A guardian of the estate, sometimes called a conservator of the estate, manages the financial affairs of someone who cannot do so themselves. This includes handling bank accounts, paying bills, managing investments, collecting income, and protecting assets. Financial guardianship carries fiduciary duties—legal obligations to act with honesty, care, and loyalty on behalf of the protected person.
Estate guardianship focuses purely on finances, separate from personal care decisions. Some guardians serve in both roles; others handle only the financial side while a different guardian manages personal matters.
Financial Responsibilities
The guardian of the estate takes control of the ward's assets and income. This means accessing bank accounts, managing investments, collecting benefits like Social Security or pension payments, paying bills, filing taxes, and maintaining property.
Guardians must keep meticulous records of all financial transactions. Courts require periodic accountings—detailed reports showing every dollar that came in, every dollar that went out, and current asset values. Poor recordkeeping can result in removal as guardian.
The guardian should create a budget for the ward's care, ensuring resources last and cover necessary expenses. This requires estimating care costs, projecting income, and planning for contingencies.
Fiduciary Duties
As a fiduciary, the guardian must act in the ward's best interests with the highest standard of care. You cannot use the ward's money for your own benefit, invest recklessly, or neglect their financial needs.
Specific fiduciary duties include the duty of loyalty (putting the ward's interests first), the duty of care (acting as a reasonably prudent person would), the duty to account (keeping records and reporting to the court), and the duty to protect assets (avoiding waste or loss).
Self-dealing—transactions where the guardian personally benefits—is prohibited without specific court approval. Lending yourself the ward's money, hiring your own business to provide services, or buying the ward's property at a discount are all improper without court authorization.
Managing Assets and Investments
Guardians must protect and prudently manage assets. For liquid assets, this typically means keeping funds in FDIC-insured accounts and conservative investments. Speculation and high-risk investments are generally inappropriate for guardianship funds.
Real property requires maintenance, insurance, and decisions about whether to retain or sell. Selling significant assets usually requires court approval. The guardian must document why sales serve the ward's interests.
If the ward has complex investments or business interests, the guardian may need professional assistance. Hiring accountants, financial advisors, or attorneys with the ward's funds is permissible when reasonably necessary, but excessive professional fees can be questioned.
Paying for Care
A primary responsibility is ensuring the ward's care is funded. Coordinate with the guardian of the person (if different) to ensure care decisions are financially sustainable. The personal guardian may want a private room in an expensive facility; the financial guardian must determine if resources allow it.
Apply for benefits the ward may be entitled to: Social Security disability, Medicaid, veterans benefits, or other programs. Proper benefits planning can preserve assets while ensuring care is covered.
Be cautious about Medicaid planning and asset transfers. Improper transfers can create penalty periods that disqualify the ward from benefits when they're needed. Consult an elder law attorney before significant financial moves.
Court Reporting Requirements
Courts require regular accountings—typically annually—showing all financial activity during the reporting period. The accounting includes beginning balances, receipts, disbursements, and ending balances for all accounts and assets.
Failure to file required accountings can result in citations from the court, personal liability, and removal as guardian. Stay current with reporting obligations. If you're struggling to prepare accountings, hire an attorney or accountant to help.
Some jurisdictions require bond—insurance protecting the ward's assets if the guardian mismanages funds. The bond amount typically reflects the estate's value. Institutional guardians or close family members sometimes have bond requirements waived.
Limitations on Authority
Even with broad financial guardianship, certain transactions require court approval. Selling real estate, making gifts from the ward's assets, settling lawsuits, and withdrawing large sums may all require court permission depending on your jurisdiction and guardianship terms.
Review your letters of guardianship carefully to understand your specific authority. When in doubt about whether you need court approval for a transaction, ask rather than proceeding and potentially violating your duties.
Getting Legal Help
Financial guardianship involves complex legal and accounting obligations. An attorney experienced in guardianship matters helps you understand your duties, prepare court accountings, obtain necessary approvals, and avoid missteps that could expose you to liability. For estates of any significant value, professional guidance is essential to fulfill your fiduciary role properly and protect both the ward and yourself.