If you or your family member are making a personal injury claim, your lawyer might talk about the concept of ‘capacity’.
There are different types of capacity and capacity can change over time so it can be a bit confusing.
The first type of capacity your lawyer might discuss is the capacity for your or your family member to give them instructions in relation to the legal claim. A child under 18 would not be considered to have this capacity so a parent usually takes on the role and is called ‘litigation guardian’ or ‘tutor’ in the court paperwork.
An adult with impaired decision making, for example due to a traumatic brain injury, may or may not need someone else to give the lawyer instructions regarding the legal claim.
When the legal claim is getting closer to resolving a lawyer needs to consider if their client will have the capacity to manage the settlement funds. A child will not have this ‘financial’ capacity but an adult may or may not, depending on all the circumstances.
If a child or adult is considered not to have ‘financial capacity’ then the lawyer may be able to claim the cost of having the settlement funds (or all of the person’s income and assets) professionally managed for them. The rules on the recovery of the cost of funds management vary slightly depending on the context of the claim (the jurisdiction, relevant legislation, etc.).
If a claim is settling while a plaintiff is a child, consideration will need to be given as to whether or not the child will have financial capacity when they turn 18 - definitely, definitely not or maybe - as this will impact the claim for funds management and the orders sought by the court.
Note that a decision on financial capacity is not permanent. A plaintiff whose funds are being managed, once an adult, can approach the relevant court or tribunal at any time to prove that they now have financial capacity. Medical evidence is required.
Note too, that even if a person does not have financial capacity they might still or later (from age 18) be considered to have ‘testamentary capacity’ - the capacity to execute a will, make a superannuation beneficiary nomination or attend to other estate planning documents.
Speak with your personal injury lawyer or contact Aeran if you have any queries about capacity in the context of personal injury compensation.