Guardianship Accounting Issues

One area where guardians of an estate have more significant responsibilities than guardians of the person is in the area of annual accountings required to be filed with the Texas Court if you live in Dallas, Houston, San Antonio, Fort Worth, Austin or San Antonio anywhere in Texas. Because the Probate Code requires the utmost good faith on behalf of a guardian of the estate, the Code also requires that the guardians be obligated to keep meticulous records and account to the Court each year during the period of the guardianship.

Each year that the guardianship of the estate lasts, the Guardian must file an annual account. The accounting will include each of the following:

1. Listing of all income/revenue received during the year.
2. Listing of all expenses paid out during the year.
3. Listing of the bank accounts, account numbers, and cash held in the estate.
4. Listing, including fair market value, of each and every asset owned by the estate.
5. Signed verifications from financial institutions in which cash assets are held verifying the account balances.
6. Listing of any new assets required during the year, any assets lost during the year, and any changes in existing assets.

As you can probably appreciate from the list above, the accounting must be extremely detailed. In addition to providing all of the information listed above, the guardian must also submit copies of the bank statements, cancelled checks, receipts for expenses, etc. to the Court showing the detail of the various items included in the accounting.

In addition to presenting the information listed above, the annual account must include statements by the guardian that he/she has paid the annual Bond Premium, that all income taxes of the Ward have been paid, the identity of any debts currently owed by the Estate, and the amount of any commission to which the guardian believes himself to be entitled for having served as the guardian for the year.

The annual accounting covers the period starting on the date that the guardian qualifies as the guardian and continuing for one year thereafter. In subsequent years, the accounting will run from the ending date of each accounting for a one-year period thereafter. In the year of the Ward’s death or restoration to capacity, the accounting will cover the period from the last annual account through the date of death or restoration.

It is important to note that the Probate Court will audit the accounting each year and will issue an Order approving the accounting. If the accounting has not been approved within an appropriate time, the Court will revoke the Guardian’s authority to act as the guardian until such time as the accounting has been approved. In addition, any interested person (generally, family members of the Ward) can raise questions about the expenses of the estate or the actions of the guardian during the accounting period.

Although the Court approves the accountings annually, questions can be raised by family members of the Ward at any time before the guardianship is ultimately closed. This means that the family can question expenses or actions of the guardian at any time before the Court finally closes the guardianship estate following the Ward’s death. Unfortunately, this leave the Guardian with potential liability until the final accounting has been submitted and approved by the Court. However, it helps to ensure that all questions are resolved related to any expense or potential misdeed of the guardian.

Because of the dramatic problems that can be presented as a result of the accounting issues for guardians of the estate, Ford & Mathiason LLP has a Certified Public Accountant (CPA) working for the firm that assists in the preparation of all of the annual and final accounts for the guardians of the estate that we represent. By having this level of professionalism available to our clients, we believe that we can help our clients appropriately navigate the accounting issues in the guardianship estate so that any potential problems can be avoided.

Please contact us if you would like more information about the accounting requirements of Guardians of the Estate.