I am continuing to provide an overview of the guardian's responsibilities and obligations when caring for a loved one or family member through a court-ordered guardianship. Last time, I outlined the guardian's responsibility to put the ward's interests first. I highlighted some of the financial responsibilities, including the obligation to manage the ward's assets for the ward's care.
A ward who is incompetent is at great risk of being financially exploited. Because of that risk, the court carefully scrutinizes guardianships to ensure that money is not misspent by a guardian. Therefore, it is vital that a guardian diligently fulfill the accounting requirements imposed by law. These requirements may be waived by court order, but if they are not waived in writing the guardian must strictly comply with them.
First, the guardian must provide an inventory to the court within 60 days of being appointed. This inventory must show any assets, personal property, real property, bank accounts, or other property that the guardian has taken custody and control of. This would include valuing any real property, jewelry, collectables, or the like. This inventory and appraisement should be as thorough and complete as possible. It marks the financial "starting point" for the guardianship records. The guardian must swear under penalty of perjury that it is correct.
Second, once the guardian has taken control of the ward's assets the guardian must separately maintain the assets. Unless married, the guardian is not permitted to mix the ward's assets with any third person. This means, for example, that a guardian cannot have the ward's social security check deposited into the guardian's personal bank account. Instead, the ward's income and monies should be kept separate bank account. Any payments to support the ward's care should come from those accounts.
Third, the guardian must keep precise and accurate records of all funds received and disbursed for the wards benefit, along with the original receipts and the purpose for each disbursement. This duty includes, but is not limited to: balancing the guardianship checkbook; ensuring that all records are maintained in a clear and legible fashion; maintaining copies of all bank records; and ensuring that all records are consistent with bank statements. I have found that the easiest way to meet this responsibility is to manage the ward's records through Quickbooks, Quicken, or another simple accounting software program. When bank statements come in each month, then you can reconcile them against the books.
Fourth, at least annually, the guardian must provide a written accounting to the court showing the balance of any accounts or assets of the ward's. If the inventory and appraisement is the "starting point," then every year an accounting would show what has happened financially since then. This accounting should show all the assets received over the last year, any amounts spent for the ward, and the balance of any account. If property was sold, or investments liquidated, the annual accounting would have to show that. The annual accounting must also show that the ward's taxes were filed and what happened to any refund. The guardian must swear under penalty of perjury that the accounting is accurate and complete.
Again, I have found that if a guardian is using accounting software to manage the books, then the annual accounting is streamlined and much easier. The guardian can literally print the profit and loss statement and balance sheet to attach as exhibits to the annual accounting.
If these accounting requirements seem overwhelming, or intimidating to you, but you still want to care for your loved one, I suggest getting the assistance of a bookkeeper or accountant. I encourage all my clients to use a bookkeeper as it frees them to focus on their loved one's needs.