In a normal guardianship estate with significant assets in Illinois, there will typically be an ongoing duty for the Guardian of the Estate to regularly account to the guardianship court regarding the assets in the estate. So, what is involved with the preparation and filing of the ongoing accountings? Let's take a closer look at the guardianship accounting process.
Preparing the Accounting
The first step in the preparation of an accounting is to gather all documentation related to the financial transactions for the estate from the date of the last accounting (or the Inventory, if this is the first accounting) to current. This means that the Guardian of the Estate will need to gather all bank statements, checks written, receipts, and copies of bills paid with regard to the estate for the accounting period.
Once the information is collected, a court-formatted cash flow accounting will need to be prepared detailing all receipts, disbursements, and the current assets on hand. If the accounting is done properly, it will be balanced according to the cash flow of the estate. After the accounting is balanced, it will then need to be properly verified by the Guardian.
In addition, it is important for the Guardian to retain the background financial documentation related to the accounting. The background information will enable the court and any other interested parties to the estate to better understand any complications with the accounting and/or estate assets if they have any questions.
Case Study: Comprehensive Accounting Required in Guardianship Estate
When Mike’s father lost his mental capacity due to the onset of dementia, Mike hired our firm to help him with his father’s guardianship estate. Mike’s father owned residential and commercial real estate, and a few financial accounts. Because of the condition of the parcels of real estate and the ongoing needs related to his father’s care, Mike made numerous expenditures to improve the real estate and provide the care that he believed that his father needed. When the annual accounting requirement came due for the guardianship estate, however, the estate required an extensive financial analysis and accounting to be done for the court’s review. Because of our experience with guardianship estates and preparing guardianship accountings, our firm was able to skillfully put together a comprehensive, thorough, and formatted accounting for the court.
Surety Bond Issues
After the guardianship accounting has been finalized for the accounting period, the Guardian will need to review the overall current assets on hand in the estate. If the overall value of the estate has increased over the past accounting period, the surety bond ensuring the Guardian’s performance will likely need to be increased accordingly. On the contrary, if the overall value of the estate has decreased over the past accounting period, the surety bond will likely need to be decreased. Also, if the Guardianship court determines that the estate has overpaid on surety bond premiums over a given period, the surety bond can be retroactively reduced to reimburse the estate for the overpayment.
Notice Requirements for the Accounting
Once the accounting has been completed, the original accounting should be filed with the court in advance of the court hearing date for the accounting. Copies of the accounting, along with a proper court notice, should be mailed to all interested parties to the estate to inform them about the accounting and the upcoming hearing date regarding same. A courtesy copy of the completed accounting should also be given to the court in advance of the hearing date to allow the judge to have time to process the information related to the estate prior to the hearing date.
How often do guardianship accountings need to be done?
The frequency of the guardianship accountings is determined by the individual judge and local guardianship court procedures. However, accountings are usually required to be prepared and filed annually in most guardianship courts throughout the Chicagoland area, including the DuPage and Cook County guardianship courts. Under the Illinois Probate Act in 755 ILCS 5/24-11(a), it states:
Sec. 24-11. Duty to account - ward's estate.) (a) The representative of a ward's estate shall present a verified account of his administration to the court which issued his letters within 30 days after the expiration of one year after the issuance of letters or within such further time as the court allows; within 30 days after the termination of his office or within such further time as the court allows, and whenever required by the court until the office is terminated; provided however, if no time is set by the court, the representative shall present a verified account within 30 days after the expiration of 3 years from the date of the preceding account or within such further time as the court allows. The account shall state the receipts and disbursements of the representative since his last accounting and all personal estate which is on hand, and shall be accompanied by such evidence of the disbursements as the court may require.
Sometimes, a judge will only require the Guardian to file an accounting once every two or three years, such as in Kane and Kendall County. However, the Guardian will still need to keep track of all cash flow and accounting issues over that two or three year period.
What happens if someone makes objections to the accounting?
If an interested party to the estate makes an objection to issues related to a guardianship accounting, the court will schedule a hearing regarding the objections. If the objections are unfounded, and are merely based on emotion stemming from family issues, the judge will likely deny all the objections and dismiss the complaints. However, if there is incomplete or inaccurate information in the accounting, the judge will likely order the Guardian of the Estate to prepare and file an amended accounting. And if the Guardian is found to have mismanaged funds or improperly handled the estate assets, the Guardian could be removed as the representative of the estate, could be held in contempt, and/or could be ordered to repay the estate funds found to have been lost or improperly taken from the estate.
What happens if the guardianship accounting doesn’t balance?
Sometimes, after completing a complex guardianship accounting, the accounting will not balance. If this happens, the discrepancy must be analyzed. If it is a discrepancy of a few hundred dollars, the Guardianship court may determine that the accounting is accurate enough to satisfy the court that the guardianship estate has been properly handled for that accounting period. If the discrepancy is several thousands of dollars, however, the Guardian will likely need to review the financial records related to the accounting to determine what is wrong.
Contact our Firm
Our firm has helped many Guardians with Guardianship accountings across the Chicagoland area. If you have questions regarding a Guardianship matter, complete the form below to set up a free initial consultation today!
The Law Office of Kevin Williams, 2295 Bannister Lane, Aurora, IL 60504, (630) 898-4789
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