Financial Capacity Assessment

Financial capacity assessment refers to an evaluation, often conducted by a psychologist, to determine if an individual possesses the capacity to manage his or her finances appropriately.

This article concentrates on financial capacity evaluations with U.S. military veterans, although much of the information is relevant to other financial capacity determinations.

Financial Capacity Assessment Principles

Checkbook, cash, calculator

First, like any mental health evaluation, the psychologist should conduct a financial capacity assessment that addresses the specific legal criteria for financial capacity relevant to the time, place, and circumstances of the evaluation.

For example, laws governing financial capacity in probate court, while usually similar, vary in some details from state to state.

Second, the evaluator should concentrate on the individual's functional abilities, not simply whether or not they suffer from a mental disorder.

While the relevant law might require the presence of a psychiatric illness in order to find that a person is not competent to manage their financial affairs, it is the individual's task-specific abilities, e.g., whether or not they can plan ahead for expenses and budget their money accordingly, that matter.

Assessment of Financial Capacity with Veterans

Conducting a financial capacity assessment with a U.S. military veteran for the means the psychologist should understand the specific federal regulation governing financial competency decisions in this context,1 as well as any relevant statutes or case law.

Footnote
1. Determinations of incompetency and competency, 38 C.F.R. § 3.353.



Bibliography

[Jump down to the Financial Capacity Assessment Bibliography]

How to Find Journal Articles & Books

(i) If you are a VA employee, contact your local librarian and/or consult the VHA National Desktop Library. VA librarians are immensely helpful and you can find about 80% of journals directly and the rest through interlibrary loan.

(ii) Request an article from the author(s).

(iii) Search for the title of the article on Google Scholar – look to the right side of the search results page for links to PDF copies of the article.

Also click on "All n versions", where n is a numeral indicating the number of versions of the article available online. You can often find PDF (or HTML) versions of an article in this manner.

(iv) If a citation has a PMC citation, e.g., "PMC2867495", that means a full-text (PubReader, ePub, PDF) version of the article is available on PubMed Central[PubMed Central® is a free full-text archive of biomedical and life sciences journal literature at the U.S. National Institutes of Health's National Library of Medicine (NIH/NLM).]

How to Visit Referenced Websites on the CHROME Browser

For technical reasons, I do not hyperlink all the URLs in the bibliography below. To visit a referenced website using the Chrome browser, select the entire URL > right-click  > left-click "Go to [URL]" (see image immediately below).

Select entire URL > right-click > left-click Select entire URL > right-click > left-click "Go to [URL]"


How to Visit Referenced Websites on the FIREFOX Browser

To visit a referenced website using the Firefox browser, select the entire URL > right-click > left-click "Open Link in New Tab" (see image immediately below).

Select the entire URL > right-click > left-click Select the entire URL > right-click > left-click "Open Link in New Tab"



Financial Capacity Assessment Bibliography

Belchior, Patricia da Cunha, Melanie Holmes, Nathalie Bier, Carolina Bottari, Barbara Mazer, Alexandra Robert, and Navaldeep Kaur. “Performance-Based Tools for Assessing Functional Performance in Individuals with Mild Cognitive Impairment.” Open Journal of Occupational Therapy 3, no. 3 (Summer 2015): art. 3 (1–21).  https://doi.org/10.15453/2168-6408.1173

Black, Ryan A., Bruce J. Rounsaville, Robert A. Rosenheck, Kendon J. Conrad, Samuel A. Ball, and Marc I. Rosen. “Measuring Money Mismanagement Among Dually Diagnosed Clients.” The Journal of Nervous and Mental Disease 196, no. 7 (July 2008): 576–579. https://doi.org/10.1097/NMD.0b013e31817d0535

Cullum, C. Munro, Kathy Saine, Lynette D. Chan, Kristin Martin-Cook, Kevin F. Gray, and Myron F. Weiner. “Performance-Based Instrument to Assess Functional Capacity in Dementia: The Texas Functional Living Scale.” Cognitive and Behavioral Neurology 14, no. 2 (2001): 103–108.

Ghesquiere, Angela R., Caitlin McAfee, and Jason Burnett. “Measures of Financial Capacity: A Review.” The Gerontologist 59, no. 2 (April 2019): e109–e129. https://doi.org/10.1093/geront/gnx045

Kershaw, Mavis M., and Lynne S. Webber. “Assessment of Financial Competence.” Psychiatry, Psychology and Law 15, no. 1 (2008): 40–55. https://doi.org/10.1080/13218710701873965

Moye, Jennifer and Michelle Braun. "Assessment of Capacity." In Handbook of Assessment in Clinical Gerontology, 2nd ed., edited by Peter A. Lichtenberg, 581–618. London: Academic Press, 2010. https://doi.org/10.1016/B978-0-12-374961-1.10022-3

Marson, Daniel C., Deborah L. Kerr, and Donald G. McLaren. “Financial Decision-Making and Capacity in Older Adults.” In Handbook of the Psychology of Aging, 8th ed., edited by K. Warner Schaie and Sherry L. Willis, 361–88. San Diego: Academic Press, 2016. https://doi.org/10.1016/B978-0-12-411469-2.00019-4

McDougall, Graham J., Heather Becker, Phillip W. Vaughan, Taylor W. Acee, and Carol L. Delville. "The Revised Direct Assessment of Functional Status for Independent Older Adults." Gerontologist 50, no. 3 (October 2009): 363–370. https://doi.org/10.1093/geront/gnp139 | PMC2867495

National Academies of Sciences, Engineering, and Medicine. Informing Social Security's Process for Financial Capability Determination, edited by Paul S. Appelbaum, Carol Mason Spicer, and Frank R. Valliere. Washington, DC: National Academies Press, 2016. https://doi.org/10.17226/21922

Niccolai, Lindsay M., Kristen L. Triebel, Adam Gerstenecker, Tarrant O. McPherson, Gary R. Cutter, Roy C. Martin, and Daniel C. Marson. “Neurocognitive Predictors of Declining Financial Capacity in Persons with Mild Cognitive Impairment.” Clinical Gerontologist 40, no. 1 (2017): 14–23. https://doi.org/10.1080/07317115.2016.1228022

Rosen, Marc I., Robert A. Rosenheck, Andrew Shaner, Thad Eckman, Gail Gamache, and Christopher Krebs. “Veterans Who May Need a Payee to Prevent Misuse of Funds for Drugs.” Psychiatric Services 53, no. 8 (August 2002): 995–1000. https://doi.org/10.1176/appi.ps.53.8.995

Sudo, Felipe Kenji, and Jerson Laks. “Financial Capacity in Dementia: A Systematic Review.” Aging & Mental Health 21, no. 7 (2017): 677–83. https://doi.org/10.1080/13607863.2016.1226761

Wilder, Christine M., Eric Elbogen, and Lorna Moser. “Fiduciary Services for Veterans With Psychiatric Disabilities.” Federal Practitioner 32, no. 1 (January 2015): 12–19. PMC6363292



Financial Capacity Assessment Instruments

Texas Functional Living Scale

Authors: Munro Cullum, Kathy Saine, & Myron F. Weiner

Description (from the publisher): Texas Functional Living Scale (TFLS) provides an ecologically valid, performance-based screening tool to help identify the level of care an individual requires.

Brief and easy to use, the TFLS is well-suited for use in assisted living and nursing home settings. It is used by a range of professionals, including neuropsychologists and clinical psychologists, social workers, and pharmaceuticals researchers.

Benefits: Support diagnostic work-ups, placement decisions, treatment planning, evaluation of treatment outcomes, and monitoring of disease progression.

Focus primarily on skills likely to be affected by cognitive decline (particularly useful with individuals suffering from dementia).

Links to and is standardized with the WAIS-IV and WMS-IV.

Features: TFLS helps measure an individual’s ability in four functional domains:

Time: ability to use clocks and calendars

Money and Calculation: ability to count money and write checks

Communication: ability to make a snack and use phones and phone books

Memory: ability to remember simple information and to take medications

Age range: 16–90 years old

Publication date: 2009

Available from: Pearson Assessments  https://www.pearsonassessments.com/store/usassessments/en/Store/Professional-Assessments/Cognition-%26-Neuro/Texas-Functional-Living-Scale/p/100000222.html

Cost for starter kit: $172


Texas Functional Living Scale: References

Cullum, C. Munro, Kathy Saine, Lynette D. Chan, Kristin Martin-Cook, Kevin F. Gray, and Myron F. Weiner. “Performance-Based Instrument to Assess Functional Capacity in Dementia: The Texas Functional Living Scale.” Cognitive and Behavioral Neurology 14, no. 2 (June 2001): 103–108.

Drozdick, Lisa Whipple, and C. Munro Cullum. “Expanding the Ecological Validity of WAIS-IV and WMS-IV With the Texas Functional Living Scale.” Assessment 18, no. 2 (June 2011): 141–55. https://doi.org/10.1177/1073191110382843



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