CONSERVATORS OF ESTATES
TABLE OF CONTENTS
The Circuit Court has entered an order appointing you as Conservator of the Estate of an Incapacitated Adult. You qualified by making oath to well and truly administer the estate and by giving bond as required. You are now a fiduciary, charged with the highest duty of care the law requires of any person, over the assets of your ward.
The Commissioner of Accounts is the person designated under law to supervise your work as fiduciary. These Instructions have been promulgated by the Commissioners of this Judicial Circuit for your guidance. They are general in nature and are not intended to completely set out the law. We encourage you to seek the advice of a lawyer or an accountant, as appropriate. Reasonable charges for their advice are properly expenses of maintaining the estate.
II. YOUR DUTIES
A. Virginia Code §37.1-137.3 sets out the general duties of a conservator. Va. Code §37.1-137.4 describes your management powers and duties. Va. Code §37.1-137.5 describes powers with respect to planning the incapacitated person’s estate. Copies of these statutes are attached to this Memorandum. The exact wording of these statutes is important; they have been crafted with care. You should read this material carefully and seek legal advice as to any question in which you are in doubt.
B. You must carry out your duties exactly in accordance with the Order that appointed you. Make no disbursements from your ward’s estate without such authorization. If you are in doubt as to the extent of your power in this regard, seek legal advice.
C. You must invest your ward’s assets safely. Experienced financial consultants understand how to structure an investment portfolio for a fiduciary, and we recommend that you seek such advice. Keep enough money ready in a checking account to pay the annual expenses such as the bond premium, professional fees, commissions and court costs.
D. You must not commingle the assets of your ward with your own assets, no matter in what amount or what the relationship is between the two of you. You must not borrow from your ward.
E. You must file an Inventory and periodic Accountings as described below. Meeting the deadline for these filings is important, and you will be sanctioned if you are tardy.
F. You should keep a ledger, listing all receipts, including the date received, the payor, what it was for and amount. Similarly, you should list all of your disbursements for expenses and distributions to your ward, by date paid, payee, what it was for and amount.
G. Keep and preserve your paperwork: receipts, bills, deposit slips, memos, bank statements, cancelled checks, investment reports and any other significant material.
III. THE INVENTORY
An Inventory form is found on this website.
Within four months from the date you qualify as fiduciary, you are obligated to file an Inventory with the Commissioner of Accounts. A copy of the Inventory is attached to these Instructions.
Referring to the top of the first page, the “Court File #” and the name of the Circuit Court will be on the caption of the Order entered by the Court.
Part 1. Should show a list of the personal property, including tangibles, bank accounts, stocks and bonds, CD’s and all other property except real estate owned by your ward and under your supervision and control (which should, in most cases, be all of your ward’s personal assets). Give the value as of the date you qualified.
Part 2. Should describe any Virginia real estate owned by your ward over which you have the power of sale. You can describe this real estate as it is described on the real estate tax bill. Whether you have the power of sale will depend on the grant of your authority by the Court. If you are in doubt, consult counsel.
Part 3. Describes any other Virginia real estate, that is, any real estate in Virginia owned by your ward over which you do not have the power of sale.
Part 4. Describes any real estate outside of Virginia owned by your ward.
Part 5. Lists your ward’s ‘legal or equitable ownership interest in any real or personal property that will pass to another” at your ward death “by a means others than testate or intestate succession.” This includes real estate, bank and investment accounts and other assets held jointly with another with survivorship, such as “joint tenants” or “tenants by the entireties.” It also includes pay-on-death accounts, life insurance, IRA’s and pension benefits. If your ward has set up a trust in which there are beneficiaries taking after your ward’s death, that value of the trust should be listed here.
Part 6. Describes such periodic payments from U.S. government agencies as Social Security or similar payments. Multiply the monthly amount being received by 12 to get the total annual value.
Part 7. Your ward’s “rights to periodic payments from any other source” includes income from trusts, insurance settlements, retirement plans, annuities, etc. Annualize the value by multiplying monthly income by 12.
All fiduciaries must sign the Inventory, list their addresses and date it. IF YOU CHANGE YOUR ADDRESS, IMMEDIATELY NOTIFY THE COMMISSIONER OF ACCOUNTS OFFICE.
When you are ready to file the Inventory, call the Office of Commissioner of Accounts to ascertain what checks you need to attach.
IV. THE ACCOUNTING
An Accounting form is available on this website.
At the top of the first page, insert the “Court File #” and the name of the Circuit Court in which you qualified.
Your first accounting should cover the first four months of your stewardship and is due in the Office of the Commissioner of Accounts six months after your qualification. Your subsequent accountings will be due at annual intervals thereafter; for example, your second accounting will cover months five through sixteen of your stewardship and will be due twenty months after your qualification. Again: if you qualified on April 15, 2004, your first accounting is due October 15, 2004 for the period April 15 through August 14, 2004. Your second accounting is due December 15, 2005 for the period August 15, 2004 through August 14, 2005.
The Account Summary is the heart of the accounting. You will attach to this paper various lists of items comprising the various Lines.
Line 1.: In the first accounting, Beginning Assets should be the taken from the Inventory. In subsequent accountings, Beginning Assets should be the same number as Assets on Hand at the end of your previous accounting.
Line 2.a: Show Receipts from the Federal Government.
Line 2.b: Show Receipts from all other sources.
Line 3: Show Gains on Asset Sales including gains from the sale of real estate, stock (net of commissions), or any other assets.
Line 4: Adjustments mean increases or decreases in the value of assets to keep pace with the market. This category can be used for other adjustments, too, but see your Commissioner of Accounts first.
Line 5: Totals Lines 1 though 4. Line 5 must equal Line 10 when you get through.
Line 6: Disbursements include expenses of maintaining the estate, such as the bond premium, court costs and commissions, and paying your ward’s creditors.
Line 7: Losses on Asset Sales is just like Gains above, but here you’re reporting losses.
Line 8: Distributions are payments or delivery of assets. Distributions of assets of Incapacitated Adults are normally made only to the Executor or Administrator of the ward upon his death.
Line 9: If your accounting is not a final accounting, you will be holding assets at the end of the reporting period. List them here. You can list them at the carrying value, rather than the market value, but if you do, you must list the market value below as shown. If you want to adjust the value of your assets annually to keep the accounting abreast of the current market value, you will use Adjustments (Line 4.)
The sale of a ward’s real estate is an unusual occurrence and one that must have the specific approval of the Circuit Court. You should never sell real estate without prior court approval; indeed your buyer’s attorney would ordinarily not permit the transaction to close without such approval.
If the value of your estate is below the statutory minimum, the Commissioner of Accounts has the authority to require you to file accountings every three years instead of annually. However, you must have his or her approval in advance. At the writing of these Instructions (Spring 2004), the threshold amount is $15,000.00 of asset value.
You should submit certain materials with your accounting. Cancelled checks are always required. If your bank provides only a copy of the front of the check, you should also submit a copy of your monthly bank statement showing the check being negotiated. You should also submit originals or copies of your monthly investment account statement, your CD’s and any other supporting material requested by the Commissioner.
The amount of your bond was based on the Court’s estimate of the maximum value of the assets in your charge. Your surety company will charge you a premium for this bond, usually annually. You should pay this charge as an expense of the estate promptly when you receive a bill. If the value of the assets under your control exceeds the amount of your bond, that amount must be increased.
Your commissions for administering your ward’s affairs are set by law. They are based on fair market value of assets. Consult the Commissioner of Accounts office before taking commissions. Further, your commissions could be reduced if you ask a professional to do routine tasks that you could reasonably do.
VIII. GUARDIAN OF INCAPACITATED ADULT
An Report of Guardian of Incapacitated Person form is available on this website.
The Court’s Order appointing you as Conservator may also appoint you or another person as guardian. The two offices are distinctly different: the Conservator is responsible for the assets of his ward; the guardian is responsible for the person of the ward, including his support, care, health, safety, habilitation, education, and therapeutic treatment and residence.
The law requires the guardian to maintain sufficient contact with the incapacitated person to know of his capabilities, limitations, needs and opportunities. The guardian shall visit the incapacitated person as often as necessary.
Prior court authorization is required to change the incapacitated person’s residence to another state, to terminate or consent to a termination of the person’s parental rights, or to initiate a change in the person’s marital status.
A guardian shall, to the extent feasible, encourage the incapacitated person to participate in decisions, to act on his or her own behalf, and to develop or regain the capacity to manage personal affairs. A guardian, in making decisions, shall consider the expressed desires and personal values of the ward to the extent known, and shall otherwise act in the ward’s best interest and exercise reasonable, care, diligence and prudence.
See Va. Code §37.1-137.1 for a full explanation of the guardian’s powers and duties.
Va. Code §37.1-137.2 requires that the guardian of an incapacitated person “file an annual report . . . with the local department of social services.” The department office can advise the guardian on the exact requirements of the report. The guardian may also be required to report to the Commissioner of Accounts.
IX. PENALTIES FOR NONCOMPLIANCE
The Supreme Court of Virginia, though the Judicial Council, sets penalties for non-compliance with deadlines and work quality. The Judicial Council provides for the assessment of a fine if you receive a “late letter”. If you do not respond to your Commissioner’s “late letters,” you should expect to be summoned to his office. If you do not comply with that summons, you will be summoned to Circuit Court and be subject to the penalties imposed by the judge.
Copyright © 2005 City of Danville, VA, Commissioner of Accounts, All Rights Reserved.