More
info at http://www.judiciary.state.nj.us/guardianship/Guardianship_Estate_web.pdf
GUARDIAN OF THE ESTATE
SUMMARY OF RESPONSIBILITIES
TABLE OF CONTENTS
1. INTRODUCTION ............................... 1
1.1 Is Guardianship of the Estate
Necessary? ..................................... 1
1.2 When Guardianship of the Estate is
NOT necessary .............................. 2
1.3 Responsibilities of a Guardian of the
Estate ............................................ 3
1.4 Letters of Guardianship .................. 3
1.5 Short Certificates ............................ 3
2. SURETY BONDS ............................... 4
2.1 Why a Bond Would Likely Be
Required ........................................ 4
2.2 Determining Whether You Can Post
the Required Bond ........................ 4
2.3 Cost of a Surety Bond ..................... 5
2.4 How to Obtain a Bond ..................... 5
3. GUARDIAN LIMITATIONS /
RESTRICTED ASSETS ....................... 6
4. ACCESS AND MANAGE PROTECTED
PERSON’S ACCOUNT(S) ................... 7
4.1 Open Guardianship Account(s) ...... 7
4.2 How Should Assets be Retitled? ..... 7
4.3 Recording Transactions .................. 8
5. RECORDKEEPING ............................ 9
5.1 What Types of Records Should You
Keep? ............................................. 9
5.2 Tracking Minimal Assets/Estates .. 9
5.3 Original Papers ............................. 10
5.4 Retention Period ........................... 10
5.5 Pay/Transfer on Death ................. 10
6. NOTICE TO SERVICE PROVIDERS .. 11
7. GUARDIAN REPORTING ................. 12
7.1 Guardianship Estate Inventory ... 12
7.2 What is a Guardianship Accounting
(i.e., Periodic Reporting)? ........... 13
7.3 Comprehensive Accounting Form
versus EZ Accounting Form ....... 13
8. GUARDIANSHIP MONITORING
PROGRAM (GMP) .......................... 15
9. SUBSTITUTED JUDGMENT/BEST
INTEREST ....................................... 16
9.1 Substituted Judgment .................. 16
9.2 Best Interest Standard ................. 17
9.3 Tough Decisions ............................ 17
iii
10. GIFTING ...................................... 18
10.1 Accepting Gifts from the Protected
Person .......................................... 18
10.2 Giving Gifts ................................. 18
10.3 General Gifting Considerations .. 18
11. PAYMENT FOR SERVICE AS THE
GUARDIAN OF THE ESTATE ........... 20
11.1 Commissions and
Reimbursement........................... 20
11.2 Attorney’s Fees: Can You Hire an
Attorney? ..................................... 20
12. ACTION REQUIRED UPON
PROTECTED PERSON’S DEATH ...... 21
FREQUENTLY ASKED QUESTIONS
(FAQ) ............................................ 22
GLOSSARY OF TERMS ........................ 26
Source
http://www.judiciary.state.nj.us/guardianship/Guardianship_Estate_web.pdf
1. INTRODUCTION
Some legal and non-legal language in the realm of
guardianships may be new to
you. For your reference, a Glossary of Terms is
included in this guide. The terms
defined in this glossary are in bold font, italicized
and marked with a dagger
symbol (†) where they first occur in the text.
After viewing the contents of this guide, you
will be able to:
• Fully
consider the responsibilities of a
guardian of the estate†
• Understand
what a surety bond† is and
why it is required
• Follow
best practices for managing
documents and records
• Understand
guardian reporting requirements
• Recognize
the difference between substituted judgment† and best interest†
when making decisions about spending that impact the
welfare of the
protected person†
Also, as part of the qualification† process, you must
file an acceptance that includes
an acknowledgement that you have received these
materials, understand the
contents, and knowingly agree to take on the duties of
guardianship.
1.1 Is Guardianship of the Estate Necessary?
Individuals considering guardianship are often
concerned about having sufficient
authority to handle all of that person’s affairs.
Typically, many people who apply
to be appointed as guardians ask for appointment as
guardian of both the person
and the estate. As you will learn from this guide, the
responsibilities of a guardian
of the estate are significant. These duties, including
the obligation to file periodic
reports unless waived by the court, take time and
effort.
If an incapacitated person† has an estate—like income
from earnings or pension,
real property, stocks and bonds, etc.—then it is
likely necessary that a guardian
† See
Glossary of Terms
IT IS EXTREMELY
IMPORTANT THAT
PROSPECTIVE GUARDIANS
BECOME FAMILIAR WITH
THE DUTIES OF
GUARDIANSHIP BEFORE
ACCEPTING APPOINTMENT.
2
be appointed to take control of these assets and
manage the estate. However, if a
protected person has no estate, then it is not
appropriate or advisable to seek
appointment as guardian of the estate.
Carefully evaluate whether appointment as guardian of
the estate is necessary.
Review the Guardianship of the Person guide to
understand the responsibilities
of serving as a guardian of the person† only. If you
are uncertain about which
appointment is needed, consider consulting with an
attorney. You will find
contact information for local lawyer referral services
using the link below.
County Lawyer Referral and Legal Services Offices
HTTP://WWW.NJCOURTS.GOV/PROSE/10153_DEPTYCLERKLAWREF.PDF
If you have applied for appointment as guardian of
both the person and the estate
and decide that guardianship of the estate is
unnecessary, you must inform the
court prior to entry of the Judgment†. Although
Judiciary staff cannot provide
legal advice or assist you in presenting your case,
general questions regarding this
topic may be addressed to the County Surrogate†.
1.2 When Guardianship of the Estate is NOT necessary
By far, the most common situation in which guardians
of the estate are
unnecessarily appointed is when an incapacitated
person has no assets (no real property, no personal
property of substantial value) and receives only
Social Security income. For example, a parent of
a disabled adult child or a child of an elderly parent
can serve as representative payee for Social
Security without being appointed as guardian of
the estate.
A representative payee files reports with the Social
Security Administration
(SSA) and is subject to oversight by the SSA. If such
a person is appointed as
guardian of the estate, then he or she must
additionally file reports with the
County Surrogate—subject to court review. Some
guardians find this process
duplicative of the reporting to the SSA.
When a protected person has no estate, it may be
better to seek appointment as
guardian of the person only. If the protected person
acquires assets in the future
(like an inheritance), you may then consider the need
for you or someone else to
be appointed as guardian of the estate (in addition to
the guardian of the person).
† See
Glossary of Terms
SOMEONE CAN SERVE AS
REPRESENTATIVE PAYEE
FOR SOCIAL SECURITY
WITHOUT BEING
APPOINTED AS GUARDIAN
OF THE ESTATE.
3
1.3 Responsibilities of a Guardian of the Estate
As a guardian of the estate, your first priority is to
gather together and protect
the assets of the guardianship estate. This guide
describes a number of different
ways that you can take control of the assets—on behalf
of, and for the benefit of,
the guardianship estate.
1.4 Letters of Guardianship
Entry of the Judgment by the Superior Court judge† establishes
the
guardianship. Until the guardian qualifies before the
County Surrogate,
however, he or she has no legal authority to act as
guardian. For example, a
guardian who has not yet qualified cannot access the
incapacitated person's bank
accounts.
To qualify, the guardian must sign certain documents
reflecting acceptance of the guardianship. If required
by the Judgment, a guardian of the estate must post
a surety bond. Modest fees must be paid to the
Surrogate for the issuance of Letters of
Guardianship†. You should keep these original
letters in a secure location, such as a safe or safety
deposit box, and should not turn them over to any
other person or facility.
Qualification may occur immediately following the
guardianship hearing, and
must occur as soon thereafter as possible.
1.5 Short Certificates
When you qualify as guardian of the estate, or at any
time during the
guardianship, you may apply to the Surrogate for short
certificates†. Short
certificates contain the basic information set forth
in the Letters of Guardianship,
stating that by Judgment of a particular date, you
were appointed as guardian of
the estate of a named incapacitated person. A short
certificate will also state that
as of the date it was issued, the guardianship remains
in effect. As guardian of
the estate, you may obtain additional up-to-date short
certificates to provide to
banks and other financial institutions as proof of
your continuing authority.
† See
Glossary of Terms
UNTIL A GUARDIAN
QUALIFIES BEFORE THE
COUNTY SURROGATE,
HE OR SHE CANNOT
ACT AS GUARDIAN.
4
2. SURETY BONDS
2.1 Why a Bond Would Likely Be Required
When you are appointed guardian of the estate, the
court will typically order that
a surety bond be posted to cover all the assets that
belong to the protected person.
Like an insurance policy, a bond safeguards the assets
of a protected person.
If a guardian misappropriates (steals) or misuses the
protected person’s funds,
does not maintain those funds, or does not keep
accurate records, the court may
require that the guardian’s bonding company reimburse
the incapacitated
person’s account for any losses. The bonding company
can then file a lawsuit
against the guardian of the estate to recover the
amount the company was required to pay, including,
in some cases, the attorney’s fees incurred by the
bonding company in seeking the reimbursement. A
guardian of the estate who engages in theft or fraud
can be removed by the court when appropriate and
may be criminally prosecuted.
2.2 Determining Whether You Can Post the Required Bond
If you are applying to be appointed as guardian of the
estate, you should
anticipate that the court may require you to post a
surety bond.
Unfortunately, some guardianship cases
proceed to entry of Judgment, and the guardian
only discovers after he or she is appointed that
they cannot get the bond—often due to credit
issues. This situation requires another
application to court to amend the Judgment,
either by adding or substituting a different
individual or institution as guardian, or by
restricting the authority of the
guardian to only those assets for which he or she can
be bonded. The additional
legal proceedings will prolong the period of time when
the incapacitated person
is without a guardian and potentially exposed to risk.
LIKE AN INSURANCE
POLICY, A BOND
SAFEGUARDS THE
ASSETS OF A
PROTECTED PERSON.
IT IS VERY IMPORTANT TO
DETERMINE WHETHER OR
NOT YOU CAN POST THE
REQUIRED BOND BEFORE
ANY JUDGMENT IS ENTERED.
5
2.3 Cost of a Surety Bond
The price of the bond, that is, the bond premium, can
be paid from (or reimbursed
through) the guardianship estate. However, the
prospective guardian of the
estate must first post the bond in order to complete
the qualification process. The
amount of the bond will ordinarily be based on
the principal value of the incapacitated person’s
property plus one year’s anticipated income,
less the value of any restricted asset(s)†.
Since one of the duties of a guardian is to keep
the court informed of any significant changes in
the circumstances of the incapacitated person,
you cannot simply keep quiet about substantial changes
to the amount of the
guardianship estate. Especially if the guardianship
estate has diminished, it is
often necessary to apply for modification of the bond
amount in order to preserve
the assets of the incapacitated person, because the
fee charged for the bond
premium is related to the value of the bond (i.e., the
premium for a bond on a
$200,000 estate is less than the premium for a bond on
a $2,000,000 estate).
2.4 How to Obtain a Bond
As noted earlier, you cannot act as guardian of
the estate until you post the bond and complete
qualification. Generally, after the judge signs
the Judgment, the County Surrogate will
promptly prepare the bond paperwork that you
will need to take to the bond company.
The court cannot recommend a bond company. Through a
local insurance agent,
you are free to choose a licensed bond company from
which to purchase the bond.
A bond company will likely require your completion of
an application including
information about your finances and credit history as
well as financial data about
the guardianship estate. If approved for the bond, you
must post the required
bond—that is, file proof of the bond with the County
Surrogate—in order to
qualify as guardian of the estate.
† See
Glossary of Terms
IF THE VALUE OF THE
ESTATE CHANGES, YOU
MAY REQUEST A COURT
ORDER EITHER REDUCING
OR INCREASING THE
AMOUNT OF THE BOND.
IF YOU ARE REQUIRED TO
OBTAIN A BOND, YOU
SHOULD DO SO PROMPTLY
AFTER YOUR APPOINTMENT
AS GUARDIAN—IN ORDER
TO QUALIFY.
6
3. GUARDIAN LIMITATIONS / RESTRICTED ASSETS
When a court restricts an asset it means that you are
not allowed to use, sell, or
transfer that restricted asset without the court’s
approval. The court can restrict
any asset of the protected person’s estate but
typically restricts real property.
When the court restricts an asset, the restriction is
outlined in the Judgment and
the Letters of Guardianship so that all parties know
what you can and cannot do
as guardian of the estate.
If the court restricts an asset, you will not need to
have its value covered by the
bond. However, if you request that the
restriction be lifted, the court may order that a
bond be posted for the asset to be unrestricted.
Most often, this occurs when a guardian
applies for court approval to sell real property
that was previously restricted. If the proposed
sale is granted, the amount of the guardian’s
bond is typically increased by the estimated
proceeds of sale, less any related expenses (i.e.,
realtor’s commission, closing costs).
RESTRICTED ASSETS ARE
OUTLINED IN THE
JUDGMENT AND THE
LETTERS OF GUARDIANSHIP
SO THAT ALL PARTIES
KNOW WHAT YOU CAN
AND CANNOT DO AS
GUARDIAN OF THE ESTATE.
7
4. ACCESS AND MANAGE PROTECTED PERSON’S ACCOUNT(S)
In order to manage a guardianship bank or
brokerage account, to do business on behalf of the
protected person, you will need to notify the
financial institution of your appointment. When
you first meet with the financial institution be
sure to bring an up-to-date short certificate,
along with a copy of the Judgment. Most banks’
legal departments will want to see your short
certificate in order to allow you access to the
account. Also, if you have access to the protected
person’s social security number, date of birth and
bank account number(s), be sure to bring that
information with you as well.
4.1 Open Guardianship Account(s)
Upon appointment as guardian of the estate, you must
open a checking account, and if appropriate, a savings
or
money market account for the guardianship estate. You
must not use your own Social Security number in
opening
the guardianship account(s). For information about
obtaining a tax identification number, contact the
Internal Revenue Service (IRS) by visiting: WWW.IRS.GOV.
4.2 How Should Assets be Retitled?
Once you have presented your short certificate of
guardianship, the account(s)
will be retitled into the name of the guardianship.
The way the account is titled
depends on the institution; some may title the account
as “Jane Doe,
incapacitated person, by John Doe, guardian”; others
may title it as “Jane Doe”
and then the next line will read “John Doe, guardian
of the estate.”
The purpose of retitling accounts is to notify the
institution (e.g., bank, brokerage
firm, Department of Motor Vehicles) that you are an
authorized person who
should be directing how the asset is held, spent, or
managed. If the incapacitated
person has more than one bank account, then you should
consider combining the
funds from these accounts into a singular guardianship
account—being mindful
of the Federal Deposit Insurance Corporation (FDIC)
coverage limits.
DO NOT USE YOUR
OWN SOCIAL SECURITY
NUMBER IN OPENING
GUARDIANSHIP
ACCOUNTS.
DO NOT COMMINGLE
GUARDIANSHIP FUNDS
WITH YOUR OWN
MONEY.
DO RETITLE ASSETS.
OBTAIN A TAX
IDENTIFICATION
NUMBER FOR THE
GUARDIANSHIP
ESTATE.
8
How Should Assets be Retitled? (continued)
If you are responsible for a large guardianship
estate, it is advisable to consult
with an accountant or financial advisor as to the
management of the estate.
NOTE: Assets titled as Payable-on-Death or
Transfer-on-Death to an
individual are considered part of the protected
person’s estate plan,
which you have an obligation to maintain. See section
5.5
Pay/Transfer on Death of this guide for more
information regarding
how to handle assets that are titled in this manner.
4.3 Recording Transactions
You should be very careful not to let any other
individual have access to any
guardianship bank accounts you manage.
While there is no law that prohibits you from using a
debit card or cash to
transact business on behalf of the protected person,
it is best to avoid these
methods whenever possible. Debit cards can be easily
accessed by another
individual, and it is difficult to prove that a cash
transaction was used for the
benefit of the protected person.
If it is necessary to use cash for a purchase, be sure
to keep all receipts to prove
the purchase was for the benefit of the incapacitated
person. If there is a
challenge to your handling of the guardianship assets,
you may be required to
produce the receipts to back up the expenditures.
9
5. RECORDKEEPING
5.1 What Types of Records Should You Keep?
You are required to keep records of the income
and expenses you manage as the guardian of the
estate. The types of records you retain depend
on factors such as the value of the estate, the
types of assets that you handle, and the type of
reporting required to be submitted to the court,
if ordered in the Judgment. Such records may
include bank statements, brokerage statements,
invoices, receipts, and any other record you need
to support your efforts as guardian of the estate.
As noted earlier, the court may order you to
produce records including receipts to back up
your expenditures from the guardianship estate,
ensuring that the expenses benefited the
protected person. Receipts are vital in that they show
what was actually
purchased, not just how much was paid. The information
will ensure all parties
know the expenses you are paying are for the benefit
of the protected person.
5.2 Tracking Minimal Assets/Estates
In some cases, guardians handle estates for
protected persons who reside with the
guardian or others as part of the household
unit (e.g., a disabled adult child who lives at
home with the guardians). It is acceptable for
the assets or income of the protected person to
be applied to cover a portion of household
expenses. In such cases, the guardian is not
expected to have receipts reflecting the protected
person’s share of household
groceries or utilities. However, the guardian should
report the total amount of
money used from the guardianship estate to cover the
protected person’s share of
such expenses. For further information about this
topic, see the Guide to
Guardianship Reporting Forms or the related form(s)
instructions posted on the
Judiciary website (HTTP://WWW.NJCOURTS.GOV/GUARDIANSHIP).
_____________________________
† See
Glossary of Terms
GOOD PRACTICE TIPS
MAINTAIN THE ASSETS OF
THE INCAPACITATED
PERSON SEPARATELY AND
DO NOT COMMINGLE† WITH
THOSE OF THE GUARDIAN
OR OTHERS.
DEVELOP AND MAINTAIN
A RECORDKEEPING AND
STORAGE SYSTEM FOR ALL
OF THE PROTECTED
PERSON’S DOCUMENTS.
WHEN THE PROTECTED
PERSON RESIDES WITH
THE GUARDIAN, RECEIPTS
FOR THE PROTECTED
PERSON’S SHARE OF
HOUSEHOLD EXPENSES
ARE NOT REQUIRED.
10
5.3 Original Papers
You should maintain the original papers for all
important documents, such as
those listed below.
5.4 Retention Period
The length of time you maintain records for the
protected person depends on a
number of factors. At a minimum, it is recommended you
keep all records
regarding your activities as a guardian for as long as
you are acting as guardian.
Keep in mind, however, that other laws may require you
keep records for longer
periods of time. It is typically good practice to
follow the record retention
requirements outlined by the Internal Revenue Service.
For further information,
see the Frequently Asked Questions (FAQ) section of
this guide.
5.5 Pay/Transfer on Death
As the guardian of the estate, you have an obligation
to maintain the estate plan
of the protected person. Assets titled as Payable-on-
Death or Transfer-on-Death to an individual, as set
forth in a Last Will and Testament or a Trust, are
considered part of the protected person’s estate plan.
For example, if you have a checking account, savings
account, brokerage account, and an IRA, and that IRA
has a Payable-on-Death beneficiary, you must use all
the other assets to maintain
the protected person's welfare first, before you use
the assets held in the IRA.
The reason for doing this is to protect that asset and
have it available for the
beneficiary, thereby fulfilling the protected person's
final wish. This also applies
to assets that are specifically gifted to a particular
person in either the Last Will
and Testament or trust of the protected person. You
should be familiar with these
documents and any designated beneficiaries named
within them.
• Life
insurance policies
• Insurance
cards
• Health
insurance
• Car
insurance
• Home
insurance
• Deeds
• Titles
• Birth
certificates
• Death
certificates
ASSETS TITLED IN THIS
MANNER MUST BE
USED ONLY AFTER ALL
OTHER ASSETS HAVE
BEEN EXHAUSTED.
11
6. NOTICE TO SERVICE PROVIDERS
When contacting the protected person's service
providers (utilities, etc.) to request
future statements be sent to your address for payment,
it is good practice to provide
a short certificate for their records. This request
should be made as soon as possible
after your appointment. This will ensure that you
receive the information
necessary to pay the financial obligations of the
protected person in a timely
manner, as well as that the providers only take
direction from you regarding the
account.
You should also process a “change of
address” request with the United States
Postal Service to make sure that you
receive all correspondence of the protected
person. This will ensure that you are
aware of all debts owed by the protected
person, and that you are aware of all assets
of the protected person.
NOTICE TO SERVICE PROVIDERS
HELPS TO ENSURE:
(1) BILLINGS AND OTHER
CORRESPONDENCE ARE
RECEIVED TIMELY BY YOU; AND
(2) SERVICE PROVIDERS ONLY
TAKE DIRECTION FROM YOU.
12
7. GUARDIAN REPORTING
Generally, an individual appointed as a guardian
of the estate of an incapacitated person must
periodically report to the court regarding the
guardianship. Most guardians of the estate are
required to report every twelve (12) months;
however, the Superior Court judge who
established the guardianship may order a
different reporting frequency.
7.1 Guardianship Estate Inventory
Unless waived by the court, a guardian of the estate
must file an inventory† of the
guardianship assets, typically within ninety (90) days
of the date of the Judgment.
This requirement, or waiver, will be stated in the
Judgment.
The value listed on the inventory for a particular
asset must be the value as of your
date of appointment. All assets of the protected
person’s estate should be listed on
the inventory. This list should include, but is not
limited to, the type of assets
shown below.
• Bank
accounts
• Brokerage
accounts
• Annuities
• Life
insurance policies (the cash surrender value)
• Real
property (homes, vacant land, and burial plots)
• Automobiles
• Jewelry/artwork/antiques
• Household
items
• Cash/coins
A form of Guardian Inventory has been approved and is
posted at:
HTTP://WWW.NJCOURTS.GOV/FORMS/11799_GRDNSHP_INVENTORY.PDF
For further information about determining value and
documenting assets in order
to prepare the inventory, see the Frequently Asked
Questions (FAQ) in this guide.
† See
Glossary of Terms
YOU MUST CONSULT
THE JUDGMENT TO
DETERMINE WHEN YOU
ARE REQUIRED TO FILE
AN ACCOUNTING TO
THE COURT.
13
7.2 What is a Guardianship Accounting (i.e., Periodic
Reporting)?
A guardian’s accounting contains a summary of
financial transactions that have
taken place in the previous year of his or her
administration as guardian of the
estate. It contains information about the beginning
value of assets held by the
protected person’s estate as of the date of your
appointment as well as the ending
balance of the assets as of the last date of the
accounting period.
The initial beginning value of the assets held by the
incapacitated person should
generally mirror the value set forth in the Guardian
Inventory. Any difference
should be explained in the accounting. The
transactions (receipts, disbursements,
gains, losses and other adjustments) outline what
happened in the middle to cause
the beginning and ending balances to change.
7.3 Comprehensive Accounting Form versus EZ Accounting
Form
The general principles set forth above regarding
guardian reporting apply whether you are filing a
Comprehensive Accounting† or an EZ
Accounting†. However, the type of reporting form
that you must file will be stated in the Judgment.
Sometimes, guardians of the estate are appointed for
individuals who have little
or no assets. Typically, such guardians will not need
to file a Comprehensive
Accounting, which is a lengthy form to which account
statements must be
attached. These guardians will generally be required
to file a shorter, simpler
form known as an EZ Accounting form.
Note that instead of filing a Judiciary form, it is
possible that a Judgment may
direct periodic filing of a copy of a Social Security
Representative Payee Report
for the most recent reporting period, or of a formal
accounting.
For further information on financial reporting, see
the Frequently Asked
Questions (FAQ) section in this guide.
† See
Glossary of Terms
THE DEGREE OF DETAIL
REQUIRED DEPENDS ON
THE VALUE OF THE ASSETS
HANDLED BY THE
GUARDIAN OF THE ESTATE.
14
The Comprehensive Accounting or EZ
Accounting, like any guardianship report,
must be filed along with a Report of Guardian
Cover Page†. If there are multiple coguardians
of the estate, all co-guardians may
sign a single report. To assist you in
determining how much information must be
presented, you should review the separate Guide to
Guardianship Reporting
Forms.
Detailed instructions are provided along with each
online form, which can be
completed on a computer and then printed (or completed
by hand). The report
forms are posted online on the Judiciary website, as
listed below.
Report of Guardian Cover Page
HTTP://WWW.NJCOURTS.GOV/FORMS/11797_GRDNSHP_RPT_GRDN_COVER_PG.PDF
EZ Accounting Form
HTTP://WWW.NJCOURTS.GOV/FORMS/11800_GRDNSHP_EZ_ACCTING.PDF
Comprehensive Accounting Form
HTTP://WWW.NJCOURTS.GOV/FORMS/11801_GRDNSHP_COMPREHENSIVE.PDF
Questions about filing guardianship reporting forms
should be directed to the
appropriate Surrogate’s Court; see the link below for
contact information.
Directory of New Jersey County Surrogates
HTTP://WWW.NJCOURTS.GOV/DIRECTORY/SURROGATEROSTER.PDF
For further information about filing accountings, see
the Frequently Asked
Questions (FAQ) in this guide.
ALL GUARDIAN
REPORTS MUST BE
FILED ALONG WITH A
REPORT OF GUARDIAN
COVER PAGE.
15
8. GUARDIANSHIP MONITORING PROGRAM (GMP)
The New Jersey Judiciary Guardianship Monitoring
Program (GMP)† is a
statewide court program established in 2013 to monitor
and support guardians
in their handling of the affairs of incapacitated
individuals. The program is
committed to helping ensure that these vulnerable
members of society are
treated with dignity and respect, while also assisting
guardians with their
challenging role.
Judiciary staff as well as appointed and
trained court volunteers review
guardianship case information,
including inventories and certain
periodic reports submitted by
guardians. The purpose of this review
is to ensure that each guardian is
handling the affairs of the incapacitated
individual properly. The review is also intended to
detect whether the protected
person is subjected to abuse, neglect, financial
exploitation or other
problems. Cases in which such concerns are revealed
are then referred to
appropriate court leaders for additional review, as
well as follow up as needed.
This follow up may include a referral to a Superior
Court, Chancery Division,
Probate Part Judge when necessary.
It is important for guardians to know that certain
periodic reports submitted to
the court will be reviewed through the GMP. In
accordance with their
appointment, a guardian must cooperate with Probate
Part judges, court staff
and volunteers who may contact you for additional
information or to provide
direction regarding your guardianship matter.
For more information about the GMP, visit: NJCOURTS.GOV/GUARDIANSHIP.
† See
Glossary of Terms
THE PURPOSE OF THE GMP IS
TO SAFEGUARD INCAPACITATED
INDIVIDUALS FROM POTENTIAL
ABUSE, NEGLECT, AND
EXPLOITATION BY COURTAPPOINTED
GUARDIANS.
16
9. SUBSTITUTED JUDGMENT/BEST INTEREST
Your role as the guardian is to listen to the
incapacitated person and ensure that
their preferences are being met as long as it does not
cause harm. You are in a
position to make decisions for the protected person in
one of two ways:
1. using substituted judgment; or
2. based on the best interest standard.
9.1 Substituted Judgment
When making decisions using substituted judgment, you
are doing exactly as it
sounds: making the decision that the protected person
would make if they had
the capacity to do so. To the extent the protected
person can understand the issue
at hand, you have an obligation to discuss the
decision you are going to make
with the protected person and listen to their
preferences in that situation.
For example, if you believe it would be
appropriate to sell an asset belonging to the
protected person, you should discuss this with
them. Try to put it in terms that they have the
ability to understand. Discuss the benefits and
the consequences of the decision you are about to
make. Listen to their preferences and the reason
for making the decision.
When using substituted judgment it is also helpful to
talk to other family
members or friends about conversations they have had
with the protected person.
• Has
the protected person ever talked
about their preference for liquidation of
their assets?
• Did
they want that particular asset to
be set aside as a gift for a friend or
family member?
Your job is to determine what their preferences were
when they were still
capable of making those decisions.
SUBSTITUTED JUDGMENT
IS APPLIED WHEN YOU
MAKE THE DECISION THAT
THE PROTECTED PERSON
WOULD MAKE IF THEY HAD
THE CAPACITY TO DO SO.
YOUR ROLE IS TO ENSURE
THAT THEIR PREFERENCES
ARE BEING MET AS LONG
AS IT DOES NOT CAUSE
HARM.
17
9.2 Best Interest Standard
Making decisions using substituted judgment may be
easier for a guardian of the
estate dealing with someone who becomes incapacitated
later in life as opposed
to an adult who has been disabled since birth.
When dealing with an adult who becomes
incapacitated later in life, they likely had
capacity and had the ability to understand
cause and effect relationships. As such, they
have likely discussed their preferences before
they became incapacitated and you may have a
better understanding of what they want.
With an individual who has been disabled since birth,
this may be more difficult.
In those situations (or in situations where the
incapacitated person’s preferences
may cause serious harm or injury), you would be making
your decision based on
what you believe to be in the protected person’s best
interest.
9.3 Tough Decisions
It is never easy to make a decision for another adult
that goes against their
wishes, but you must keep in mind that your friend or
family member does not
have the ability to truly understand the
consequences of their decision. Ultimately, the
decision is yours. If you are making a decision
that is in contrast to the stated or demonstrated
preferences of the incapacitated person, you
should be prepared to defend that decision.
THE COURT APPOINTED
YOU AS THE GUARDIAN OF
THE ESTATE—TO MAKE THE
TOUGH DECISIONS.
YOU WOULD BE MAKING
YOUR DECISION BASED
ON WHAT YOU BELIEVE
TO BE IN THE PROTECTED
PERSON’S BEST INTEREST.
18
10. GIFTING
10.1 Accepting Gifts from the Protected Person
It is typically looked at as a conflict of interest
for you to accept any gift from the
incapacitated person without first seeking court
approval. The general rule is
that you cannot and should not accept gifts from the
protected person.
10.2 Giving Gifts
If you know at the time of the guardianship
action that you may want to continue a
plan of gifting and/or give gifts beyond
those previously made by the
incapacitated person, such as for tax
savings, then you should consider
requesting that the Judgment include
specific provisions regarding gifting.
In New Jersey, a guardian of the estate of an
incapacitated person is not
automatically authorized to give gifts from the
guardianship estate. Even if such
gifts may serve a valid purpose, such as minimizing
tax exposure, others may
later question your authority and/or motive. Thus, it
is always best that the
Judgment explicitly address the extent of your
authority, as guardian, to make
gifts from the guardianship estate. Note that you also
may apply for court
approval each time you wish to give gifts from the
guardianship estate.
10.3 General Gifting Considerations
If you are seeking authority to provide a gift to
someone from the incapacitated person, you
should be prepared to supply the court with all
the information shown below.
• The
protected person’s estate plan
• Whether
there is a pattern of prior gifting
• The
potential tax savings if the gifts are
authorized
THE JUDGMENT SHOULD
EXPLICITLY ADDRESS THE
EXTENT OF YOUR
AUTHORITY, AS GUARDIAN,
TO MAKE GIFTS FROM THE
GUARDIANSHIP ESTATE.
A GUARDIAN WHO USES
FUNDS FROM THE
GUARDIANSHIP ESTATE TO
GIFT OTHERS—WITHOUT
COURT APPROVAL—COULD
BE REQUIRED TO
REIMBURSE THE ESTATE.
19
General Gifting Considerations (continued):
• The
size of the estate
• The
protected person’s income and expenses
• The
physical and mental condition and life expectancy of the protected
person (the court wants to ensure that the gift would
not diminish the
protected person’s ability to meet their needs during
the course of their
lifetime)
• The
likelihood that the protected person’s disability may cease or improve
• The
likelihood that the protected person would make this gift if they were
able to consent (this is an example of how substituted
judgment comes into
play in your decision making)
• The
ability of the protected person to consent to the gifts
20
11. PAYMENT FOR SERVICE AS THE GUARDIAN OF THE ESTATE
11.1 Commissions and Reimbursement
You are entitled to payment for services as the
guardian of the estate of an
incapacitated person. New Jersey statutes set forth
specific commissions† that
may be taken by a guardian of the estate, based upon
the amounts of corpus
(that is, the principal of the estate) and income on
the estate.
You are also entitled to reimbursement
from the protected person’s estate for any
money you pay out of pocket for their
benefit. For example, if you pay for a filing
fee with the court, you would be entitled to
be reimbursed for that expense.
You have the option of applying to the Superior Court
for approval of payment
to yourself and/or others for providing services
outside of standard guardianship
duties. This can be especially helpful in situations
where individuals, such as
relatives of the incapacitated person, question your
actions as guardian of the
estate.
11.2 Attorney’s Fees: Can You Hire an Attorney?
Yes, you may hire an attorney and you are entitled to
have the fees for that
attorney paid for by the protected person’s estate—as
long as the court
determines that the fees are reasonable and necessary.
As guardian, you may apply to the court in advance for
authorization to expend
up to a specific amount for attorney’s fees, to avoid
any dispute as to whether
such fees should be paid by you or by the guardianship
estate.
† See
Glossary of Terms
QUESTIONS REGARDING THE
AMOUNT OF COMMISSIONS
THAT YOU MAY TAKE
SHOULD BE DIRECTED TO AN
ATTORNEY.
21
12. ACTION REQUIRED UPON PROTECTED PERSON’S DEATH
When the protected person dies, you must
promptly notify the Surrogate’s Court and forward
a copy of the death certificate upon receipt. You
should consult the Judgment to determine if you
are required to notify anyone else within a
specified period of time.
The death of the incapacitated person terminates the
guardianship. However,
the guardian is still responsible to account for funds
and assets of the
guardianship estate. In extraordinary circumstances,
governed by statute, the
guardian may handle burial and funeral costs and may pay
certain fees for
administration or probate.
If you are in doubt about the action required when the
protected person dies, seek
legal advice from an attorney. You will find contact
information for local lawyer
referral services using the link below.
County Lawyer Referral and Legal Services Offices
HTTP://WWW.NJCOURTS.GOV/PROSE/10153_DEPTYCLERKLAWREF.PDF
YOUR RESPONSIBILITIES AS
GUARDIAN OF THE ESTATE
DO NOT END WHEN THE
PROTECTED PERSON DIES.
22
FREQUENTLY ASKED QUESTIONS (FAQ)
Q: What is the difference between substituted judgment
and best interest?
A: When using substituted judgment, a guardian makes a
decision that the
protected person would make if he or she had capacity,
typically based on the
preferences previously expressed by the individual. In
contrast, a decision
made based upon best interest requires the guardian to
determine what he or
she believes would be best for the incapacitated
person, either without
knowledge of the protected person’s wishes or because
doing what he or she
wants would be unreasonably dangerous or
impracticable.
Examples: (1) Consider a situation in which an
incapacitated person owns a
valuable sports car that he can no longer use.
Although the car is unused, the
protected person wishes to keep it stored in an
expensive garage. Using
substituted judgment, the guardian would keep the car
and continue paying
the garage fees as long as possible because this is
what the incapacitated
person wants. (2) In contrast, if the guardian
determines that it is impractical
to honor the expressed preference to keep the car
because of other expenses,
then applying a best interest approach the guardian
could sell the car.
As illustrated by the above examples, a guardian
should first attempt to apply
substituted judgment, in order to achieve the known
and reasonable
preferences of the protected person. If the
incapacitated person’s wishes are
unknown, or if fulfilling them would be dangerous or
impractical, then the
guardian should shift from substituted judgment to a
best interest approach.
Q: Is it really necessary to keep all records – even
invoices and receipts – to
show the expenses paid from the guardianship estate?
A: Determining what records to keep can be
challenging, especially if the
guardianship is complicated by factors like family
conflict, prior financial
mismanagement, or complex and valuable assets. While
the same basic rules
apply to all guardians of the estate, each
guardianship is unique. Some cases
will require greater vigilance in recordkeeping. When
in doubt, consult an
attorney for guidance tailored to the specific facts
of your case. Below are some
different scenarios for your reference.
Scenario 1: In some cases, parents care for their
disabled adult child in their
own home, applying modest public benefits received by
the protected person
towards shared household expenses. When there are no
other relatives or
23
persons who might question a guardian’s spending,
detailed records and
receipts may never be needed to justify certain
expenses in court.
Scenario 2: In other cases, incapacitated persons
reside in developmental
centers or group homes that take care of payments for
expenses like housing,
food, and clothing. The guardian may do nothing other
than turn over benefits
to the facility to make those payments. When the
guardian is not directly
paying for each item needed by the protected person,
maintaining receipts for
these types of payments would be impracticable to
produce.
Scenario 3: Perhaps the guardianship was hotly
disputed from the beginning,
with different family members and/or friends seeking
to be appointed as
guardian. Those who are not selected by the court may
question the motives
of the person appointed as guardian. As a result, they
may apply to court for
proof that he or she is doing the job properly.
Scenario 4: An incapacitated person may have been
financially exploited prior
to the establishment of the guardianship, and there
may be ongoing legal
proceedings regarding his or her assets. The guardian
may have to keep
detailed records in order to document exactly what
assets and income were
received when he or she took over handling the estate.
Scenario 5: Still other guardianships involve estates
of great value – in the
millions of dollars – where the amounts spent by the
guardian may be
questioned by prospective heirs of the incapacitated
person.
Q What is the most recent guidance from the Internal
Revenue Service (IRS)
about the retention of financial records?
A: Keep copies of your filed tax returns. They help in
preparing future tax returns
and making computations if you file an amended return.
For general
information about the retention of financial and/or
tax records, records which
may also support guardianship accountings, visit: WWW.IRS.GOV.
Q: When preparing an inventory, how do I determine the
value of assets?
A: The (cash) value of bank accounts, brokerage
accounts, annuities and/or life
insurance policies will be the value on the date you
were appointed. A reliable
way to determine the value of an automobile would be
to use the Kelley Blue
Book valuation.
24
Determining the value of other assets may be a little
more difficult. Appraisals
may be obtained for homes, jewelry, artwork or
antiques. Appraisals can be
very costly. If it is not your intent to liquidate the
asset in the very near future,
and since the value of such assets can change
significantly in a very short
period of time, it may be best to provide a reasonable
estimate of the asset’s
value—instead of seeking an appraisal. Be sure to note
on the inventory any
values that are estimated.
Q: How much detail should I include in the inventory?
A: You should include as much detail as is necessary
to reasonably identify the
asset. For example, if the incapacitated person has a
checking account at Bank
of America, you would document it as “Bank of America
checking account” and
provide the last four digits of the checking account
number.
When documenting an automobile, you should include the
make, model, year
and vehicle identification number (VIN). You should
include the address and
parcel number for real estate.
Documenting household items on an inventory can be a
little more difficult.
Some guardians will include a lump sum value of
miscellaneous household
property and others will include details such as one
sofa, one end table and one
coffee table. No matter the amount of detail you
choose to record, you may want
to photograph or video record the personal property.
This step protects you in
the event that persons interested in the assets of the
guardianship estate claim
that assets are missing or mischaracterized in the
inventory.
Q: What is the schedule for filing periodic guardian
reports?
A: If ordered to account annually, the due date will
be based on the anniversary
of your Judgment date. The first annual accounting
should include all activity
from the date of appointment through and including the
last day of the twelfth
month following the appointment. Subsequent
accountings must be filed in
accordance with the schedule set forth in the Judgment
or any subsequent
Court Order modifying the Judgment.
25
Q: What if the Judgment directs me to file something
other than a Judiciary
guardianship report?
A: Particularly for financial reporting, the Judgment
may direct a guardian to file
a Judiciary form – the Guardian Inventory, Periodic EZ
Accounting, or Periodic
Comprehensive Accounting – or another document. If the
person subject to
guardianship receives Social Security benefits but has
no other assets, then
the court may direct the guardian to file a copy of
the Social Security
Representative Payee Report for the most recent
reporting period. This form
is not posted on the Judiciary website but can be
found on the Social Security
Administration site, here: WWW.SSA.GOV/FORMS.
It should be filed with a
Report of Guardian Cover Page.
In other situations, especially if a guardianship
estate is very valuable or
complex, or if the guardianship was contested or a
financial institution was
appointed as guardian of the estate, the court may
direct the filing of a formal
accounting. Unlike informal guardianship reports, a
formal accounting is filed
by way of a Verified Complaint and Order to Show
Cause, and it is audited by
the Surrogate. There is no Judiciary form for a formal
accounting. Typically,
a formal accounting is prepared by an attorney, often
with the assistance of an
accountant. A formal accounting should be filed with a
Report of Guardian
Cover Page, and otherwise in accordance with the New
Jersey Rules of Court.
All guardians must report in accordance with the terms
of the Judgment. If
you are directed to file a Judiciary form, then you
must file using that
form. Alternatively, if you are directed to file a
different type of report, then
you must do so.
26
GLOSSARY OF TERMS
Legal and non-legal language in the realm of
guardianships is always changing. For
reference, a glossary of terms is included in this
guide. The terms defined in this
glossary are marked with a dagger symbol (†) when they
first occur in the text.
Best Interest
Standard
Making a decision based on what you believe to be in
the best
interest of another person; for example, a guardian
making a
decision based upon what is believed to be in the best
interest
of an incapacitated person.
Commingle To combine items and treat them the same
way. In the
context of guardianship, commingling refers to
combining the
funds of an incapacitated person with other funds,
such as
those of the guardian.
The assets and income of the guardianship estate must
be
maintained separately and cannot be commingled.
Commissions Compensation, set by statute, to which an
individual, such as
a guardian of the estate of an incapacitated person,
is
entitled.
A guardian of the person is not entitled to
commissions.
Comprehensive
Accounting
One of two forms approved for guardians of the estate
who are
required to file periodic reports. The Comprehensive
Accounting form is lengthier and more detailed than
the EZ
Accounting. It is appropriate when a guardian is
managing a
large and/or complex estate. The Comprehensive
Accounting
form is posted online at:
HTTP://WWW.NJCOURTS.GOV/FORMS/11801_GRDNSHP_COM
PREHENSIVE.PDF
27
County Surrogate An elected Constitutional Officer who
serves as judge of the
Surrogate’s Court for uncontested probate and estate
matters.
A Surrogate also serves as Deputy Clerk to the
Superior Court
for the Probate Part, as well as for adoptions in the
Family
Part.
EZ Accounting One of two forms approved for guardians
of the estate who are
required to file periodic reports. The EZ Accounting
form is
shorter and much less detailed than the Comprehensive
Accounting. It is appropriate when a guardian is
managing a
small and simple estate, such as one in which the
incapacitated person has no real property and receives
monthly income, like a pension. The EZ Accounting form
is
posted online at:
HTTP://WWW.NJCOURTS.GOV/FORMS/11800_GRDNSHP_EZ_AC
CTING.PDF
General
Guardianship
A “complete in every respect” type of guardianship in
which
the guardian is able to exercise all rights and powers
of the
incapacitated person in terms of the area of
responsibility he
or she is granted.
Also known as full or plenary guardianship.
Guardian An individual appointed by the court with
authority over the
person and/or the estate of a person who has been
legally
declared incapacitated.
A guardian may have general or limited authority.
28
Guardian of the
Estate
An individual appointed by the court to handle the
financial
affairs of another person who has been legally
declared
incapacitated.
Unlike a guardian of the person, a guardian of the
estate is not
responsible for decisions regarding the personal
well-being of
the protected person. Rather, the guardian of the
estate
handles assets, income, expenses and liabilities.
Guardian of the
Person
An individual appointed by the court to handle the
personal
affairs of another person who has been legally
declared
incapacitated.
Unlike a guardian of the estate, a guardian of the
person does
not manage the financial affairs of the incapacitated
person,
except that a guardian of the person may serve as
representative payee for Social Security benefits.
Guardianship
Monitoring Program
(GMP)
The New Jersey Judiciary Guardianship Monitoring
Program
is a statewide court program launched in January 2013
to
monitor and support guardians in their handling of the
affairs
of incapacitated individuals. The program was
implemented
in all 21 counties as of July 2014.
Incapacity
Inability to govern oneself and/or to manage one’s
affairs.
Incapacity may be general (as to all areas) or limited
(as to
specific areas only).
Incapacitated
Person
An individual legally declared by the court as unable
to govern
himself or herself and/or unable to manage his or her
affairs.
Also known as a protected person. Formerly referred to
as an
incompetent or a ward.
29
Interested Parties A person or agency that has an
involvement with the
incapacitated person who is the subject of the
guardianship.
Interested parties (or parties in interest) are
typically the
same individuals entitled to notice of the initial
application for
guardianship – i.e., the incapacitated person’s
spouse, parent,
adult child, etc.
Inventory A written summary of the assets, income, and
liabilities of an
individual. In the context of guardianship of the
estate, an
inventory is a document typically required to be filed
within
ninety (90) days of a guardian’s appointment. The
inventory
must be filed on the approved form, at:
HTTP://WWW.NJCOURTS.GOV/FORMS/11799_GRDNSHP_INVEN
TORY.PDF
Judgment The official decision of a court in a case.
For purposes of this guide, Judgment refers to the
Judgment
of Incapacity and Guardian Appointment, also known as
the
Judgment of Incapacity and Order Appointing Guardian.
Least Restrictive
Alternative
The most minimally restrictive form of intervention
appropriate to address a situation, enabling the
incapacitated
person to maintain as much independence as possible
without
putting him or her in danger.
Letters of
Guardianship
Documents issued by the County Surrogate upon an
individual’s qualification as guardian, after the
entry of a
Judgment by the Superior Court. Proof of a guardian’s
authority.
30
Limited
Guardianship
A less intrusive, more individualized, type of
guardianship in
which a guardian is appointed with authority as to
some – but
not all – areas.
A limited guardianship is established based upon a
court’s
finding that the person alleged to be incapacitated
lacks the
capacity to do some, but not all, of the tasks
necessary to care
for himself or herself.
Protected Person Another term for an incapacitated
person, that is, an
individual legally declared by the court as unable to
govern
himself or herself and/or unable to manage his or her
affairs.
Formerly referred to as an incompetent or a ward.
Qualification A process conducted before the County
Surrogate, or
Surrogate’s staff, following entry of a Judgment.
As part of qualification, the person appointed as
guardian
affirms his or her willingness to fulfill the duties
of a guardian.
If a bond is required, the bond must be posted in
order for the
guardian to qualify and obtain Letters of
Guardianship.
Report of Guardian
Cover Page
A general information form required to be filed along
with any
other guardianship reporting form(s). This form may be
signed by all co-guardians of the person, or by all
co-guardians
of the estate. Available online at:
HTTP://WWW.NJCOURTS.GOV/FORMS/11797_GRDNSHP_RPT_G
RDN_COVER_PG.PDF
31
Restricted Assets Assets over which a guardian of the
estate does not exercise
full control.
The most common restricted asset is real property. The
restriction can be found in the Judgment and sometimes
the
Letters of Guardianship. It typically provides that
the
guardian of the estate “cannot sell, transfer,
mortgage, or
otherwise encumber the real property of the
incapacitated
person absent court approval.”
Service Delivery of papers in a legally appropriate
way.
For example, notice of an application for appointment
of a
guardian is served upon the alleged incapacitated
person by
personal service , meaning that copies of the papers
are
personally delivered. For more information, see New
Jersey
Rules of Court (Rule 1:5) at:
HTTP://WWW.NJCOURTS.GOV/RULES/INDEX.HTM
Short Certificates Short forms of the Letters of
Guardianship, stating that by
Judgment of a particular date, the guardian was
appointed
with authority of the person and/or estate of the
named
incapacitated person.
A short certificate will state that as of the date it
was issued,
the guardianship remains in effect. Additional short
certificates may be purchased by a guardian, from the
Surrogate, for $5.00 each as long as the guardianship
remains
in effect. Unlike the original Letters of
Guardianship, short
certificates should be provided to banks, service
providers and
other institutions that require proof of a guardian’s
authority.
Substituted
Judgment Standard
Making a decision based upon what you believe that the
protected person would do if they had the capacity to
make the
decision.
32
Superior Court
Judge
For purposes of guardianships, the judge of the
Superior
Court, Probate Part, who decides if the alleged
incapacitated
person is in fact incapacitated and in need of a
guardian.
The Superior Court judge makes the substantive
decisions
about the guardianship, including the determination of
capacity and the choice of guardian. The Superior
Court judge
conducts any hearing(s) and signs the Judgment.
Surety Bond A contract between at least three parties:
the obligee (the
party who is the recipient of an obligation), the
principal (the
primary party who will perform the contractual
obligation)
and the surety (who assures the obligee that the
principal can
perform the task).
A bond functions much like an insurance policy so that
if the
guardian of the estate misappropriates (steals) or
misuses the
money, or makes some other mistake, the incapacitated
person
will be protected. The price of that insurance policy
(the bond
premium) can be paid from the guardianship estate.
Surrogate’s Court
A county office headed by the County Surrogate that
may be
in the same location as the Superior Court or may be
in a
different location.
Probate Part actions are filed with the Surrogate's
office,
including actions to appoint a guardian. It is also
where the
guardian goes to qualify after entry of the Judgment.
33
source http://www.judiciary.state.nj.us/guardianship/Guardianship_Estate_web.pdf
