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Guardian Accounting

Guardians are appointed to manage the property of persons who are unable to manage the property for themselves.  Generally, the court appoints a guardian for persons who are either mentally incapacitated or are minors.  The persons for whom guardians are appointed by the court are called “wards”.

If the ward has a large estate or trust, the Court may appoint a conservator for the utilization of the funds.  In most cases however, the everyday oversight of the ward’s funds will be the guardian’s responsibility.  The guardian is not expected to use his or her own funds for the ward and the guardian is required to the use the ward’s funds for the ward’s support.  Depending upon the laws of the state where the ward lives, some of these duties and responsibilities will require court approval, while others will not.

Of the different types of duties and responsibilities entrusted to the guardian, the duty of accounting and financial management is the most important.  The guardian is required to use reasonable care and caution when handling the financial resources of the ward.  The guardian should also maintain proper accounts of the income and expenses incurred for the ward.

The most important accounting responsibility of the guardian is to file an annual accounting.  This accounting must set forth a detailed accounting of how the ward’s assets have been bought, sold, invested, and spent on behalf of the ward during the previous year.  If the ward is mentally incapacitated, the report must contain a doctor’s report detailing the ward’s current mental and physical conditions and whether a guardianship is still required.  In addition, the report must contain a plan detailing the medical treatment and personal care received by the incapacitated ward in the previous year and an outline of the plan for the ward’s medical and personal care for the next year.

Investment and management of the minor’s assets are also an important duty of the guardian.  The guardian is responsible for deciding where the minor’s liquid assets will be held and who will be responsible for overseeing the investments.  If the minor owns any real estate, the guardian is responsible for paying all of the bills for maintaining the property such as taxes, mortgages and insurance.

The guardian is also vested with the duty of preparing and filing income tax returns on behalf of the ward.  Because the guardianship assets will need to be invested to produce income sufficient to take care of the minor’s needs, in most cases the guardian will need to prepare and file a yearly income tax return on behalf of the minor and pay any taxes that may be due.

Many of the duties and responsibilities of the guardian can be carried out only after asking for court approval.  This however depends on the laws of the state where the guardianship has been established.

Inside Guardian Accounting