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69 Park Street |
Tel 1-978-474-4700 |
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Andover, MA 01810 |
Fax 1-978-474-4701 |
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69 Park Street |
Tel 1-978-474-4700 |
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Andover, MA 01810 |
Fax 1-978-474-4701 |
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Fiduciary Duty: As a court-appointed guardian you have what is called a "fiduciary duty" regarding the protected person. This means that you must always act in his/her best interest. The fiduciary's authority only extends to such actions as may be for the benefit or advantage of the ward.
Your role is in effect to step into the shoes of the ward and make the decisions he/she would make regarding financial matters and life decisions. When acting in a fiduciary capacity, you are not acting under law as you would act in a personal capacity. That is, you owe a duty to protect the estate of the ward or to manage it frugally and without waste. You may not spend any of the ward's money for yourself without a prior court order. The money you hold as guardian is for the care, comfort, support and welfare of the ward. Assets which you may receive from the Ward's estate must be protected and, where appropriate, invested in safe, non-speculative investments. You may not engage in self-dealing with trust assets or anything that appears to be a conflict of interest.
Court Filings: All monies belonging to the ward are carefully monitored by the court. Generally, within three months you must complete an "inventory" of assets and file it with the court. This is essentially a list of what he/she owns, with the value of each item as of the date of your appointment.
In addition, you must file an accounting each year with the court, listing precisely how must money came into the estate and how you have spent the money of the ward. Depending on how you invest the assets this may be a very simple matter. The easiest way to keep track of the ward's funds is to open a checking account in his/her name. If you have all receipts and expenses run through the account, you will have a good record at the end of the accounting year.
Your responsibility to fulfill the ward's legal obligations includes making certain that his/her tax returns, if any are required, are accurately filed with the Internal Revenue Service and the state.
Life Decisions: As guardian your powers and responsibilities extend beyond purely financial matters. You are responsible for his/her health and welfare as well. This means that you can make decisions about where he/she will live, what doctors he/she will see, and other day to day health care decisions. More major decisions, such as whether the ward requires certain medication or surgery, require court review and approval.
Attorney's Continuing Role: After obtaining your appointment, the attorney of record in the estate continues. This means that each year the ward's estate will accrue attorney's fees for work in seeing that the tax returns are filed and that the inventory and annual accountings are prepared and filed with the court.
The attorney will assist you in preparing the initial inventory, the annual accounts, and the tax returns. Although this will mean some expense for the ward's estate, it will provide you with certainty that the papers are correctly filed. It will also allow you to focus your energies on the ward rather than on administrative matters.
IMMEDIATELY AFTER APPOINTMENT OF FIDUCIARY
Tax Matters
1. Obtain taxpayer identification number for the estate (and trust).
2. Request copies of gift tax returns and 1040's, if necessary.
a. Determine who will be preparing decedent's final income tax returns.
b. If returns cannot be filed timely, obtain an extension before the due date.
c. Be sure to make the current year's federal and state estimated tax payments and revise, if necessary. Reg. Sec. 1.6015(b)-1(c)(2), Sec. 1.6153-1(a)(4). If decedent was unmarried, no postdeath federal estimates need to be paid; however, state filings should be made.
d. Determine whether to file a joint return.
3. File Form 56 (Notice of Fiduciary Relationship) with the Internal Revenue Service.
4. Consider the selection of a fiscal year for the estate and its effect on beneficiary's income tax liability. (Selection of fiscal year should also be coordinated with estate distributions.)
Administrative Matters
1. Open estate checking and bank accounts and set up estate books. (If there is a trust, do likewise.) Always maintain separate accounts: do not commingle a personal and fiduciary account or two fiduciary accounts.
2. Collect any life insurance proceeds payable to estate and obtain Forms 712.
3. File for and obtain pension payments and annuity benefits. Consider carefully settlement options and their tax consequences.
4. If there are homeowner's insurance policies for dwellings, name the executor and devisees as the insured, or add the executor and devisees as the insured.
5. Arrange for professional appraisals of real estate and tangible personal property, as necessary. Generally, professional appraisals of tangible personal property are required if the value of the property exceeds $3,000. Reg. Sec. 20.2031-6(c). (Cost of appraisal is paid by estate and deductible on estate tax returns or federal fiduciary income tax return.)
6. If decedent had an interest in a lease, review to determine decedent's rights and liabilities and to consider termination by compromise. Notify landlord where appropriate.
7. Notify all banks and other institutions holding the decedent's funds at his or her death and request date of death balances and income information. In most instances, close these accounts and consolidate them into the estate's bank account.
8. Consider whether ancillary administration is necessary.
9. Change dividend mailing address for decedent's securities if not jointly owned. Change any brokerage accounts in the decedent's sole name into the name of the estate.
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