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Mental Capacity

Also known as: Decision-Making Capacity, Capacity

Definition

Mental capacity is your legal ability to understand and make decisions for yourself at the time a decision needs to be made, governed by the Mental Capacity Act 2005.

Understanding mental capacity is fundamental to estate planning because you must have capacity to create valid legal documents like wills and Lasting Powers of Attorney.

What Does Mental Capacity Mean?

Mental capacity is governed by the Mental Capacity Act 2005 in England and Wales. The Act establishes a presumption of capacity—every adult aged 16 or over is assumed to have mental capacity unless proven otherwise. Capacity is decision-specific: you may have capacity for some decisions but not others, depending on their complexity. Capacity is also time-specific: it can fluctuate day to day, especially with conditions like dementia or during acute illness. The Act defines lack of capacity as an inability to make a decision due to "an impairment of, or a disturbance in the functioning of the mind or brain" (such as dementia, brain injury, learning disabilities, or mental health conditions).

The Mental Capacity Act 2005 sets out a four-stage test to determine whether someone lacks capacity for a particular decision. To have capacity, you must be able to: (1) understand the information relevant to the decision, (2) retain that information long enough to make the decision, (3) use or weigh that information as part of the decision-making process, and (4) communicate your decision by any means (speech, sign language, blinking, writing). You must fail at least one of these four stages to lack capacity for that specific decision. Making an unwise decision alone is not evidence of lack of capacity—the law protects your right to make decisions others might consider poor choices.

Sarah, 78, has mild dementia. She has capacity to decide what to wear each day (simple decision with immediate consequences) but may lack capacity to decide whether to sell her house (complex decision requiring understanding of finances, housing market, and long-term consequences). David, 82, is recovering from a stroke in hospital. Some days he can understand and discuss his treatment options clearly. Other days he's confused and cannot retain information. His capacity must be assessed at the specific time a decision needs to be made, not based on his general condition.

Mental capacity is distinct from testamentary capacity—the specific test for making a valid will, established in Banks v Goodfellow (1870). Testamentary capacity has a deliberately lower threshold than general mental capacity. Walker v Badmin [2015] confirmed that Banks v Goodfellow, not the Mental Capacity Act 2005, is the correct test for will-making capacity. Emma, 45, has learning disabilities and wants to make a will leaving her savings to her sister. Though she cannot manage complex financial affairs, she has testamentary capacity because she understands the nature of making a will and her assets. If you lack capacity and have no Lasting Power of Attorney, the Court of Protection may need to appoint a deputy to make decisions on your behalf. You must have mental capacity to create an LPA—you cannot make one after losing capacity.

Common Questions

"What is mental capacity and why does it matter for estate planning?" Mental capacity is your legal ability to make decisions for yourself at the time a decision needs to be made. It matters because you must have mental capacity to create a valid will, make a Lasting Power of Attorney, or manage your own affairs. Without mental capacity, decisions about your care and finances may need to be made by others through the Court of Protection.

"Is mental capacity the same as testamentary capacity?" No, they are different but related concepts. Mental capacity (governed by the Mental Capacity Act 2005) is a broad test covering all types of decisions. Testamentary capacity is the specific, lower threshold needed to make a valid will, governed by the Banks v Goodfellow (1870) case. Someone may lack general mental capacity but still have testamentary capacity to make a will.

"Can someone with dementia have mental capacity?" Yes, capacity is decision-specific and can fluctuate. Someone with dementia may have capacity to make some decisions but not others, and their capacity may be better on some days than others. The Mental Capacity Act 2005 presumes capacity unless proven otherwise. A person may retain mental capacity for simpler decisions even as their condition progresses.

Common Misconceptions

Myth: If you have dementia, you automatically lack mental capacity and can't make any decisions.

Reality: Capacity is decision-specific, not a blanket judgment. Someone with dementia may retain capacity for many decisions, especially simpler ones. The Mental Capacity Act 2005 presumes capacity unless proven otherwise for each specific decision, and capacity can vary from day to day (fluctuating capacity).

Myth: Mental capacity and testamentary capacity are the same thing—if you pass one test, you pass both.

Reality: These are different legal tests. Mental capacity (Mental Capacity Act 2005) is a general test for all types of decisions. Testamentary capacity (Banks v Goodfellow test from 1870) is the specific, deliberately lower threshold for making a valid will. Walker v Badmin [2015] confirmed that testamentary capacity uses its own test, not the Mental Capacity Act 2005 framework.

  • Mental Capacity Act 2005: The statutory framework that defines mental capacity and sets out the four-stage test for assessing capacity in England and Wales.
  • Testamentary Capacity: The specific legal test for having mental ability to make a valid will, using a different and lower threshold than general mental capacity.
  • Capacity Assessment: The formal evaluation process determining whether someone has mental capacity for a specific decision, applying the four-stage test.
  • Lasting Power of Attorney: Legal document you must create while you have mental capacity, appointing attorneys to make decisions if you later lose capacity.
  • Court of Protection: The specialist court that makes decisions for people who lack mental capacity and have no Lasting Power of Attorney in place.

Need Help with Your Will?

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.