Dementia is something many Australian families are now facing. As our population ages, the conversation around cognitive decline is becoming more common – and with it comes an important but often misunderstood issue: legal capacity, explains Legal Practice Director Jeff Garrett.
According to Dementia Australia, more than 446,000 Australians are currently living with Dementia, making it one of the leading causes of death in the country.
Yet despite its prevalence, many people still assume that a diagnosis automatically means someone can no longer make legal or financial decisions. The reality around mental capacity is far more complex.
Understanding how Dementia affects legal decision-making and why early planning is so important can make all the difference for families navigating these difficult circumstances.
A common myth about Dementia and decision-making capacity
One of the biggest misconceptions about Dementia is that once someone is diagnosed, they immediately lose their mental capacity and the ability to make decisions about their affairs.
But many people living with Dementia – particularly in the early stages – may still have the legal capacity to make or update a Will or appoint an attorney under an Enduring Power of Attorney. They can sell or transfer assets, enter into contracts, make financial decisions and even get married.
Capacity depends on how advanced the condition is and whether the person understands the decisions they are making at the time.
This is where things can become particularly complicated.
Different decisions require different levels of mental capacity
Another surprising aspect of legal capacity is that different decisions require different levels of understanding.
The capacity required to get married is relatively low, for example. Whereas making a Will requires a higher level of understanding, and appointing an attorney under an Enduring Power of Attorney may require an even higher level of capacity.
This means someone may be capable of making one type of decision but not another.
Adding to the complexity, many forms of Dementia involve fluctuating capacity. A person may be clearer and more alert at certain times of day, or experience periods of lucidity between cognitive decline.
This is why capacity is often assessed at a specific point in time, rather than based on a general diagnosis.
How do courts decide whether someone has capacity?
Capacity is ultimately a legal question. While doctors and specialists provide important medical evidence, the courts determine whether a person had the legal capacity to make a document, such as a Will.
To make a valid Will, a person generally needs to:
- Understand the nature of the document they are signing,
- Understand the assets they own,
- Know who might reasonably expect to benefit from their estate, and
- Be able to make rational decisions about how their assets should be distributed.
These requirements are known as testamentary capacity, and determining whether someone meets this test can be challenging, particularly when Dementia is involved.
Courts have long recognised this difficulty. As far back as 1857, a judge in a House of Lords case described assessing capacity as like determining when twilight becomes darkness – a gradual, often difficult transition to pinpoint.
That analogy remains just as relevant today.
Dementia is not one condition
Another factor that adds complexity is that Dementia is not a single condition.
There are many different types, including Alzheimer’s Disease, Vascular Dementia, Lewy Body Dementia, Frontotemporal Dementia, and Mixed Dementia.
Each type can affect cognition differently, and symptoms may progress at varying rates.
In some cases, the nature of the condition may not even be fully understood during a person’s lifetime. Families may only discover the full extent of the diagnosis after medical investigations or post-mortem examination.
This was evident in the life of much-loved actor and comedian Robin Williams. Robin Williams provided one of the most powerful examples of how complex cognitive conditions can be.
Following his death in 2014, it was revealed that Williams had been living with Lewy Body Dementia – a condition that had initially been misdiagnosed as Parkinson’s disease during his lifetime.
Even his own family was unaware of the true nature of his condition until after his passing, when an autopsy confirmed the diagnosis.
Lewy Body Dementia is known to cause fluctuating cognition, memory issues, confusion, anxiety, and changes in behaviour, all of which can impact decision-making and legal capacity in different ways.
Not all cognitive decline is straightforward, and even medical professionals may struggle to diagnose certain conditions accurately.
Why planning early makes a difference
When legal documents are prepared early – before any cognitive decline – they are far less likely to be challenged later.
Waiting too long can create significant risks, including:
- Disputes over whether documents are valid,
- Family disagreements about decision-making,
- Applications to tribunals or courts,
- Appointment of external decision-makers, and
- Involvement of public trustees or administrators.
These outcomes can be stressful, time-consuming, and costly for families already dealing with emotional circumstances.
Early planning allows individuals to have a voice and control over the outcome.
It also gives families peace of mind knowing the right structures are already in place.
Another important consideration is that Dementia is no longer limited to older Australians.
Early onset Dementia – affecting people in their 30s, 40s, and 50s – is becoming increasingly recognised.
Estate planning is not just for older people. Unexpected illness or cognitive decline can affect anyone, which is why planning ahead is important for all adults.
Choosing the right Attorney is critical
One of the most important decisions in estate planning is choosing who to appoint under an Enduring Power of Attorney.
This person may have the authority to make financial decisions, as well as health and lifestyle decisions.
It is a position of significant responsibility and one that requires absolute trust.
While many people instinctively appoint family members, this is not always the best option. Unfortunately, financial elder abuse is becoming increasingly common, and in many cases, the abuse occurs within families.
Choosing the wrong attorney can lead to misuse of funds or assets, elder abuse, and conflict between family members.
Sometimes, appointing an independent or professional decision-maker may be the more appropriate option.
What should families do if they notice cognitive decline?
If you are starting to notice signs of cognitive decline in a loved one, it is important to act sooner rather than later.
Steps families can consider include:
- Seeking advice from an experienced estate planning lawyer,
- Consulting with a GP or specialist,
- Obtaining a capacity assessment if required, and
- Reviewing existing estate planning documents.
Taking action early can help ensure decisions are made while capacity still exists.
Attwood Marshall Lawyers – helping you plan for the future and preserve your wishes
Dementia presents many challenges, but proactive legal planning can help reduce uncertainty and protect both individuals and their families.
Understanding and being sensitive to the fact that capacity can fluctuate – and that early planning is key — allows people to take control of their future while they still can.
Attwood Marshall Lawyers’ Wills and Estates team has extensive experience assisting families with estate planning, capacity assessments, estate disputes, and elder law matters.
For further advice or information, our team is always available at any of our conveniently located offices. Contact our Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or freecall 1800 621 071 to book an appointment.
