As a general rule, you cannot act on instructions from a client if they do not have the necessary mental capacity to give you those instructions. Rule 8 of the Australian Solicitors Conduct Rules 2012 (Qld) ('ASCR') states that you must follow a client’s lawful, proper and competent instructions.
Again as a general rule, a person is presumed to have capacity, but if you have doubts then you should consider obtaining a medical assessment. You would need your client’s consent and instructions for this, and in seeking these it might be a point to put to the client that it is in their interests to have that confirmation of capacity as evidence to meet any later challenge to the validity of the transaction or the act the subject of the instructions. If consent is not forthcoming, you may have to cease to act.
The Queensland Handbook for Practitioners on Legal Capacity (1 July 2014) provides practitioners with a sound conceptual framework for assessing whether a client has capacity to give legal instructions.