Guardianship of the Estate
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.
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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
