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Guardianship of the Estate -- Starting Out
GUARDIANSHIP OF ESTATE - GETTING STARTED RCW 11.92.040 requires a newly appointed guardian of the estate To file within three months after the guardian's appointment a verified inventory of all the property of the incapacitated person which comes into the guardian's possession or knowledge, including a statement of all encumbrances, liens and other secured charges on any item. This can be a very daunting task when the ward has not kept adequate records, or sometimes no records at all. Often the guardian begins the process with nothing more than an unsorted collection of old paperwork, recently arrived mail and, perhaps, anecdotal information from friends and family. Even in the happy instance in which adequate records are available, an estate of any complexity at all requires considerable attention to assure that all assets have been identified and marshalled. Attachment 1 is a "Client Intake Checklist" that a guardian can use in following the procedures outlined below. The practices described below will also vary with the conditions of the guardianship. A limited guardian or the guardian of a ward with strongly held preferences will not necessarily have the authority to do all of what follows. This section will, for the most part, proceed on the assumption that the guardian has been appointed full guardian of the estate in a case in which records are poorly kept. Limited Guardianships It is common for a limited guardian to have both the authority and the need to require some action of a financial or government institution. The word "limited" however will often raise problems, because the Letters of Guardianship do not specify the scope of the guardianship. It is crucial that the Order Appointing Limited Guardian be specific as to the scope of the guardianship. A certified copy of the order should always be obtained. The certified order can be presented in the event there is any concern about the scope of authority, and this is usually sufficient. Documenting Authority The newly appointed guardian should obtain at least three certified Letters of Guardianship. It is prudent to also get a certified copy of the Order Appointing Guardian, although in most full guardianships this is not needed. More complex estates will require more certified copies, usually 10 will suffice. They cost $2.00 each. Many times, it is possible to use photocopies rather than certified copies. Any bank, stock company or other financial institution will require certified Letters. If the guardianship is limited, a certified copy of the Order Appointing Limited Guardian will also often be requested. Most creditors are happy to send bills on the basis of a photocopy of the Letters. The Government ordinarily requires Certified copies of the Letters. It is usually a good idea to obtain the Letters of Guardianship on the day of the appointment. Otherwise the order goes into the clerk's filing and will not be available for review for five days to two weeks. The clerk needs the original or a certified copy of the Order, the Bond, if any, and the original of the guardian's Oath in order to prepare the Letters. (Please note that preparation of the Oath is a commonly neglected detail. There are no form Oaths available in the courthouse.) If there needs to be delay getting a signed Oath or the bond, the attorney should obtain a certified copy of the Order Appointing Guardian to present to the clerk. When certified Letters are being sent out, a note attached saying, "Please return this certified document once my authority has been verified" usually has the desired effect. Often banks, and always stock companies, will request certification dates on documents within 60
or sometimes 30 days of their processing of the request. The clerk can prepare a copy of any
document in the court file, certified as of the date the clerk makes the copy.
Documenting the Assets of the Estate Incoming Mail An excellent source of information about a person's estate is incoming mail. One of the guardian's first acts is often obtaining and submitting a Change of Address Order to the local post office. Attaching a photocopy of the letters of guardianship usually assures that the Postal Services will make the change within five to ten days. In the interim the mail will continue to go to the wards address. A Change of Address Order will redirect all mail, including subscriptions and personal mail. This should not be done if the ward would be discomfited by not receiving mail. People who retain some capacity are usually bothered by not getting mail. This is one of those basics that sometimes bothers even the most handicapped of people. If possible make arrangements for the mail to be screened and safeguarded by a care giver and routinely turned over to the guardian. Mail that the guardian needs to receive directly can be rerouted via direct contact with the company. Even if a Postal Service change of address order is necessary, the guardian should be able to make arrangements to receive important mail directly and then submit a new Change Order directing mail back to the wards address. Occasionally, if the ward has not picked up mail for a long period, the Postal Service will stop making deliveries and will hold mail at the local station. Usually, receiving a Change of Address Order causes all of this mail to be delivered to the guardian. Internal Revenue Service Another good source of information is the IRS. It is best to get at least the last three years tax returns, including the W-2 and 1099 forms. If these are not in the wards records and the guardian does not know who the accountant was, the information can be requested from IRS using IRS Form 4506. It usually takes at least a month for the IRS to respond. Include certified letters of guardianship with the request. Also include a cover letter directing future correspondence to the guardian and enquiring as to the ward's current tax status. Personal Papers of the Ward The guardian has a duty to go through the ward's residence to identify valuable assets and records. The guardian must be sensitive to a ward who perceives this as an intrusion. Almost everyone has a place where they keep important papers that are about their assets or business. Many people have home offices, and the guardian must go through these papers very thoroughly. People commonly hide paperwork or actual assets. Cash is often found in the home, at times in staggering amounts. The bottom drawer of a dresser, the sewing basket and under the mattress are only a few places that such articles are commonly kept. Shoe boxes are common vessels for storing paperwork. We sometimes refer to the process of inventorying assets as "doing the shoe box". Be particularly alert for safe deposit box keys, which, paradoxically, people almost always hide. Searches of the ward's residence should be done by two persons who remain together during the process. This minimizes the likelihood that either the fact or appearance that the guardian or guardian's agent may have misappropriated valuables. Anecdotal Information The ward should always be asked what bank accounts, investments real property, valuable personal property and so on they own. The same should be asked of relatives and close friends, and of anyone who may have had occasion to know. Always make a record of the information provided. For example, if all a person can remember is that the ward used a bank in, say, Redmond this can help track down a safe deposit box. If all anyone knows is that the person had accounts at Peoples bank, and enquiry will reveal that Peoples is now owned by US Bank of Washington, and this can be a valuable lead. The inventory process is often a true investigation, and most people experienced in the field are happy to tell their most exotic experiences. The best I have heard involved a hand drawn map and two bank trust officers digging for buried gold. In suits. Title`Searches If there is question about the ownership of a particular parcel of real property, most title companies are happy to provide any one who asks with copies of recent transactions affecting the property. These are called "listing packets", and are provided at no charge. It is usually best to ask for the last three transactions. This is especially valuable if there is concern that the ward may have disposed of property while incompetent or subject to undue influence. A full title search is better and should usually be ordered whenever the guardian knows the ward owns a particular piece of property. It will reveal liens or potential liens, information about property taxes and a wealth of other information. Technically, when a title company does a title search, it is to insure the validity of title. The title company is assuming the risk that the title report is inaccurate. The company charges a fee for this. If there is any likelihood that the property will be sold in the reasonable future the order should be characterized as for a "preliminary title report". If the property is not listed, title insurance can be canceled and the fee is about $60.00. If there is no chance the property will be sold the title company will treat the order as a "litigation guarantee" and the fee is about $250.00. Debts Not surprisingly, debts are usually easy to identify. It is the rare creditor that does not send at least a quarterly statement. Often the guardian encounters correspondence and telephone calls from collection agencies. Sometimes there is little indication whom the collection agency represents, that is: who was originally owed the money. Collection agents intimidate people for a living, and are often choleric in their approach. The guardian needs to understand that s/he is in a very strong position to tell the agents to provide a clear record proving that the ward incurred the debt, preferably including the signature of the ward. If an agent is not satisfied s/he can be referred to the procedures for making claims against estates in RCW 11.92.035. Such claims are almost never made. Be aware of significant debts incurred at a time that the ward was clearly incapacitated. Although
there is a legal presumption of competence until a person is adjudicated otherwise, it is also so
that if reasonable enquiry would reveal that a person is incompetent, a debtor's claim is sometimes
prejudiced. A guardian encountering such a situation should consult closely with counsel. The
guardian should also be aware of charges incurred by someone other than the ward either making
unauthorized use of accounts, or having been placed on an account by the ward.
Organizing Information Once the guardian has collected all of the paperwork and other information, s/he must organize it. The following is a step by step process for doing this. It is important to do one step at a time. Again, the following assumes a disorganized set of records, but is a good system for all estates. Equipment The guardian needs to have a three hole punch, a three ring binder, a supply of tab indexes and a sorter. Tab indexes are separators between binder sections. Sorters come in a variety of forms, all of which provide separate sections for each letter of the alphabet. All of these are available in any good office supply store, and are legitimate estate expenses. STEP 1. Alphabetize This sounds a little silly until it is tried. The guardian needs to adopt a system and place each piece of paper in a section of the sorter. Usually it is best to sort by the first word in the company name. As this is being done it is a good idea to discard envelopes, advertising material and the other recycling that is the inevitable accompaniment to all important mail. It is very important to unfold all paperwork to its full size. Not only records from known assets, but any anecdotal information the guardian has obtained should be included. STEP 2 Sort Chronologically By Account Once the material is roughly organized, go through it a second time and segregate records by account. That is, if there are a savings account, a checking account and a certificate account at the same bank, records for each account should be placed together in chronological order. It is very important to sort this material chronologically, and to review transactions on each account over time. This will help identify any large transfers, regular deposits and other information that can be helpful in locating other assets or possible exploitation of the ward. STEP 3 Place In Binder Using Inventory Record Cover Sheet Once each account has been segregated and ordered, the material is punched and placed in individual sections of the three ring binder, using index tab separators. Again, only one account per section, with accounts at any one institution placed in adjacent sections. Attachment2 2 headed "Inventory Record", is a cover sheet for each asset. Keep this as the first page in the section. Use the lines on the cover sheet to keep a journal of the guardians treatment of the asset during the life of the asset. Using this sheet will assure that the information needed for the Verified Inventory is handy. An Inventory Record sheet should be completed for all possible assets and debts, even those on which no written documentation has been obtained. This assures that the guardian will remain aware of the possible asset throughout the investigation. And, yes, it is definitely worth the time it takes to make a little label for each index tab to identify the asset. The binder remains in use after the inventory. Statements on the account are kept in the binder over the year. As accounts are closed or transferred, these records are kept in the binder. The information in the binder is used to prepare the annual accounting. It may take some persuasion to convince the guardian to slog through the process of following this system. It is rare that having done so, the guardian fails to appreciate its virtue. MARSHALLING ASSETS The guardian ordinarily begins the process of marshalling assets before the preparation of the Verified Inventory. The guardian needs to safeguard assets as quickly as possible, and needs to obtain current information on assets. Usually, the guardian will need to go in person to access or block bank accounts. Most other assets can be dealt with by mail and telephone. Attachment 3 3 is a form letter which covers most of the situations the guardian encounters. Attachment 4 is a very detailed "Asset Marshaling Checklist". It is important to place all financial institutions on notice that the guardianship has been ordered. Record Keeping It is very important that the guardian keep very close track of all transactions on behalf of the ward. The binder system described above helps this process considerably. Tickle System The guardian should develop a system to remind him/herself to attend to time sensitive tasks such as the inventory date, certificate maturities, compliance with requests made by the guardian, and so on. This can be one of many computer systems or a simple calendar system. Affidavit for Delivery of Assets RCW 11.92.096 directs banks and other financial institutions to provide the guardian access to accounts, provided that the guardian has appropriate documentation and completes an Affidavit for Delivery of Assets. Attachment 5 is a form affidavit. The procedure set forth in the statute is that the guardian is responsible for providing the affidavit and an envelope addressed to the clerk of the court. The guardian completes the affidavit, which the bank then forwards to the clerk for placement in the court file. This process assures that an inattentive or dishonest guardian cannot access funds without the court's knowledge. This section of the law was adopted fairly recently. Some banks have interpreted the section to mean that the guardian had to provide account numbers before information would be provided: an obvious catch 22. This problem seems to be fairly uncommon now. The Guardianship Account The guardian should use whatever funds are first accessed to open a new checking account in the name of the Guardian "as guardian for ___________". All funds that are accessed by the guardian should go through the guardianship account. This bears repeating. ALL FUNDS ACCESSED BY THE GUARDIAN SHOULD GO THROUGH THE GUARDIANSHIP CHECKING ACCOUNT. This assures a strong "paper trail" and allows the guardian to track his or her activities for the annual accounting. It is not advisable to convert a pre-existing account for the ongoing use of the guardian. When the guardian chooses to leave an account open, the guardian should keep the number of transactions on the account to the absolute minimum. This assures better control and record keeping, a more comprehensible accounting and reduces the margin for error. Accessing Bank Accounts Banks will always require Certified Letters of Guardianship. Banks are understandably reluctant to give access to funds to anyone but the depositor. The bank has an obligation to protect the depositor. It is important for the guardian to have confidence that s/he has the authority to direct the bank, and that the bank has the obligation to comply with those directions. More often than not a branch bank officer will need to call the bank's legal department for guidance. It will conserve time to make telephone contact with the bank in advance and advise a bank officer of the guardian's need to access the account, as this process can take an hour or more. A professional guardian is well advised to identify a bank officer at each of the major banks, and go to that person routinely. Search for Accounts The guardian should always ask the officer to run the ward's social security number through the computer to identify other accounts of the ward. Accounts closed in the past year should be included in this investigation. The officer can print out summaries of accounts held, and can usually print activity on any account since the last bank statement. It is a good practice to obtain these printouts and include them in the binder materials. In doing this search, ask the bank officer to make a special effort to locate any safe deposit box. Many banks do not integrate records of safe deposit boxes into their other computer records. Often, the only way to identify the existence of a box is to call the branch where it is located. Ask the bank officer to check. Direct Deposits All government pension plans and many private plans encourage pensioners to receive their income in the form of direct deposits. Always check to see if there are direct deposits to an account. Never close an account to which direct deposits are going. Reduce the account to the minimum balance, change the address for statements and redirect the deposit to the guardianship account. The bank at which the guardianship account is opened will provide the form for changing government direct deposits. A sample is included as attachment 6 but the banks form must be used. The switch usually occurs within 60 days, but can take much longer. The guardian should tickle to close the account once the change has been made. The guardian may prefer to receive the check itself rather than an electronic deposit. Be advised that Civil Service Annuity and Railroad Retirement Pension systems are quite insensitive to these requests, taking up to a year. The guardian should first change the direct deposit and then request the paper check. Direct Payments Less commonly, accounts are set up to pay certain obligation directly. Usually this is a loan from the same bank. Health insurance, savings plans or other business is also managed in this way as well. The account should remain open and funded until the guardian can make alternate arrangements. Change Address Even when closing an account, the guardian should first ask that the address be changed to the guardian. This assures that the final statement and tax information is sent to the guardian. Also, it is not unusual for there to be problems with outstanding checks, un-posted interest or other small matters that require the bank to contact the guardian. Tax Information It is a good idea to obtain the year to date amount of interest income as of the date an account is closed, just in case the 1099 goes astray. Payable on Death Accounts The guardian needs to determine if the ward instructed the bank as to disposition of accounts after death. It is a common practice for a person to designate a remainderman to whom an account is to be delivered upon the death of the depositor. These funds go directly to the remainderman and are not part of the probate estate. When transferred by the guardian, such funds should be placed into accounts with the same remaindermen. It is not uncommon for a person to have different remaindermen for different accounts. In this case the guardian should devise an equitable formula to expend funds among accounts with different provisions. This arrangement should be disclosed to anyone affected and should be approved by the court. The Verified Inventory should be specific as to the character of the accounts and the measures taken to preserve the intentions of the ward; and counsel should obtain approval of these plans, with advance notice to anyone affected. Joint Accounts People often hold funds in accounts on which they have allowed another person to have access. This is usually done to cause the account to be payable on death to the co-holder; and to make the funds available to another "just in case". Except in the case of spouses, it is rare to have a claim of actual ownership made. These accounts should be treated as described in the previous paragraph. If the co-holder has been making use of the account to pay the ward's bills, ask the co-holder to stop. Sometimes the bank will refuse to provide funds in a joint account to a guardian until the co-holder approves. This is usually due to an excess of zeal at the bank, as a guardian should have the same access provided to the ward. If the bank officer holds firm, the guardian should confirm that the same restriction is placed on the co-holder and either obtain the co-holder's written approval, an order from the court or, preferably, clarification from the bank's legal department. Such impasses are not unusual. Bank officers are rightfully fearful of making mistakes with depositor's money. Time Deposits Certificates of Deposit and other time deposits generally carry a penalty for early withdrawal. This penalty is waived when a guardian has been appointed. The guardian should consider the need of the ward for immediate funds, the maturity date and the return the funds are generating when deciding whether to liquidate a time deposit in part or in whole. Bank officers are sometimes not aware of the early withdrawal option that is available to the guardian. The banks procedure manuals usually include this in their section adjacent to sections dealing with death of a depositor. The Code of Federal Regulations has an obscurely located, but quite clear requirement to this effect at 12 CFR 402 Section 204.2 (c)(1)(i)(footnote [e]). See attachment 7. Safety Deposit Boxes The guardian should enter and inventory the contents of the ward's safety deposit box as soon as possible. Many people who are anxious about the safety and confidentiality of their finances use safe deposit boxes to protect themselves. Thus, the existence of the box, the location of the box and key and the contents of the box can be very difficult to discover. Banks procedures are geared to providing this confidentiality and security. Identifying and accessing the box can be difficult. Sometime the guardian has a key, but has no indication where the box is located. Sometimes the location of the box is known, but not of the key. Sometimes the first indication a guardian has that there is a box is receiving an annual rental bill from the bank. This bill will sometimes go to the wards address, even when the guardian has asked the bank to change the address for all accounts. Safe deposit box keys are usually of a distinctive design that is readily recognized. If the guardian locates a key, but no record of where the box is, a search must be initiated. People usually maintain boxes where they bank. Sometimes boxes are kept even after accounts at a bank have been closed. Be alert for record of old accounts and contact those bank branches. If the ward has failed to pay rent on a box for some time, it may be declared abandoned. Abandoned boxes are drilled and their contents stored for 5 years. Records of abandoned boxes are kept at the State's Unclaimed Property Division, PO Box 448, Olympia, Washington 98504. Phone 736-4829. The Seattle Times publishes a list of the names of renters of abandoned boxes on March 1 each year. If a diligent search fails to turn up the key to a known box, it will have to be drilled. Banks do not have master keys to the boxes they keep. The bank can easily arrange to have a box drilled. The fee ranges from $50.00 to $150.00. Some banks will require a specific court order to drill the box, which counsel can easily obtain. The requirements of RCW 11.92.096 (2) include the presence of a bank officer at the opening and inventory of the box, and the filing of an inventory along with the Affidavit for Delivery of Assets. Not all banks are aware of this provision. Bank officers almost always agree to monitor this process if asked, and this should always be done. As with joint accounts, be aware that if a box is registered in more than one name, the contents may not necessarily belong entirely to the ward. Stocks and Bonds The unseasoned guardian may be confused when confronted with a combination of communications from corporations, stock or bond certificates and brokerage account records. Counsel may want to refer a guardian who has not managed stocks and bonds to an experienced stockbroker. Counsel should also be diligent to assure that the guardian does not begin to play the market. Inexperienced guardians can easily be convinced by stock brokers that it is in the interests of the ward to make various trades or investments. Brokers are usually completely unaware of the limitations on guardian's activities and give the same advice they give other clients. Counsel should inform the guardian very clearly of the need to obtain prior court approval of such activities; and of the limited choices and risks available to the guardian. Certificates In going through the wards personal papers the guardian may locate stock certificates. These are usually quite recognizable as items of value. These should be safeguarded, of course. Any stock broker can tell the guardian the value of the stock, or the guardian can look in the newspaper. The guardian should locate and preserve all available records of when the stock was purchased and the purchase price. This information has important tax implications when the stock is sold. The guardian may locate or begin to receive dividend payments or promotional material suggesting that the ward owns stock. If there is some way of specifying the ownership, such as from the dividend check or proxy ballots, but the certificate cannot be located the guardian may have to seek replacement of the lost certificate. This involves posting a relatively costly non-refundable bond and providing recently certified Letters of Guardianship. This should not be done until all other avenues for locating the lost certificates has been exhausted. The first place the guardian should check for certificates is to see if they are being held in street name by a brokerage, as described below. The guardian may locate stock certificates for, say, a mine in Idaho or similar venture which is not carried on any stock exchange. The guardian should contact the Secretary of State, Corporations Division of the state in which the stock was issued to see if the company still exists. Usually these stocks are worthless, but not always. If the guardian is working with a broker, the broker will usually be willing to do this research at no charge. Brokerage Accounts The guardian should be alert for statements from stock brokers that show assets being managed on behalf of the ward. Usually, this means that the certificates need not be located, as they are retained by the brokerage. The statement may show holdings of stocks or mutual funds, and records of dividends received and held. Usually, there is a money market fund associated with the account to collect dividends or interest. The investor will continue to receive correspondence such as proxy ballots from the corporations directly. If the ward was holding a significant amount of stocks or bonds in certificate form, the guardian is well advised to place the certificates with a brokerage. This simplifies the process of managing dividend income and of arranging trades. Stock certificates are signed on the back by the guardian and "placed in street name", that is, held by the brokerage. When including pre-existing brokerage accounts in the Verified Inventory, it is best to identify the account but also to specify the precise holdings and values. Alternatively, a copy of a recent statement can be referenced and attached to the Verified Inventory. Real Property Once an item of real property has been identified the guardian should write to the county assessor to have the address for tax statements changed. The guardian should be sure to apply for a senior citizen/disabled person discount, if available. The guardian also needs to make certain that the property is adequately insured. If the ward owns a home which is standing empty, insurance can become quite expensive. If the ward owns recreational property, the guardian should check to see if the homeowners policy on the ward's residence extends liability coverage on the recreational property. If not, this coverage should be obtained. Insurance Policies There is a very wide variety of life insurance, annuities and similar instruments by which people safeguard their future. The guardian needs to make contact directly with the company or the agent who sold the policy. Life Insurance When the guardian encounters a life insurance policy s/he should write to the company and find out the present cash value, the death benefit amount and the beneficiary. The guardian should be especially wary not to confuse the cash value of the policy with the death benefit. The guardian should avoid cashing in a policy that is fully paid, as it deprives the beneficiary of potential income intended by the ward. If the ward is in need of funds, a comparison should be made between the benefit to the ward and the potential benefit to the beneficiary. Usually, the amounts are comparable and the ward's needs dominate the decision. If there is a wide variance, the guardian should give the matter careful consideration and should include the beneficiary in the decision. Court approval should be obtained for this. Annuities Simply put, an annuity is a guaranteed income stream that has been purchased from an insurance company. The guardian may come across the following two types of annuities. Immediate Annuity - A purchaser of an immediate annuity pays an insurance company a lump sum in return for a guaranteed fixed monthly payment for life. There is very little action for the guardian to take if an immediate annuity was purchased prior to appointment (assuming the ward purchased the contract when s/he was competent). The guardian should contact the insurance company to change the address of record, payee, and have the company confirm that all back checks were negotiated by the ward. Deferred Annuity - Deferred annuities are investments made in a lump sum or in several payments. The interest earned on the investment is tax free. At this writing, this type of investment is heavily marketed by banks due to the fall in CD interest rates and because they are a commission product. The funds are invested with the insurance company and accumulating interest. The guardian has many decisions to make when given the fact his client has a deferred annuity in his portfolio. The following are some of the main steps and decisions that need to be made: Review the policy: The first step is to review the contract. Each annuity company has a specific set of rules listed in the contract. A simple look at the interest rate is insufficient as a stated rate is guaranteed for only short periods of time and could be offset by a host of other specifics in the contract. Evaluate the company: The guardian needs to determine if the company behind the annuity contract is solid. This can be accomplished by reviewing their status in several rating services (Weiss, Best, etc.) and requesting a copy of the companies prospectus which should indicate the breakdown of their investment portfolio (beware of low grade bonds and commercial real estate). If the company has a poor rating the guardian should obtain court approval to rollover the annuity into a safer company, or cash out the deferred annuity and invest the funds into another investment vehicle. Partial withdrawal: The investment may turn out to be with a very strong company (thus making it a good investment to retain with the courts permission); but the client may have some immediate need for part of the funds locked into the contract. Usually surrender charges are high to cash in early but the charge declines over time and disappear after seven or eight years. However, many companies allow policyholders to withdraw up to 10% each year of their value without surrender charges. Tax Considerations: Deferred annuities enjoy special tax treatment similar to that of a nondeductible IRA. However, if the guardian withdraws the money before the ward is age 59 1/2, the IRS imposes, in addition to income taxes, a 10% penalty on the amount by which the value exceeds the premium. The IRS considers that interest is withdrawn before any principal, and the funds are taxed accordingly. A deferred annuity brings with it a host of decisions for the guardian all of which should be approved by the court prior to any action. Unwise Investments, Financial Abuse The guardian should review any transactions by the ward at a time that the ward was clearly incapacitated. The ward may have made unwise decisions or may have been taken advantage of by others. An individual may have sold or given away an asset, made an uncharacteristic gift, made a very risky investment, or placed necessary funds out of reach. If this appears to have occurred, the guardian should investigate. Financial institutions will sometimes reverse recent transactions upon a request by the guardian. If not, counsel should review the matter to determine if fraud or undue influence can be shown. Questionable transactions often occur among friends or family members. These may have been honest attempts to assist or protect the incapacitated person, efforts to carry out what the friend or family member "know's" the ward "would want"; or may be outright fraud masquerading as the above. Even those transactions that are made in the best of faith and for the benefit of the ward can cause terrific dissension within families. Health Insurance One of the most important assets many elders maintain is their health insurance. Most elders are on Medicare. In addition to this benefit, it is a virtual necessity that people on Medicare purchase supplemental insurance. Supplemental insurance is paid in monthly premiums. A top priority of a newly appointed guardian is to identify and assure continued payment for medical and supplemental insurance. It the elder has no coverage, it should be obtained. American Association for Retired Persons (AARP) is consistent in offering good coverage. Sorting out insurance claims is one of the single most challenging aspects of putting a person's affairs into order. There are business that assist with this process, the most prominent of which is Expertise Medical Claims. This is a valid estate expense. Medicare should not be confused with Medicaid. The latter is a welfare program which pays medical bills for people determined to be in poverty. Medicaid is a state, not federal, program. It is also known as "medical coupons" or "Title 19". People on Medicaid cannot afford and have no need for supplemental insurance. It is sometimes difficult to find physicians satisfied with the payments from Medicaid. Otherwise, the coverage is quite reasonable. The guardian should watch for multiple supplemental policies. Some elders purchase far more insurance than is necessary. The guardian should also be wary of so called nursing home insurance. Most nursing home insurance covers people only after Medicare coverage has been exhausted and only covers the same conditions as Medicare. In fact, Medicare coverage for nursing home care is extremely limited. It is very rare for a person to exhaust Medicare coverage for nursing home care. Thus, nursing home insurance is usually not a valid estate expense. The reality that the marketers of these policies rely on is that long term nursing care is paid for by the patient from the liquidation of all assets upon exhaustion of which Medicaid coverage is available. PREPARING THE VERIFIED INVENTORY The guardian is required to file the Verified Inventory within three months of appointment as guardian. The purpose of the Verified Inventory is to inform the court of the type and value of the wards assets and liabilities. The guardian's goal should be to provide the court with a document which clearly documents the assets and liabilities of the ward's estate at the time of his appointment. Attachment 8 is a sample Verified Inventory. The asset discovery stage of a guardianship, as explained in earlier sections, can be complicated and time consuming. Therefore, it is common that the guardian's investigation has not progressed to the point of having marshaled or assigned value to all assets within the first three months. The guardian, however, should submit to the court, within the three month deadline, an inventory of known assets and a list of those under investigation. When the investigation is complete an updated inventory should be filed. The Verified Inventory should only include assets of the ward as of the appointment date. From the appointment to preparation of the Verified Inventory, the guardian will usually have closed, reduced, and/or transferred assets. The changes or movement of an asset by the guardian should be included as a note to that asset. The purpose of the inventory is to reflect the original assets and value at the date of appointment. The Verified Inventory is a snapshot of the estate at the guardians appointment and a foundation from which annual accountings to the court will be built. If the guardian has performed an organized search for assets and used the system outlined above, the Verified Inventory should prove to be a simple document to prepare. The Verified Inventory is a legal document, not an accounting tool. It should not only provide asset descriptions and value but also inform the reader as to the composition, treatment, and problems of any assets. Assets should be identified by location, account number, and value as of approximately the appointment date. For ease of reading and comprehension the assets should also be grouped by type (e.g Bank Accounts, Stocks, and Bonds, etc.) If the value is uncertain or intangible, the manner in which the assigned value was determined by the guardian should be stated. Bank Accounts Each account in this asset type should give the name of the bank, branch, type of account (Certificate, savings etc.), the account number, and the balance as of the date of appointment. If the account has been blocked, that should be noted, and a receipt filed with the inventory. If funds have been reduced or closed, since the appointment, it should be clearly noted under the asset (e.g. $10,000.00 was transferred from this account to open the guardianship operating checking account #062-09890-098 at U.S. Bank.). If the guardian sees the need for further investigation this should be stated in a note. Also, how the account is registered should be noted (e.g. joint account with rights of survivorship). Rates of interest and maturity dates should be shown for time deposits. Stocks and Bonds Stocks and Bonds should be listed individually indicating the name of the company, type of instrument (eg common, preferred, bearer etc.), purchase date, number of shares, tax basis, and market value at the date of appointment. If stocks or bonds are held in a brokerage account, the name of the firm and account number should be given. If the investment is held in the form of certificates, the physical location of the certificates should be indicated. Real Property The street address is usually sufficient to identify the location of the property although if the legal description is known at the time of the inventory it should be included. If an appraisal has not been completed the tax assessed value, at the year of appointment, is typically used as a value for the property. The name of the homeowners insurance carrier, broker, and policy number should be included. Details as to the condition of the property or any other factors affecting value or marketability should be stated. Liens on the property should be listed. Safe Deposit Boxes The bank name, branch, and box number should be listed. The date(s) of entry should be given and an inventory of the contents should be attached. Personal Property Identification of personal property vary widely with the nature of the property. If it appears that there are items of value, these should be professionally appraised and listed on the inventory along with the location and efforts to safeguard the objects. Items of nominal worth can be grouped and assigned a carrying value (e.g. Various home furniture). It sometimes occurs that items having minor value can have great sentimental value to the ward or relative. This should be reported, and appropriate efforts made to safeguard the items. Personal property management is one of the more time consuming and least cost efficient responsibilities of a guardian; and so is often neglected. It is, however, highly advisable to spend the necessary time and have a complete inventory list and video for insurance and court purposes. Those items exceeding a certain dollar level (e.g. $500.00) should be tagged with an inventory tag. Trusts and Estates If the ward is the beneficiary of a trust, that fact should be reported along with the value of the trust and the most important terms of the trust. Care should be taken to avoid characterizing a trust as an asset of the guardianship estate. If the ward is an heir in a pending probate matter, this should be reported. Liabilities Any consumer debt, liens on property, damage claims or other outstanding debt should be reported. The guardian's plan for satisfying this debt should be reported. Investigations If the guardian believes that debt was incurred under questionable circumstances, recent property transfers should be reviewed or that the ward may otherwise have been taken advantage of, this should be reported along with the guardian's plan for addressing the problem. |