The Court of Appeal has categorically confirmed the distinction between capacity and memory. In the case of Simon v Byford and others  EWCA 280 the testator made a will in 2005 which treated all of her children equally. This differed from her previous wills, which had favoured one son by gifting him a shareholding in the family company which would give him a controlling interest. The purpose of the testator's earlier wills was to avoid a deadlock between the children, which could result from them having equal shareholdings in the company.
The High Court found that at the time the testator made her will in 2005, she did not recall the reasons for the different terms on which her earlier wills were drafted. However, she did have testamentary capacity and she knew and approved the contents of her will. To have testamentary capacity it was necessary for the testator to have understood the terms and effect of the will, to have understood the extent of her property, and to have understood the moral claims which might be made against her estate, whilst suffering from no disorder of the mind which might prevent the exercise of her natural faculties.
On appeal the Court of Appeal upheld the High Court's decision. The Court of Appeal found that the testator was capable of understanding the reasons for her earlier wills, even if she chose not to. The Court of Appeal also found that in applying the test for testamentary capacity the important question was what the testator had the potential to understand, rather than being a test of memory about what the testator actually understood. The Court of Appeal also confirmed that there was no requirement for the testator to understand the collateral consequences of her will (i.e. the practical consequences flowing from the distribution of shares in the family company). The testator was only required to understand the extent of her own property, without having to appreciate the consequences of gifting the property when combined with facts such as the property already owned by the beneficiaries.