The Nuts and Bolts of Managing an Adult Guardianship Estate Stacy - - PowerPoint PPT Presentation

The Nuts and Bolts of Managing an Adult Guardianship Estate

Illinois Guardianship Association Conference October 1, 2019

Stacy Berk Supervising Attorney & Director of Training Office of the Cook County Public Guardian 69 W. Washington Street, Suite 700 Chicago, IL 60602 (312) 603-0800 stacy.berk@cookcountyil.gov

▪ The estate guardian is responsible for managing the property, finances, and legal matters of the person with a disability. ▪ At all times, the estate guardian must follow the law and any court orders specific to his/her guardianship. ▪ An estate guardian should avoid any conflicts of interest or the appearance of impropriety when handling the assets of an individual under guardianship. ▪ An estate guardian is required to have legal counsel in Cook County and is expected to seek guidance from financial professionals when appropriate.

What is an Estate Guardian?

▪ This is the primary section of the Probate Act governing guardians of the estate. ▪ The estate guardian has a statutory duty to always act for the best interests of the person with a disability.

Duties of the Estate Guardian 755 ILCS 5/11a-18

Under the Probate Act, 755 ILCS 5/11a-18(a) , “To the extent specified in the order establishing the guardianship, the guardian

• f the estate shall have the care, management and investment of

the estate, shall manage the estate frugally and shall apply the income and principal of the estate so far as is necessary for the comfort and suitable support and education of the ward, his minor and adult dependent children, and persons related by blood or marriage who are dependent upon or entitled to support from him,

• r for any other purpose which the court deems to be for the best

interests of the ward, and the court may approve the making on behalf of the ward of such agreements as the court determines to be for the ward’s best interests.”

Duties of the Estate Guardian 755 ILCS 5/11a-18

The Guardian’s Powers: Plenary vs. Limited Guardianship

▪ A plenary guardian of the estate has all the authorities listed under 755 ILCS 5/11a- 18 and is also known as a “full” guardian. ▪ An order appointing a limited guardian of the estate allows the court to reserve certain authorities under 755 ILCS 5/11a-18 to the person under guardianship. ▪ A guardian should always retain copies of his/her court order appointing a guardian and his/her “letters of office”.

Surety Bonds

▪ Every individual representative must file an oath or affirmation that he/she will faithfully discharge his/her duties, and every guardian of the estate is required to file a bond which must be approved by the Court. (755 ILCS 5/12- 2) ▪ Bond should be obtained with a surety company. ▪ The amount of the bond must be 1.5 times the value of the estate when a surety company acts as surety.

▪ A guardian of the estate must post additional bond when he/she sells or mortgages real property (1.5 times the amount of funds “likely to come into the hands” of the

• estate. (755 ILCS 5/12-9; Circuit Ct. of Cook County R. 12)

▪ Financial institutions that serve as guardian of the estate are excused from posting a surety bond. ▪ The Office of the State Guardian is excused from posting a surety bond. ▪ The Cook County Public Guardian posts a blanket surety bond.

Surety Bonds (continued)

Guardian of the Estate – Getting Started

• The estate guardian has a duty to

keep the assets and income of the individual under guardianship separate from his/her own assets and income.

• Set up a separate guardianship

account for depositing income and paying expenses.

• Maintain copies of bank statements

and keep all receipts.

▪ Contact the U.S. post office to redirect the individual’s mail; contact utility companies and known financial institutions to change mailing address. ▪ Apply to become representative payee with Social Security Administration and contact the pension or annuity provider to redirect monthly income. For

individuals already on Medicaid or Medicaid-pending, consider authorizing a nursing home to become representative payee of Social Security income.

▪ If the individual owns real property, conduct an inspection and inventory of the contents.

Guardian of the Estate – Getting Started – What’s in the Estate?

Patricia Phillips is 80 years old and diagnosed with dementia and paranoid psychosis. Ms. Phillips is a

• widow. She has 3 children, none of whom were

interested in becoming her legal guardian. Ms. Phillips was discharged to a nursing home after a hospitalization and has a large balance accruing. Her

• nly known income is Social Security and a pension, and

her only known assets are a bank account with approximately $10,000, an old car, and a single family home where she previously resided.

Scenario #1

▪ Every petition filed under the Probate Act must be under oath or affirmation (except for statements made on information and belief). ▪ Include a signed verification statement with every petition and/or court filing.

“Under penalties as provided by law pursuant to Section 1-109 of the Code of Civil Procedure, the undersigned [attorney] certifies that the statements set forth in this instrument are true and correct, except as to matters therein stated to be on information and belief and as to such matters the undersigned certifies as aforesaid that she verily believes the same to be true.”

Verified Pleadings – 755 ILCS 5/1-5 Petition under oath

▪ See 755 ILCS 5/11a-18(a-5) and 755 ILCS 5/1-6 ▪ Who should receive notice of court filings?

❑the individual under guardianship (consider individual’s state of mind and plenary vs. limited guardianship) ❑family ❑heirs/legatees ❑GAL and other attorneys who have filed an appearance ❑friends ❑other parties and interested persons as the Court directs

Notice Requirements

Inventories

▪ Within 60 days of his/her appointment, a guardian of the estate is required to file an inventory with the

• court. (755 ILCS 5/14-1 and Rule 12.9 of the Rules of Circuit Court of

Cook County)

▪ The court date for the initial inventory is typically set at the date of appointment and included in the appointment order. ▪ Inventories must be verified.

▪ The inventory must describe all real and personal property which has come to the knowledge of the guardian and any cause of action

• n which he/she has a right to sue.

▪ Personal property is a very broad term. ▪ Personal Property includes all financial assets:

❑ bank accounts (checking, savings, CDs) ❑ investment/brokerage accounts ❑ individual stock holdings ❑ IRAs ❑ U.S. savings bonds ❑ life insurance policies ❑ annuities

Inventories (continued)

▪ Personal property includes all tangible items:

❑ household furnishings ❑ automobiles and other vehicles ❑ jewelry ❑ coins ❑ other collectibles (i.e. books, stamps, dolls)

▪ Personal property includes safe deposit boxes and their contents. ▪ Personal property includes beneficial interest in a trust (including real property held in a land trust).

Inventories (continued)

▪ Rule 12.9 of the Rules of the Circuit Court of Cook County provides specific instructions for describing various assets including real property and stocks and bonds, as well as potential causes of action. ▪ The first inventory is considered the “initial” inventory and should be titled “Initial Inventory”. ▪ A guardian of the estate is required to file additional inventories if he/she discovers more assets, failed to include an asset in the initial inventory, or needs to correct

• r change the description of an asset (“supplemental” vs.

“amended” inventories).

Inventories – Important Notes and Practice Tips

▪ All inventories are a “snapshot” of what the person with a disability owned at the time the guardian was

• appointed. Use the date of appointment to state the

value of an item or the balance of an account. ▪ Obtain appraisals for household furnishings, collectibles, jewelry, coins, and automobiles.

Inventories – Important Notes and Practice Tips

REAL PROPERTY Item No. Description 1. Single family home located at _______ Street, Skokie, Illinois 60077. PIN: xx-xx-xxx-xxx-0000 Legal Description: Lot __ in the Subdivision of Lots 1, 2, and 3 in the Resubdivision of Block __, being a subdivision of parts of the southeast 1/4 of Section 16, Township 41 North, Range 13, east of the 3rd Principal Meridian in Cook County, Illinois. Title: Craig Phillips and Patricia Phillips, his wife, in joint tenancy. (Craig Phillips is Patricia Phillips’s deceased husband.) Property taxes: 2017 taxes were sold. Encumbrances: Memorandum of Judgment entered June 10, 2017, by the Administrative Hearing Officer for The Village of Skokie, for ordinance violations in the amount of $750.00

Inventories Sample Description – Real Property

PERSONAL PROPERTY Item No. Description 1. Checking account #xxxxxx1924 held at ______ Bank with a date of appointment value of $10,601.00, titled Craig Phillips (deceased) or Patricia Phillips. 2. Miscellaneous goods and chattels located at _______Street, Skokie, Illinois, with an appraised value of $3,850.00. (See attached appraisal labeled Exhibit A.) 3. 1983 Mercury Cougar two door, VIN ____________, with an appraised value of $300.00; title under investigation. (See attached appraisal labeled Exhibit B.)

Inventories Sample Descriptions – Personal Property

INCOME Item No. Description 1. Monthly Social Security benefits in the amount of $1,200.00, for an annual benefit of $14,400. 2. Monthly Municipal Employees Annuity and Benefit Fund benefits in the amount

• f $3,000.00 for an annual benefit of

$36,000.00.

Inventories Sample Descriptions - Income

(same facts as Scenario #1 but with some additions) Mail forwarding reveals that Ms. Phillips also owns some stock and has an annuity. A review of tax and title records shows that Ms. Phillips executed a quit claim deed transferring the property to her granddaughter shortly before she was adjudicated a person with a disability.

Scenario #2

PERSONAL PROPERTY Item No. Description 4. Non-qualified annuity held with American General Life Insurance Company, under Contract #________, owner: Patricia A. Phillips, annuitant: Patricia Phillips, naming Catherine Phillips (daughter) as primary beneficiary, with an interest rate of 3.00%, and a cash surrender value of $37,598.26. 5. Sixty-three (63) shares of Pioneer Natural Resources Company stock with a date of appointment value of $9,983.61 ($158.47 per share), titled Patricia Phillips.

Inventories Sample Descriptions – Personal Property

POTENTIAL CAUSE OF ACTION Item No. Description 1. On information and belief, Patricia Phillips purchased a single family home located at ___________Street, in Skokie , Illinois, on or about July 9, 1968, in joint tenancy with her husband Craig Phillips. Craig Phillips passed away January 7,

• 2018. On or about November 15, 2018, Patricia Phillips

purportedly signed a Quit Claim Deed transferring her entire interest in the property to her granddaughter Tacy Anderson. On information and belief, Patricia Phillips did not possess requisite capacity to sign the deed dated November 15, 2018. The Public Guardian is filing a Complaint To Quiet Title contemporaneously with the filing of the Initial Inventory.

Inventories Sample Descriptions – Cause of Action

▪ A guardian of the estate has a duty to pay the bills of the person with a disability in a timely fashion, including nursing home care, utilities, property insurance, health insurance, property taxes, income taxes. ▪ Apply for public benefits if the individual has insufficient assets to pay for his/her daily care and expenses.

Paying Bills

▪ See 755 ILCS 5/11a-18(a) and (a-5), and see Rule 12.7 of the Rules of the Circuit Court of Cook County ▪ File a Petition for Disbursement

❑ To pay bills incurred before the guardian was appointed (i.e. nursing home or hospital charges) ❑ To pay extraordinary expenses (i.e. custom wheelchair, dentures, hearing aids, repairs to real property) ❑ To pay items not included in a court-approved budget order ❑ To pay the guardian’s fees ❑ To pay attorney’s fees ❑ To ratify a payment already made

Paying Bills – When to Go to Court

▪ Before selling personal property (household furnishings, automobiles, jewelry, coins or other collectibles, etc.), consider offering the items to family and/or heirs at appraised value (required for the Public Guardian 755 ILCS 5/13-5(e). ▪ The estate guardian should file a petition for court approval to sell any personal property. ▪ It is good practice to have a separate appraisal and

• ffer to purchase.

Selling Personal Property – Goods and Chattels

▪ Look at 755 ILCS 11a-18 Duties of the estate guardian, specifically section (a-5)

“The probate court, upon petition of a guardian … and after notice to all other persons interested as the court directs, may authorize the guardian to exercise any or all powers over the estate and business affairs of the ward that the ward could exercise if present and not under disability. The court may authorize the taking of an action of the application of funds not required for the ward’s current and future maintenance and support in any manner approved by the court as being in keeping with the ward’s wishes so far as they can be ascertained …”

Collecting Bank Accounts and Liquidating Financial Assets

▪ Types of petitions contemplated under 755 ILCS 5/11a-18 (a-5) : ❑ Petition for Leave to Collect, Re-establish and Invade Account (joint account or POD aka Totten trust account) ❑ Petition to Surrender Annuity or Life Insurance ❑ Petition to Sell Stock or to Liquidate Investment Account ❑ Petition to Drill, Inventory and Collect Contents of Safe Deposit Box ❑ Petition to Surrender Savings Bonds

Collecting and Liquidating Assets (continued)

▪ Be cognizant of notice requirements. ▪ Set up segregated accounts for funds that came from an asset with a beneficiary or beneficiaries. ▪ Review tax consequences and consult a tax preparer

• r accountant if appropriate. Ask financial institution

to withhold percentage of proceeds for taxes.

Collecting and Liquidating Assets – Additional Considerations

▪ Clean out the home – file a petition to sell the personal property contained within the home or a petition to dispose of the personal property. ▪ Obtain an appraisal of the real property from a licensed appraiser. ▪ Obtain a market evaluation or comparative market analysis (CMA) from a licensed broker.

Selling Real Property

▪ File a petition to list the property with a licensed

• broker. Include copies of the appraisal, CMA, and

listing agreement. ▪ File a petition to sell the property to the individual or entity with the highest or best offer (755 ILCS 5/20-3 and 755 ILCS 5/20-5).

Selling Real Property (continued)

▪ A guardian of the estate has a duty to account for all income, all assets, and all expenditures for the person with a disability. ▪ The date for the first account (aka first current account) is set forth in the appointment order, 13 months after the date of appointment. Subsequent accounts are filed annually after that, subject to court order. ▪ An account includes all receipts, disbursements and distributions (typically for a 12-month period), and a recapitulation and listing of all assets on hand at the end of the accounting period. (755 ILCS 5/24-1 through 5/24-22 and Circuit Ct. of Cook County R. 12.13)

Annual Accounts

Investments

▪ The estate guardian has a duty to manage the assets frugally (755 ILCS 5/11a-18). This includes the duty to invest the money of the individual under guardianship (755 ILCS 5/21-2). ▪ The Probate Act lays out the specific types of investments allowed for estate guardians (i.e. obligations of the U.S., CDs, municipal bonds, mutual funds, stocks, etc.). ▪ An estate guardian should file a petition for approval of investment plan when investing or changing current investments for large sums of money.

▪ Make sure the individual under guardianship has health insurance and apply for additional coverage if needed. ▪ Secure real property (change locks if necessary) and maintain appropriate insurance. ▪ Maintain real property (lawn care, snow removal, necessary repairs). ▪ Safeguard personal property and maintain insurance coverage if appropriate. ▪ Respond to legal matters outside of Probate Court and make sure the individual under guardianship has legal representation (domestic relations issues, mortgage foreclosure, debt collection). 4

Miscellaneous Duties of the Estate Guardian

THANK YOU!