Nathan Spaling (my colleague from the Capacity Clinic) and I are often asked to conduct capacity assessments in the context of guardianship applications. On occasion, the application is brought by a parent seeking to be appointed as the guardian of property for a child who is about to become an adult (i.e., the child is nearing their eighteenth birthday). Adults are presumed to have capacity to manage their own property. However, a parent may feel that their child will be incapable of looking after their own financial affairs even after their eighteenth birthday.

Nathan and I were recently involved in a case like this. The case involved a person who had received a substantial settlement award arising from an injury they suffered as a child. The court ordered that the person undergo an assessment 6 months before their eighteenth birthday to determine whether they had capacity to manage their own property. Following the assessment, the person was found incapable of managing their own property.

The original assessment noted that the person was unfamiliar with basic financial concepts such as income tax, HST, and the use of credit cards (the person had no experience with making payments except with cash). In addition, the person knew nothing about the nature and amount of their investments. This was in large part because the parents had not disclosed this information to the person, out of fear they would in turn discuss their finances with others and become a target for undue influence.

The following year, the person was admitted to college. They began living independently in the college residence during the week, but returned to their parents’ home on weekends. Nathan and I were engaged by the parents to provide a second opinion regarding the person’s capacity to manage property. Attending college provided the person with an opportunity to demonstrate some financial autonomy, as they used a Student Card used to purchase on-campus meals. However, while the person was in a position to learn how to capably carry out simple risk-free transactions, Nathan and I opined that the person was not able to manage their property independently. This was because the person was unable to appreciate risk and the potential foreseeable consequences of their financial decisions.

When assessing capacity to manage property, the person must demonstrate the ability to understand the relevant information. The ability to understand relevant information has three key elements: (1) language comprehension, (2) storage of new information, and (3) retrieval of that information. These are the hallmarks of an intact (short-term) memory.

Determining whether a person has the ability to understand the relevant information is challenging when the person has had no prior exposure to key concepts involved in managing finances. In these circumstances, it is difficult to determine whether the person has a limitation due to a lack of ability to understand financial concepts, or whether the person has a limitation simply because they lack experience. Educating the person and determining if they have the ability to understand new concepts may require sequential assessments.

In this case, Nathan and I opined that the person was capable of managing small transactions independently, but still required a guardian of property to manage their finances. Ultimately,  the parents agreed to open a bank account with limited funds, which the person could access, to provide them with greater autonomy and dignity.