Assessment of decision-making capacity

At a glance

• Presume capacity. Every adult has it until shown otherwise. A diagnosis, age, a low cognitive score or a choice you disagree with isn't proof.
• Capacity is decision-specific and time-specific. Assess it for this decision now, and reassess if delirium clears.
• The test is functional: can the person understand, retain, weigh and communicate the information relevant to this decision?
• Support first. Interpreter, hearing aids, simple language, a better time of day, a trusted person present. Substitute decision-making is the last resort.
• When capacity is absent: a valid advance care directive refusal binds; otherwise the appointed decision-maker or a tribunal guardian (the order between them varies by state), then the state's statutory hierarchy. In an emergency, the doctrine of necessity.
• Law differs by state and territory. Know the terms for your jurisdiction.

Principles

Principle	What it means at the bedside
Presumption of capacity	The burden is on whoever says the person lacks it
Decision-specific	"Has capacity" or "lacks capacity" always refers to a named decision
Functional, not status or outcome	Judge the reasoning process, not the diagnosis or whether the choice is wise
Supported decision-making	Take practicable steps to help the person decide before finding incapacity
Least restrictive option	If substitute decisions are needed, keep them narrow and reflect the person's will and preferences
Respect for privacy	Assess where and how the person can do their best

These match the NSW Capacity Toolkit principles, the Victorian and Queensland statutory definitions, and the direction of the Disability Royal Commission (2023) and the NZ Law Commission (2026) toward supported decision-making.

The test

The common law test grew from Re C (1994), where a man with schizophrenia was found able to refuse amputation. Australian statutes now phrase it as four abilities:

1. Understand the information: the nature of the decision, the options, and the main risks and benefits of each, including doing nothing.
2. Retain it long enough to make the decision. Memory for the conversation an hour later isn't required.
3. Use or weigh it. This includes appreciation: accepting that the information applies to them. Denial driven by illness ("my leg isn't infected, the nurses are lying") fails this limb.
4. Communicate the choice by any means: speech, writing, gestures, a communication board.

The higher the stakes, the more careful the assessment, but the test itself doesn't change.

Assessing capacity step by step

1. Define the decision and the realistic options. "Can she go home?" needs to become "Can she decide to go home alone with twice-daily carers, against advice to enter residential care?"
2. Optimise conditions. Treat delirium, pain and hypoxia if the decision can wait. Correct senses, use a professional interpreter, choose the person's best time of day.
3. Give the information in plain language, in chunks, with written or visual aids.
4. Ask open questions that test each ability:
   • "What's the problem with your health at the moment?"
   • "What have we suggested, and what could happen if you go home without help?"
   • "What makes you lean towards going home?"
   • "What would you do if you fell at night?"
5. Look for consistency over time. A choice that matches long-held values is more likely to reflect capacity, even if risky.
6. Collateral: family, GP, carers. Their account of past values is relevant; their wishes aren't the test.
7. Document the decision, the information given, the person's answers in their words, the conclusion for each ability, and any support used.

Tools such as the MacCAT-T or the Aid to Capacity Evaluation structure the interview but don't replace judgement. Cognitive screens such as the MMSE or MoCA can't decide capacity. See Screening tools for depression, delirium and cognition.

Worked example

An 86-year-old widow with moderate Alzheimer disease (MoCA 15/30) is recovering from a hip fracture. The team recommends residential care. She wants to go home.

• She says she broke her hip, knows she walks with a frame, and states she would press her alarm pendant if she fell. Understands and retains.
• Asked about stairs, she says she would live downstairs as she did before. Asked what could go wrong, she says "I might fall again and lie there, but I'd rather that than leave my home of 60 years." Weighs risks against her stated values.
• She communicates a consistent choice over three conversations.

Conclusion: she has capacity for this decision despite dementia. The team respects her dignity of risk and arranges the safest version of going home: pendant alarm, Support at Home services, falls prevention and a review date. A low MoCA alone doesn't justify overriding her.

Contrast: if she insisted she had never fallen and that her late husband would care for her, she would fail appreciation, and a substitute decision would be needed for accommodation.

Capacity for different decisions

Decision	Key issue
Medical treatment	Understand the treatment, alternatives and consequences of refusal
Accommodation	Understand own care needs, the options and the realistic risks of each
Making an enduring power of attorney or enduring guardian appointment	Understand what powers are given, to whom, and that they can be revoked
Will (testamentary capacity)	Banks v Goodfellow (1870): understand the nature of a will, the extent of the estate and who has claims, with no disorder of mind poisoning those judgements
Finances	Manage day-to-day money and recognise exploitation; if capacity is lost and no attorney exists, the tribunal can make a financial management order

Pitfall: asking a medical officer to sign that a patient "has capacity" in general. The form must name the decision.

When capacity is absent: who decides

1. Advance care directive. A valid, applicable refusal of treatment binds clinicians under common law (Hunter and New England Area Health Service v A, 2009) and, in most jurisdictions, under statute. NSW has no advance care directive statute, so common law alone applies there. Values statements guide the substitute decision-maker.
2. Appointed decision-maker chosen by the person while capable: enduring guardian (NSW, WA, Tas), medical treatment decision-maker (Vic), attorney for personal or health matters (Qld, SA substitute decision-maker, ACT).
3. Tribunal-appointed guardian (NCAT, VCAT, QCAT, SAT, SACAT, ACAT, NTCAT, TASCAT).
4. Statutory hierarchy, the default when nobody was appointed.
5. Public Guardian or Public Advocate when nobody suitable is available or there is conflict.

The order of steps 2 and 3 varies. In Queensland a tribunal-appointed guardian ranks above an enduring attorney (Guardianship and Administration Act 2000 (Qld) s66). In Victoria the appointed medical treatment decision-maker ranks above a VCAT guardian.

Jurisdiction	Default decision-maker term	Order
NSW (Guardianship Act 1987)	Person responsible	Guardian with health functions; spouse or de facto in a close continuing relationship; unpaid carer; close friend or relative
Victoria (MTPDA 2016)	Medical treatment decision-maker	Appointed MTDM; VCAT guardian; first of spouse or domestic partner, primary carer, adult child, parent, adult sibling
Queensland (Powers of Attorney Act 1998)	Statutory health attorney	Spouse; unpaid carer; close friend or relative; Public Guardian

• Emergencies: treat under the doctrine of necessity and state emergency provisions when treatment can't wait for consent, unless a valid advance refusal applies.
• Mental Health Acts authorise treatment of mental illness only. A delirious patient refusing antibiotics is managed through guardianship law, not detention. See Psychiatry issues in general medicine.
• Disputes between family members, or a substitute decision-maker acting against the person's known wishes, go to the tribunal or Public Guardian.

Aged care and other contexts

• Under the Aged Care Act 2024 (from 1 November 2025), registered supporters replaced My Aged Care representatives. They help the person decide; they can't consent on the person's behalf.
• Restrictive practices in residential aged care (including antipsychotics given to manage behaviour) need informed consent from the resident or, if they lack capacity, their substitute decision-maker, plus a behaviour support plan. See BPSD.
• Voluntary assisted dying is lawful in every Australian state and, since November 2025, the ACT. The NT passed its Rights of the Terminally Ill law in August 2026, with access expected in early 2028. Every scheme requires decision-making capacity throughout, so dementia that removes capacity excludes it, and an advance directive can't request it. NZ has the End of Life Choice Act 2019.
• Elder abuse often involves misuse of an enduring power of attorney. See Abuse and neglect.

New Zealand

• The Protection of Personal and Property Rights Act 1988 governs enduring powers of attorney (property, and personal care and welfare) and Family Court welfare guardians. An attorney for personal care and welfare can act only once the person is certified as lacking capacity.
• The Code of Health and Disability Services Consumers' Rights (Right 7) presumes competence and allows treatment in the person's best interests when no one can consent.
• The Law Commission's 2026 review recommended replacing the 1988 Act with a supported decision-making model and attention to tikanga Māori. The Government hadn't legislated at the last check.

Medicolegal points examiners use

• Duty of care doesn't let you override a capable refusal. Document, offer alternatives, and keep the door open.
• Futility: there is no obligation to offer treatment with no reasonable prospect of benefit, including CPR. Discuss the decision with the patient or substitute decision-maker; their consent isn't needed for a treatment that won't be offered, but communication is.
• Resuscitation plans and goals-of-care forms record decisions; they aren't consent documents. Review them on transfer between settings. See Recognising dying and illness trajectories.
• Encourage advance care planning while capacity remains, especially after a dementia diagnosis.

Pitfalls

• Equating a dementia diagnosis or low MMSE with incapacity.
• Finding incapacity because the patient disagrees with the team.
• Assessing capacity during untreated delirium for a decision that could wait.
• Using family as interpreters during a capacity interview.
• Letting the family override a valid advance refusal.
• Using the Mental Health Act to treat a medical illness.
• Assuming the next of kin listed on admission is the legal substitute decision-maker.
• Documenting "lacks capacity" without naming the decision.