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Duties of a Guardian- Accounting

The law compels the guardian to “preserve, protect, and account for the ward’s property and financial resources faithfully” i  The guardian also must exercise care to avoid intentional or unintentional waiver, surrender, impairment, or alteration of the person’s rights outside of the guardianship order. To fulfill these obligations a guardian must have the power to demand an accounting when the ward has a right to such action and upon refusal the court must order it.

Example:A psychiatric evaluation found Kent of Kings Park, NY, incapable of making financial decisions. Kent’s niece, Jane, of Smithtown, NY had obtained Power of Attorney, Living Will and Health Care Proxy over Kent. Robert petitioned the court to become guardian for Kent. Kent was determined to be incapacitated and Robert was appointed guardian for personal needs and property management of Kent. Simultaneously, the power of attorney in favor of Smith was rescinded.

Robert as guardian of Kent, requested an accounting of Jane, the former attorney in fact of Kent, and Jane objected. The Court stated that it has jurisdiction to order an accounting when four factors exist:

  • a fiduciary relationship,
  • entrustment of money or property,
  • no other remedy, and 
  • a demand and refusal of an accounting. 

The Court reasoned that a power of attorney entails the handling of property, which may include power to mortgage, sell or otherwise dispose of any real or personal property without advance notice or approval. (GOL § 5-1501.) This unilateral authority, combined with the fiduciary relationship, requires the agent to reveal all of her dealings pertaining to Kent’s money. Where disclosure does not occur as here, a principle may seek a court-ordered accounting to find the whereabouts of the entrusted money.

Courts presiding over Article 81 proceedings must customize each guardianship to satisfy the needs of the individual. (MHL § 81.01.) This affords the judge broad discretion in handling each case. Kent, an incapacitated person, has a right to an accounting of his funds held by his former attorney in fact. However, he is incapable of seeking such an order. By allowing a guardian to seek an accounting the purpose and goal of Article 81 are furthered by providing for the individual needs of the incapacitated person.

To be continued….

Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

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