The Guardian for Property Management
If you are Guardian for Property Management, you must now start to manage the income and assets of your loved one. Taking control of your ward’s property is called “marshalling the assets.” In general, the rule about managing another person’s assets is to be very careful in how you spend or invest your ward’s money.
Newly appointed Guardians for Property Management have distinct responsibilities that are different from Guardians for Personal Needs. Before you start working on the various tasks you might want to review the Order and Judgment. This document is your guide.
|NOTE: Whenever you do business for your ward, you must bring a certified copy of your Order and Judgment and Commission with you to prove that you are authorized by the court to act on behalf of your ward.
Things Guardians for Property Management May Not Do
Guardians for Property Management are limited in what they are allowed to do by the Order and Judgment. Below are examples of things guardians may not do without court approval:
- Take away any powers or rights from your ward that the judge has not approved beforehand
- Sell your ward’s real estate or keep your ward’s real estate in your own name rather than in your ward’s name
- Combine your own money with that of your ward, even if you had a joint bank account with your ward before the guardianship
- Use your ward’s funds for your own purposes, or borrow from your ward
- Make investments that are risky
- Hire professionals or special experts, for example an accountant to file income tax returns, unless the judge has given you permission to do so
- Revoke a will, power of attorney, or other contract that your ward made before you were appointed
|NOTE: If you believe that you have a good reason to do something that is not listed in the Order and Judgment, for instance, if you have to manage substantial assets, you may want to ask the court for permission to hire an investment broker or other financial manager to help you. You should contact your lawyer if you have one and ask for advice or ask the judge’s law clerk for guidance by explaining why you believe that the Order should be changed.
Guardians Must Spend Their Ward’s Money Wisely
Guardians are supposed to spend their wards’ money wisely and make it last as long as possible. Without the judge’s prior approval you should be careful about buying very expensive items for your ward, even if you think that your ward has enough money to pay for it or deserves it.
Examples of such major expenses are:
- Rebuilding your ward’s home to make it wheelchair accessible
- Buying a special van to transport your ward
- Trying some alternative medical treatment for your ward that is not likely to be covered by your ward’s medical insurance
- Taking an expensive vacation with your ward
|NOTE: When you are thinking about buying something very expensive your ward needs or could benefit from, you should get it approved ahead of time by the judge. If you don’t get prior approval, the court examiner, who reviews all reports, may not approve of the purchase of the item and demand that you pay this expense out of your own funds.
Detailed Tasks of Guardians for Property Management
The authors are indebted to Leona Beane, Esq. who developed the list of tasks described in this section and gave permission to adapt the list for this manual.
Establishing a Guardianship Checking Account
Identify all bank accounts owned by your ward (checking, savings, money market, etc.). Divide any joint accounts and separate your ward’s share from it. Close your ward’s accounts and open a guardianship checking account with your ward’s Social Security Number on it and with your name as Guardian in the title.
Example: The Guardianship Account
Joe Smith became the guardian for his wife Jane, who has Alzheimer’s disease. Although the couple always had a joint bank account, now that Joe has become Jane’s guardian, he must open a separate bank account for his wife. This new account has Jane’s social security number on it but the account is in Joe’s name as guardian for an incapacitated person. Here is how the account is titled: “Joe Smith as Guardian for Jane Smith, an Incapacitated Person”.
|Note: If your ward had arranged for direct deposit of income checks (Social Security, SSI, VA checks, and pensions) you need to open the Guardianship Account first and then request that the income checks be re-directed from the old account into the Guardianship Account. Once the checks are being deposited into the new account you can close the old one.
Identifying Sources of Income
Identify all sources of your ward’s income: pension benefits; rental income from tenants; interest income from investments; Social Security Income; Supplemental Security Income; veteran’s benefits. Make a list, describing each source and the monthly amount your ward receives and arrange for all income to be deposited into the guardianship account.
If any public benefit checks are missing, arrange for the checks to be reissued.
Identifying Your Ward’s Eligibility for Public Benefits
If your ward does not currently receive public benefits but may be eligible, you must apply for them on behalf of your ward.
Arranging for Pre-need Burial Expenses
If your ward receives Supplemental Security Income or Medicaid or if you are applying for these benefits or are engaged in “Medicaid Planning,” you are permitted to open a separate Guardianship savings account with no more than $1,500 as a special burial account. This account may generate interest and grow over time but you may never use it during your ward’s lifetime – it is a set aside for your ward’s future funeral expenses. In addition to a separate burial savings account, you also may obtain an irrevocable burial trust, arrange for a pre-paid funeral with a funeral home, or purchase a cemetery plot. You may want to discuss this with the judge’s law clerk before you make the decision and spend your ward’s funds.
|NOTE: Medicaid Planning is the process of preparing to apply for Medicaid with the assistance of an attorney who is a specialist in Medicaid law. See Spending Down Your Ward’s Assets below.
Becoming Representative Payee for Government Income Checks
If your ward receives Social Security benefits or Supplemental Security Income you should apply to be appointed Representative Payee (for VA benefits the Representative Payee is called “Fiduciary”) and have the checks automatically deposited into the guardianship account. If your ward lives in a nursing facility or a residence for people with disabilities, you may prefer to have the facility or residence become Representative Payee. That way the nursing home will receive the money and you don’t have to manage it and pay the nursing home each month.
Example: The Nursing Home as Representative Payee
Mary Elkins and her disabled brother John have lived together for many years. Ever since she turned 65, Mary had the Social Security Administration deposit her Social Security check and John’s SSI check into a joint bank account. Now that John has been placed in a nursing home and Mary has become John’s guardian, either Mary or the nursing home can apply to the Social Security Administration to become John’s Representative Payee. If the nursing home becomes the Representative Payee the nursing home will use the money for John’s monthly nursing home cost and will then apply for additional Medicaid coverage. Mary will only gain access to John’s Medicaid-approved personal allowance to be used for John’s personal needs. This arrangement will make managing John’s funds very easy for Mary.
You must assess your ward’s monthly expenses and arrange to have these met. Include payments for rent, food, clothing, pet care, housekeeping and personal care providers, social activities, educational programs, medical expenses, and care of dependents (if ordered by the judge). Request that all recurring bills (such as those for utilities and rent) be re-directed to you so that they can be paid in a timely fashion. Identify non-recurring bills and arrange for payment. Examples of non-recurring bills are doctor’s bills, payroll taxes and related expenses for household employees. You may set up a local account with a grocery store or arrange for petty cash for homecare workers to make your life a little easier. If your ward is able to manage a small amount of money you may arrange for weekly spending money so that he or she still has some independence.
|NOTE: You should always pay by check rather than cash since it is extremely difficult to account for cash payments when you write your reports to the judge. If you need to pay by money order, write down on the receipt what the payment was for. And, if you must pay with cash ask that the recipient sign a receipt for you.
Paying Outstanding Debts
Identify all current debt and arrange for payment. Include court ordered payments to various professionals who were involved in the guardianship process. Check your Order and Judgment for the names of the people who must be paid and the amount of their fees.
If your ward receives Social Security benefits or Supplemental Security Income and has no financial assets, your first obligation is to ensure that your ward’s monthly expenses are covered, such as for shelter, food and clothing. Guardians should advise all creditors that their wards are not capable of paying their outstanding debt by sending the creditor a letter explaining the ward’s situation and the fact that you are now Guardian and Representative Payee for your ward. Click here for a a sample letter to creditors.
|NOTE: Creditors can usually gain access to your ward’s income before you can. However, creditors cannot gain access to your ward’s government income checks. Furthermore, if your ward had received an “overpayment” from Social Security or SSI, and must pay the overpaid amount back to the Social Security Administration you should negotiate a monthly payment that is as small as possible so that you can pay your ward’s ordinary monthly expenses without too much hardship.
Arranging For Your Ward’s Mail to Be Re-Directed To You
Personal mail can just be forwarded to you but official mail like bills and other statements should be addressed to you “as guardian for [your ward’s name]”, similar to the title on the guardianship account.
Finding Bank Accounts with Help from the IRS
Example: Looking for Bank Accounts
Rudi Johnson received his Commission to act as guardian for his Uncle Jacob a week ago. Since his uncle always was secretive about his finances Rudi has no idea how much money his uncle has and where his bank accounts are located, but he wants to be sure that his uncle’s funds are safe from people who have abused Uncle Jacob in the past. The first thing Rudi must do is to find Uncle Jacob’s bank accounts and close them so that Uncle Jacob and the people who took advantage of him, no longer have access to the money.
One of the most difficult tasks guardians usually face is to find all the assets and sources of income of their ward. A good source of help for guardians is the Internal Revenue Service, which regularly receives information on all tax payers who own bank accounts or who have income from wages, pensions, or investments. If you think your ward may have bank accounts you cannot find, you may fill out IRS Form 4506T (Request for Transcript of a Tax Return). Check item #8 on the Form. After about two months the IRS will send you a report on all banks and other financial institutions that have submitted financial information to the IRS on accounts owned by your ward. There are also private agencies that will do this faster for a fee.
|NOTE: IRS forms are available through its website: www.irs.gov, or by calling 1-800-829-3676. Whenever you mail a letter or form to the IRS you should attach a copy of your certified Guardianship Commission and sign your letter or form as “Guardian”.
Locating Other Unclaimed Property
In addition to searching for your ward’s active bank accounts, you may want to search for other unclaimed property that is owned by your ward, such as unclaimed tax refunds, insurance reimbursement, and neglected bank accounts. In New York State you may try www.osc.state.ny.us. For property in other states you may try the website of the National Association of Unclaimed Property Administrators, www.naupa.org.
Looking For Safe Deposit Boxes
Check with the bank to find out if your ward had a safe deposit box and arrange with the bank to make an inventory of its contents. If the safe deposit box is jointly held with someone else, separate your ward’s valuables from those of the other person and rent a separate box for your ward.
|NOTE: You should check your Order and Judgment to see if the judge ordered you to check the contents of a safe deposit box. If it is not in the original Order you may need a special court order to gain access to the safe deposit box.
Locating Insurance Policies
Identify all insurance policies; make a list and include the name of the company and the policy number. Policies may include household, valuable items, liability, life, fire, auto, long term care, and medical insurance. Notify the companies of your guardianship appointment and request that all correspondence be re-directed to you.
Identifying All Investments
Identify all stocks, bonds, mutual funds, and investment accounts your ward may have established in the past. Make a list of each with the name of the security, policy number, and current value. Notify all companies of your guardianship appointment (send them a copy of your Certified Commission) and request that all correspondence be re-directed to you. If your ward’s assets are complicated, request permission from the judge to hire an investment broker or accountant to manage your ward’s assets.
If stock certificates cannot be located, arrange for an indemnity bond.
Identifying Valuable Personal Items
Identify all valuable property at your ward’s home: include jewelry, art, fine rugs, coins, stamp collections, silverware, and cash. You should have the items appraised for their estimated value and if they are not insured, you should insure them. Make sure that you make a list of all of the items.
Looking For Valuable Documents
Search for important documents among your ward’s papers. Look for a will, a health care proxy, a living will, a power of attorney and anything else you think may be important. Put these documents in a safe place.
Locating Real Property
Identify any real estate owned by your ward and file a “Statement Identifying Real Property” with the Property Recording Office of the county where the property is located. These documents must be signed by you in front of a Notary Public. Real property must be kept in your ward’s name. If your ward owns a co-op apartment you must notify the Co-op Board of your appointment and ask to have any mail re-directed to you. (Click here for a sample of a Statement Identifying Real Property.)
|NOTE: If you wish to sell the property you must first get permission from the judge. Before you sell the property the judge may want it to be appraised by an appraiser who is listed on a court approved list and the judge will establish the fee for the appraiser.
Filing Tax Returns
File federal, state and local tax returns before April 15th of each year. If you cannot file your ward’s taxes on time you may file for a six months extension, using IRS Form 4868, called an Application for Automatic Extension of Time. Tax returns must be filed in your ward’s name and social security number, but they must be signed by you as “Guardian for [name of your ward], an incapacitated person.” You should attach a copy of your certified Commission to the tax returns you file for your ward. If your ward missed filing tax returns in previous years the IRS will notify you and demand that these be filed as soon as possible. Request that the IRS waive penalties for late filing and send the IRS a copy of your Certified Commission to show that your ward is an incapacitated person and was incapable of filing taxes previously.
|NOTE: If you need help with your ward’s taxes you should ask permission from the judge to hire an accountant. If the judge approves your request, the judge will set the accountant’s fee which then can be paid out of your ward’s assets.
Spending Down Your Ward’s Assets
As you are spending your ward’s assets on his or her care you must make a plan for your ward’s future financial needs. This may require you to engage in Medicaid planning if your ward’s assets are close to being depleted. You should discuss Medicaid planning with an elder law attorney familiar with Medicaid. Medicaid is an important medical insurance program that covers extensive home care and nursing home care for New Yorkers who have depleted their assets and have become indigent. (Click here for more information on Medicaid.)