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Mental capacity is the legal and medical framework determining whether a person can make decisions about their own care, property, finances, or legal affairs. A mental capacity assessment report is prepared to determine whether a person has or lacks capacity on a particular decision. These reports are used in the Court of Protection (which makes decisions on behalf of people who lack capacity), in disputes about wills or finances, and in civil litigation where a party’s ability to conduct their case is in question.
The Mental Capacity Act 2005: statutory framework
The Mental Capacity Act 2005 (MCA) is the governing legislation. It establishes five key principles:
- A person must be assumed to have capacity unless the contrary is established
- A person is not to be treated as lacking capacity merely because of behaviour or appearance
- Before treatment depriving someone of liberty or determining a major decision, all practical steps must be taken to help them decide
- Unwise decisions are not evidence of lack of capacity
- A decision made on behalf of someone lacking capacity must be made in their best interests
The Act also defines the test for capacity: a person lacks capacity in relation to a matter if, at the time the matter arises, they are unable to make a decision related to that matter because of an impairment of, or disturbance in, the functioning of the mind or brain. This applies to any person, not just those with psychiatric conditions; dementia, brain injury, physical illness affecting cognition, and severe mental illness can all affect capacity.
The two-stage test: diagnostic and functional
Capacity under the MCA is assessed using a two-stage test. An expert must establish both stages for a finding of lack of capacity.
Stage One: Diagnostic stage. There must be an impairment of, or a disturbance in the functioning of, the mind or brain. This can be:
- A diagnosed medical condition (such as dementia, schizophrenia, bipolar disorder)
- Brain injury or stroke
- Severe depression or anxiety affecting cognition
- Intoxication or substance withdrawal
- Delirium (acute confusion from infection or metabolic derangement)
Simply being diagnosed with a condition is not enough; the condition must actually be affecting the person’s mental functioning at the time the decision is being made.
Stage Two: Functional test. The person must be unable to make the decision because of the impairment. The person must be unable to do one or more of the following:
- Understand information relevant to the decision
- Retain that information
- Use or weigh that information as part of the process of making the decision
- Communicate the decision (whether by talking, sign language, or other means)
A person might be able to understand information but unable to retain it (if they have severe short-term memory impairment). Another person might understand and retain information but be unable to weigh it (if their mental illness prevents rational reasoning). Some people cannot communicate decisions at all.
Litigation capacity
Litigation capacity is the ability to conduct civil proceedings (lawsuits). A claimant needs capacity to instruct a solicitor, understand legal advice, decide on settlement offers, and stand trial. If a person lacks capacity, they cannot represent themselves; instead, a litigation friend (usually a family member) must conduct the case on their behalf, or they must have a guardian appointed.
A person with depression or anxiety might retain litigation capacity even if quite unwell, provided they can understand legal advice and make decisions. Someone with dementia, severe psychosis, or brain injury might lack it. The assessment addresses the specific decision: Can this person manage the conduct of this particular case?
Capacity to make a will
Testamentary capacity (capacity to make a will) is assessed at the time the will is being made. The test is set by case law (the case of Banks v Goodfellow from 1870) and requires that the person:
- Understands the nature of making a will
- Knows the extent of their property
- Knows the claims of family members and others who might have expected to inherit
- Understands how the will distributes their property
- Has no mental disorder affecting their decision
A person with advanced dementia, active psychotic delusions about their family, or severe depression with paranoia might lack testamentary capacity. Someone with early dementia or stable mental illness might retain it. The assessment is specific to the time of the will and the person’s state of mind then.
Capacity to manage property and affairs
The Court of Protection often appoints deputies (or, for some financial matters, attorneys under a Lasting Power of Attorney) to manage finances for people who lack capacity. A capacity assessment on property and affairs addresses whether a person can manage their bank account, understand property ownership, pay bills, and make sensible financial decisions. Someone with severe dementia or learning disability might lack this capacity, whereas someone with controlled bipolar disorder might retain it.
What a mental capacity assessment report contains
A comprehensive mental capacity report includes:
Identifying information: The person’s name, date of birth, and current living situation.
History of decision-making: How has this person made decisions in the past? Do they have a pattern of unwise but autonomous decisions, or genuine inability?
Relevant medical and psychiatric history: Any diagnosis, previous episodes of mental illness, current medication, and any treatment engagement.
The specific decision in question: The report must address capacity to a particular decision at a particular time, not general capacity. A person might have capacity to decide about medical treatment but lack capacity to manage finances.
Assessment of both stages:
- Is there an impairment or disturbance of mind or brain? What is causing it?
- Can the person understand the relevant information? Can they retain it? Can they use and weigh it? Can they communicate the decision?
Evidence: What observations, tests, or responses in the assessment led to the conclusion? For example, did the person repeat back information to show understanding? Did they confabulate (invent false memories) or show evidence of false beliefs?
Best interests (if applicable): If the person lacks capacity, the report may comment on what decision would be in their best interests, though the ultimate best interests decision is made by the court or the person’s representative.
Timing and updating capacity assessments
Capacity can fluctuate. Someone in delirium may regain capacity when the infection is treated. Someone with dementia may have capacity when supported and less capacity under stress. Capacity assessments are a snapshot of the person’s state at that time. If significant time passes or circumstances change, a fresh assessment may be needed.
The role of the Court of Protection
If someone is found to lack capacity and no informal arrangement can be made, the Court of Protection becomes involved. The court can make a one-off decision (such as authorising a medical procedure) or appoint a deputy to make ongoing decisions. Psychiatric evidence is crucial in these cases because it establishes whether court involvement is necessary and what type of order is appropriate.
Key points
- The Mental Capacity Act 2005 provides a statutory framework for assessing capacity to make decisions
- The two-stage test requires both an impairment of mind or brain (diagnostic stage) and inability to make a decision (functional test)
- The functional test asks whether a person can understand, retain, use and weigh, and communicate information relevant to the decision
- Capacity assessments are specific to a particular decision at a particular time; a person may have capacity to some decisions but not others
- Litigation capacity addresses a person’s ability to conduct civil proceedings; testamentary capacity is the ability to make a will; property and affairs capacity is the ability to manage finances
- A mental capacity report must assess both diagnostic and functional elements and explain the reasoning clearly
- Capacity can fluctuate and may require reassessment if circumstances change
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