As parents age, families increasingly face questions about capacity: can a parent still make a will, sign a power of attorney or approve a transaction? These questions are sensitive, and in wealthy families they can become the focus of serious disputes. Understanding how the law approaches capacity allows families to plan early and protect elderly members from both incapacity and exploitation.
How the law approaches capacity
The same principles apply in Victoria, Singapore and many other common law jurisdictions:
- Capacity is presumed. A person is assumed to have capacity unless it is shown otherwise.
- Capacity is decision-specific and time-specific. The question is whether the person could make this particular decision at the time it was made.
- A diagnosis is not the answer. Dementia, stroke or depression does not automatically mean a person lacks capacity. Capacity can fluctuate.
- The functional test. A person generally needs to be able to understand the relevant information, retain it, use or weigh it, and communicate a decision. Victoria’s Powers of Attorney Act 2014 adopts this approach for enduring powers of attorney.
- All practicable support. Information should be explained in the person’s own language, with plain explanations and the actual documents.
For wills, the long-standing test from Banks v Goodfellow asks whether the will-maker understood the nature of making a will, the extent of their property, and the people who might have a claim on them. See testamentary capacity in wealthy families.
Lessons from recent cases
Courts look at both medical and functional evidence: cognitive test results, whether the person could describe their assets and understand the consequences of the document, and their evidence if they can give it. In a 2025 Singapore case (YKG v XKF), a court revoked a lasting power of attorney made by an elderly woman with dementia in favour of a sibling, while emphasising that a diagnosis alone does not determine capacity. The question was whether she understood what the document did and the powers it gave. Other cases across the region show how a vulnerable elderly person’s assets can be taken by someone outside the family who gains their trust.
How courts weigh capacity evidence
Singapore’s Court of Appeal decision in Re BKR [2015] 4 SLR 81 remains the leading authority on the statutory capacity test there, and its reasoning is consistent with the Australian approach. Medical experts usually address the clinical question, whether an impairment exists; the court decides the functional question, whether that impairment prevented the particular decision. Capacity can exist for one decision but not another, and a person’s relationships and living circumstances can affect it.
Recent Singapore cases illustrate the point:
- ULP v ULS [2021] SGHCF 19. A donor with Alzheimer’s disease was found to have had capacity to make a lasting power of attorney, and cognitive test scores alone did not decide the question. The power was nevertheless revoked because it had been made under undue pressure. Capacity and undue pressure are separate questions.
- WLR v WLT [2023] SGHCF 20. A power of attorney was revoked where a psychiatrist had expressed the view, close to the time of signing, that the donor lacked capacity. Formal execution cannot substitute for genuine capacity, and contemporaneous medical opinion carries real weight.
- A 2026 Family Court decision. The court rejected a son’s claim that his 97-year-old father lacked capacity to marry his long-time partner. Age and appearance do not dictate capacity; medical evidence showed the father remained lucid for personal and financial decisions.
When evidence conflicts, courts do not simply count witnesses or doctors. They ask who had the best opportunity to observe the person at the time, whether the evidence was recorded then or reconstructed later, whether the expert addressed the specific legal abilities in question, whether the person showed actual understanding of the document, and which account best fits the whole record. Medical evidence is important but not automatically decisive, and the judge decides the legal question.
What a robust file records
For wills and powers of attorney made by older clients, the strongest position is a contemporaneous record of: the information explained and how it was explained; the person’s responses in their own words, including their awareness of assets and family members; whether they were seen privately; why each attorney or beneficiary was chosen, and why an obvious candidate was not; any restrictions requested; any signs of pressure, conflict or dependence involving a proposed attorney or beneficiary; and the reasons for unusual gifts or changes from earlier documents, recorded in the document itself or in a separate signed statement.
Warning signs
- increasing forgetfulness or repetition;
- unusual transactions inconsistent with the person’s past values;
- signing documents without appearing to understand them, or documents completed in another person’s handwriting;
- being unaware of recently completed transactions;
- sudden changes, such as excluding a family member or favouring a new person;
- the person not speaking for themselves at meetings;
- family members making competing claims about the person’s capacity.
Practical precautions
- Plan while capacity is clear. Make wills and enduring powers of attorney early, and review them regularly.
- Prepare for the capacity assessment. Where a will, trust or power of attorney is complex, check early that the person understands it, before any family disagreement arises. Practical aids help: a family tree, a simple chart of the family’s companies and trusts, and photographs of the properties and other main assets, so the person can show that they know what they own and who might expect to benefit. A file note of what was explained and how the person responded, in their own words, is valuable later.
- Meet the client alone. Instructions should come from the person, not the family member who arranged the meeting.
- Obtain medical evidence where needed. Where capacity may be questioned, a contemporaneous assessment by a doctor experienced in capacity assessment can be decisive later.
- Choose attorneys carefully. Consider trustworthiness, competence, knowledge of the person’s wishes, whether attorneys act jointly or severally, and replacements. Explaining why an obvious candidate is not chosen can prevent later conflict.
- Plan across borders. Powers of attorney are jurisdiction-specific. A Victorian enduring power of attorney may not be accepted in Singapore or Hong Kong, and the reverse. Families with assets in several countries may need documents in each.
- Use mediation early. Where family members disagree about a parent’s care or finances, an elder mediation can resolve matters privately. See aged care and elder mediation.
If an attorney is not acting in the person’s interests, VCAT can review and revoke an enduring power of attorney in Victoria. Where a person has lost capacity to make a will, the Supreme Court can authorise a statutory will. See statutory wills in Victoria.
How we assist
We prepare wills and enduring powers of attorney for older clients with appropriate safeguards, advise families concerned about a parent’s capacity or the conduct of an attorney, and mediate family disagreements about elderly relatives’ care and finances. Justin Chua is trained in elder mediation. We act in English, Mandarin and Cantonese. Justin Chua is a Nationally Accredited Mediator and an Affiliate member of STEP, the worldwide professional body for trust and estate practitioners.
Frequently asked questions
Does a dementia diagnosis mean a person cannot make a will or power of attorney?
No. Capacity is presumed and is assessed for the particular decision at the particular time. Many people with early dementia can still make valid documents, but medical evidence at the time is often advisable.
How is capacity to make a power of attorney assessed in Victoria?
Generally, the person must be able to understand the information relevant to the decision, retain it, use or weigh it, and communicate the decision, with practicable support provided.
What can a family do if an attorney is misusing a parent’s money?
In Victoria, an application can be made to VCAT, which can review the attorney’s conduct and revoke or vary the power of attorney. Legal advice should be obtained promptly.
Is a Victorian power of attorney valid overseas?
Not necessarily. Powers of attorney are generally governed by local law. Families with assets in Singapore, Hong Kong or elsewhere may need separate documents in those places.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Related reading: Ageing Clients With Australian Assets: Capacity, Powers of Attorney and Frozen Accounts, for private bankers and trustees whose clients hold Australian assets.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice. Victorian law unless stated otherwise.
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