There is no distinction — the terms are interchangeable.

Capacity is a clinical determination made by clinicians assessing a patient's ability to make a specific decision at a specific time. Competency is a legal determination made by a court. A patient may be assessed as lacking capacity clinically while remaining legally competent until a court rules otherwise.

Competency is assessed by clinicians; capacity is determined by courts.

Capacity applies only to medical decisions; competency applies only to financial decisions.