what would make it easier
• suggest a GP visit to rule out treatable causes
• involve someone they trust, if a first conversation does not go well.

Keep the focus on their wishes. The aim is to help them stay in control for as long as possible.

Who might ask for a financial capacity assessment

Requests come from many directions. For example:

• a family member worried about a parent after a dementia diagnosis
• a lawyer preparing an enduring power of attorney or a large property transaction
• a hospital or aged care team planning discharge or accommodation
• a bank, accountant or financial adviser who has noticed unusual activity
• a person applying to a tribunal for someone to manage another person’s finances.

The person being assessed should be told the purpose of the assessment, and their consent is sought. It helps when they understand the assessment is about working out the right support, not taking control away.

What the assessment involves

A neuropsychologist (a psychologist who specialises in how the brain affects thinking and behaviour) will usually include:

• An interview about the person’s income, assets, bills, spending and financial goals, and how they have managed money in the past.
• Practical tasks, such as reading a bill, working out change, understanding a bank statement or explaining the risks of a loan.
• Judgement questions, such as how they would respond to a suspicious phone call or a request for money.
• Cognitive testing of memory, attention, reasoning, planning and number skills.
• Other information, with consent, from family, doctors, bank statements or care staff.

The report describes what the person can do, where they struggle and whether they can make the specific financial decisions in question. It should also suggest supports that could help the person keep as much control as possible.

What happens after the assessment

The outcome often points to practical changes rather than legal orders. Options include:

• setting up automatic bill payments and simpler banking
• asking the bank about extra account security or a trusted contact
• regular help from a trusted person to check statements
• making an enduring power of attorney, if the person has capacity to do so.

If the person cannot manage their finances and there is no suitable arrangement, a tribunal may appoint someone. In Victoria, VCAT can appoint an administrator, and a medical report from the last three months is required. In NSW, NCAT can make a financial management order if the person is not capable of managing their affairs, someone else needs to manage them, and the order is in the person’s best interests. Other states have similar tribunals.

Whatever the outcome, the person’s views still matter. Tribunals are expected to consider what is important to the person and to choose the least restrictive option that meets their needs.

Invictus Health कैसे मदद कर सकता है

Our neuropsychologists provide capacity assessments, including assessments of financial decision-making. Where memory or thinking changes are the main concern, a broader neuropsychology assessment may help explain what is happening. Neuropsychology reports are reviewed by Dr Judy Tang OAM.

We have assessment clinics in every state and territory, and no GP referral is needed for most assessments. Visit our शुल्क पृष्ठ या संपर्क करें to talk it through. This article is general information and is not legal advice or financial advice. Please speak with a qualified professional about your situation.