and other scams, as well as greater susceptibility to
undue influence by family members and third parties.
As noted above, some situations of financial incapac-
ity may reach the courts and result in loss of deci-
sional autonomy and the appointment of a conservator
(or guardian) by the court to protect the person and his
or her estate.Conceptual Model
of Financial Capacity
Early conceptual formulations of FC were anemic and
limited to unelaborated descriptions such as “money
management skills” or “financial management skills.”
In actual fact, FC is a complex, multidimensional con-
struct representing a broad range of conceptual, prag-
matic, and judgmental skills. This multidimensionality
is reflected in the concept of limited financial compe-
tency recognized across state legal jurisdictions, where
an individual may still be competent to perform some
financial activities (e.g., handle basic cash transac-
tions, write small checks) but no longer others (e.g.,
make investment decisions or asset transfers). In addi-
tion to multidimensionality, a conceptual model of FC
should incorporate the dual performance and self-
interest perspectives discussed above. For example,
persons with schizophrenia may have adequate finan-
cial performance skills but lack FC because they con-
sistently make poor judgments about how to spend
their government entitlement monies.
Marson and colleagues have proposed a clinical
model that conceptualizes FC at three increasingly
complex levels: (1) specific financial abilities or tasks,
each of which is relevant to a particular domain of
financial activity; (2) general domains of financial
activity, which are clinically relevant to the indepen-
dent functioning of community-dwelling older adults;
and (3) overall FC, or a global level. This conceptual
model of FC currently comprises 9 domains, 20 tasks,
and 2 global levels. The 9 domains include basic mon-
etary skills, financial conceptual knowledge, cash
transactions, checkbook management, bank statement
management, financial judgment, bill payment, knowl-
edge of personal assets and estate arrangements, and
investment decision making. As discussed, each
domain of financial activity is further broken down
into constituent tasks or abilities that emphasize under-
standing and pragmatic application of concepts rele-
vant to a specific domain. For instance, the domain of
financial conceptual knowledge involves understandingconcepts such as loans and savings and also using this
information to select advantageous interest rates.
Similarly, bill payment involves not only understand-
ing what a bill is and why it should be paid but also
accurately reviewing a bill and preparing it for mail-
ing. Finally, clinicians are usually asked by families
and the courts to make clinical judgments concerning
an individual’s overall FC. Such global judgments
involve integration of information concerning an indi-
vidual’s task- and domain-level performance, his or
her judgment skills, and informant reports. Such global
clinical judgments are particularly relevant for guardian-
ship and conservatorship hearings.Methods for Clinically
Assessing Financial Capacity
At present, there are at least three major approaches to
assessing FC: clinical interview, patient/informant rat-
ings, and direct performance instruments. The clinical
interview is the traditional, and currently the primary,
method for evaluating FC. At the outset of an interview
with a patient (and family members), it is important
that a clinician first determine the patient’s prior or
premorbid financial experience and abilities. For
example, it would be inappropriate to assume that a
person who on testing demonstrates difficulty writing
a check has suffered decline in this area if he or she has
never performed this task and/or has traditionally del-
egated this task to a spouse. Once the premorbid expe-
rience level is established, clinicians need to identify
the financial tasks and domains that make up the
patient’s current financial activities and differentially
consider those required for independent living within
the community. The level of impairment on a specific
task or domain should be carefully considered. Indi-
viduals who require only verbal prompting to initiate
or complete a financial task (e.g., paying bills) are
qualitatively different from individuals who require
actual hands-on assistance and supervision in paying
bills; both, in turn, differ from individuals who are now
completely dependent on others to pay their bills.
A second approach to assessing FC involves the
use of completed patient and informant rating forms.
Clinicians commonly use observational rating scales
to supplement their clinical interview. Observational
rating scales are typically completed by the patient
and/or a knowledgeable informant, such as a spouse,
parent, or adult child. They can provide valuable
“real-life” information about an individual’s current314 ———Financial CapacityF-Cutler (Encyc)-45463.qxd 11/18/2007 12:42 PM Page 314