Financial capacity is a critical issue of autonomy for older people. However, determining the point at which a cognitively impaired older adult is no longer capable of independent financial management poses an onerous task for family members, and health and legal professionals. At present, there is no agreed-upon standard for evaluating financial capacity, and issues pertaining to the level of impairment that constitutes incapacity remain largely unresolved. In the absence of validated assessment guidelines, determinations of capacity are frequently based on neuropsychological measures and clinical judgment, although there is limited evidence to support the validity of these methods in capacity determinations. In this paper, various cognitive, psychiatric, social, and cultural factors that potentially contribute to financial incapacity in older adults are described. The strengths and weaknesses of clinical approaches and instruments currently used in capacity determinations are evaluated, and specific recommendations are made regarding broader assessment approaches. Finally,