Proof of client capacity critical

A superannuation lawyer has emphasised the importance of being able to prove the mental acuity of their elderly clients when authorising a course of action for an SMSF and has suggested the solution can be simple and straightforward.

“A really important thing is [to establish the] evidence you have that when you spoke to your client they actually had capacity. Why do you think that?” Cooper Grace Ward partner Scott Hay-Bartlem told attendees of the SMSF Association Technical Summit 2026 held in Sydney recently.

Hay-Bartlem revealed a potential method of achieving this can be very simple.

“When I’m doing estate planning with clients, particularly older clients, I get them talking because everyone will tell you about their grandchildren and their children, good and bad, who they saw and who they didn’t see,” he noted.

“If [they can tell me about] their children, what they are doing, when they saw them and their grandchildren’s birthdays and their weddings, it’s a great way of establishing capacity.”

Hay-Bartlem pointed out when engaging clients in this manner, practitioners need to be wary of what he called the “overbearing spouse” who may intervene and not allow the client to actually converse for the purpose of this exercise.

He expressed unease that incorporating such procedures in client meetings may not be standard practice for advisers.

“What concerns me is as lawyers we get trained to take notes and to be aware and to be prepared for the [capacity] question, but as non-lawyer advisers, where do you sit with this?” he said.

He pointed out documentation of client meetings becomes the key issue and piece of hard evidence in establishing mental alertness.

“Do you have the notes? With AI (artificial intelligence), it’s probably easier to have good notes [regarding] what you discussed and what you talked about,” he said.

“But it is [something] that I think [where] if you have to get caught up in the litigation … notes are really important.”