Does your parent need a Guardian?
If Dad becomes mentally incapacitated to the point where he should not be handling his own financial affairs, he may need a Guardian. We work with many attorneys who specialize in Guardianships. They can apply to the Court to have a Financial Guardian appointed and a Personal Guardian also if necessary.
Guardian vs. Power of Attorney- What’s the Difference?
A Financial Guardian has a myriad of responsibilities to handle. In contrast to a Power of Attorney who has the right to handle many of these functions, the Guardian is Court-appointed and has the obligation to perform all these jobs.
Accounting Obligations of Guardian:
- Locating assets of ward
- Handling all tax matters
- Preparing court accountings
- Establishing budget for the ward’s personal and health needs
- Investing liquid assets
- Review and update of all insurance policies
- Review of terms of any traditional or reverse mortgages
- Maintaining real estate of ward
NJ Guardian Accounting Requirements
In all States, the Guardian must file an annual report of the financial affairs of the incapacitated person. In NJ, many counties now require that the Guardian of the Estate report using Judiciary forms as to the financial affairs. There are two different periodic reporting forms: the Periodic EZ Accounting form and the Periodic Comprehensive Accounting form. The Comprehensive Form requires numerous attachments to substantiate the figures reported. The Judgement of Incapacity should specify which form you are required to file, as well as the deadline for filing.
Instead of filing a Judiciary form, it is possible that a Judgement may direct periodic filing of a formal court accounting. All of these types of accountings are complex. Urbach & Avraham can relieve you of this burden and prepare the accountings for you.
Do Executors and Trustees also need Accountings?
Estates and trusts need court accountings in two instances. If a beneficiary requests an accounting, usually in a litigated matter, the Court will demand a formal accounting. If any of the beneficiaries is a charitable organization, than a formal accounting must be submitted to the state Attorney General.
An accounting? No problem! After all, you kept all the bank statements and receipts for every expense. However, unfortunately, a formal accounting must be in a specific format strictly mandated by NJ Statutes in the Uniform Principal and Income Act. The following do not constitute a formal accounting:
• A stack of all the bank and brokerage statements
• Boxes, envelopes and binders of all receipts for all expenses paid
• The check register for the estate checking account
• The fiduciary income tax returns for the trust or estate (Form 1041) or the individual income tax returns (Form 1040)
• An Excel summary of all expenses paid
• A profit and loss summary from Quickbooks
• Mom’s medical records
Preparing a formal account can be an overwhelming process for a fiduciary. The starting point is a list of all assets for the first day of the account period. All receipts, disbursements, gains and losses from disposition of assets, transfers and distributions are detailed.
We can relieve your burden, take your crates of documents and convert them into a formal accounting. If there is a dispute about a specific asset or disbursement, we will add additional documentation to clarify, strengthen and justify our client’s position.
Working with Urbach & Avraham, CPAs is unique because we truly know what you’re going through. Several members of our firm have taken care of their elderly parents. We have experienced the many trials and tribulations of providing for their medical needs and handling their financial affairs. Please contact us to see how our CPA firm can assist you.