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Conservator Reviewing Documents

Conservators’ Legally Required Reporting (Inventory and Asset Management Plan)

Dec 12, 2022

Conservators: How to Complete an Inventory and Asset Management Plan

When a Probate Court is presented with “clear and convincing” evidence that an adult lacks the ability to make significant, responsible decisions regarding his or her affairs, the Court can remove certain rights from the Ward and delegate those rights to a conservator who typically is a friend, relative or third party. In cases like these, a legally appointed conservator makes financial decisions to benefit the newly named Ward and his or her dependents.

Viewed as legal measure of last resort, conservatorships come into effect only when less restrictive options have failed or no longer exist.

Conservators are required to keep the Probate Court apprised of the Ward’s financial affairs, including real property, income, personal and intangible property, as well as debts, liabilities, and expenses. To satisfy this legal obligation, conservators file an annual Inventory and Asset Management Plan (IAMP) within 60 days of the Court issuing Letters of Conservatorship. That initial IAMP is then updated each year that the Conservatorship continues.

Conservators should think of the IAMP as a single document divided in two parts: (1) The Inventory, which serves as a summary of the Ward’s income and assets; and (2) The Asset Management Plan, which lays out a detailed budget that manages those assets to continually provide for the Ward and his or her dependents.

Unfortunately, the IAMP is not an intuitive document, and we strongly recommend hiring a bookkeeper to assist with the first two years of returns.

1. Getting started.

The Inventory a/k/a the “Snapshot.” The Inventory is a straightforward document designed to show the Court what the Ward owned on the “Snapshot Date,” the date that the Letters of Conservatorship were issued. Once you identify what the Ward owned on the Snapshot Date, list each item in the appropriate place on the IAMP, along with each owner of that asset.

This next step is a little more involved. After identifying each asset, you will need to find the value of each item as of the Snapshot Date. Let’s say, hypothetically, that the Letter of Conservatorship (the Letter) was issued on June 15, making June 15 the Snapshot Date. The bank issues a financial statement including the period of June 1 – June 30. Most bank statements keep a running balance of the account, and you will need to review the statement and identify the balance of the account as of June 15. Record this amount next to the asset.

Brokerage statements can pose a problem because they may cover three-month periods at a time and do not provide any running balance of the account. I have had to determine what stocks someone owed on the Snapshot Date, how many shares that person owned on that date, and the closing value of the stocks on that date. I then calculated the value of that asset by multiplying the shares and the value per share. That value is entered in the Inventory.

To determine the value of a car, go to a reputable site that values cars and provide the value of that car for a private sale.

If there are other valuables, such as jewelry, you may need to get those items appraised. As conservator, you will need to ensure that these items are properly insured anyway, so go ahead and get a formal valuation. If you have no time to do a formal valuation, you may be able to find comparable values on-line at retail stores or on E-bay.

Be sure to keep copies of any webpages or other documents you used to determine the value of an asset. This means you will need to save the Zillow page used to get a home value, for example, or the Kelley Blue Book page showing how you arrived at the value of the car.

The Inventory is important for two reasons. First, as discussed further below, the Court will review the Ward’s income to determine how much the conservator is allowed to spend of the Ward’s savings during the following year. Second, the Court will use the income to determine the amount of the conservator’s bond.

The Asset Management Plan a/k/a the “Planned Budget.” The Asset Management Plan is essentially a budget designed to advise the court as to what the Ward’s expenses are each month and how much of the Ward’s income and assets will be needed to meet those needs. I cannot overemphasize the importance of developing a proper system to track income and expenses at this early point in the conservatorship.

First, gather the Ward’s bank and other financial statements, credit card invoices, and other bills for the last 4-6 months.

Second, you will need to create something to track the Ward’s income or expenses – a spreadsheet, QuickBooks, or a written ledger. Enter all of the Ward’s transactions into the ledger and classify them using the categories in the IAMP. Sometimes, the categories do not line up with how you or I might categorize them in our personal or professional lives, and that is fine. Sometimes there is no category, and you will have to identify it as an “other.” Examples of “Others” may include, for example, “Other: rental income,” “Other: tithing,” or “Other: legal fees.”

Sometimes, the Ward’s income is not the amount deposited into the bank. For example, if the Ward receives Social Security and Medicare, the amount deposited into the bank is the Ward’s monthly benefit less a Medicare Part B and possibly Part D premium. Likewise, a retirement benefit may be net income taxes and private health insurance premiums. You will need to determine the actual gross income payment and the amounts being deducted from that income. Be sure to account for each deduction as an expense in the IAMP.

Once you have determined the Ward’s income and expense for the last several months, use these numbers to create a budget with the Ward’s anticipated income and expenses for the next 12 months. You may want to adjust a budget item up or down depending on what the anticipated needs are. Recently, we represented a conservator who was selling the Ward’s residence. Because the Ward would not have a mortgage payment for the next year, we adjusted the “Care Facility/Rent/Mortgage Payments” expense category to reflect that no mortgage payments would be made.

If, after you prepare the budget, the income from the Ward is greater than the expenses, you are golden. The code gives the conservator great latitude in spending the Ward’s income for the Ward’s needs.

If, however, the Ward’s needs are greater than the Ward’s income, you will need to show the court that deficit and ask the court for permission to dig into the Ward’s savings to cover that amount. You may look at that number and realize that the Ward is going to run out of money within the near future. In this case, you will need to speak with the Ward (yes, the Ward, to the extent that the Ward is able to understand), family, a financial planner and/or an elder law attorney about the steps needed to finance the Ward’s long-term care.

In addition to asking for the ability to use the Ward’s savings, you also should request reimbursement for payments made on the Ward’s behalf before the conservatorship existed. For example, you will want to request a reimbursement for the bond and for the attorney’s fees, costs, and expenses associated with obtaining the guardianship and conservatorship. This is also the time for family members and friends who paid expenses on the Ward’s behalf to receive reimbursement. Be sure to attach receipts reflecting that the payments were made.

Finally, you should explain to the court what your plan is for managing the Ward’s money for the next twelve months. For example, you may wish to create a new investment scheme, consolidate accounts, or pay off debts. You may note that you plan to sell the Ward’s house or car or that you need to engage in Medicaid planning because the Ward is going to run out of money.

2. The Following Years.

The conservator owes the next IAMP within 60 days of the anniversary of the Snapshot Date. Like in the first filing, the Inventory will show what the Ward owned on that year’s Snapshot Date, and the Asset Management Plan will create a budget for the following 12 months. However, now the conservator owes one additional report:

The Annual Return a/k/a What Actually Happened. Each probate court has its own Annual Return that is used to show how money was actually spent in the last year. Even if you have spreadsheets detailing all of the prior year’s expenses by date and by category (and yes, you want both), be sure to enter the information from these reports on the actual annual return form. We will include, for example, the total for each category of income and expense on the annual return and total that information. If you do not write the totals on the Annual Return, the Court will reject the filing.

A few additional pointers.

  1. Read the reports and individual court instructions. You are often required to file portions of (not the entire) bank statements. Contact the Court’s clerk with questions about what documents you need to produce with the report. Please note that, while the clerk can tell you what documents you need to file, the clerk cannot help you complete the report.
  2. These reports must balance, or the court will reject them. Again, the reports contain instructions on how to balance the reports.
  3. You should have a receipt or invoice for almost every expense. Most courts do not require that you file the receipts with the returns, but some do. And even courts that do not require the receipts may decide to audit your filings.
  4. Because these reports are difficult to prepare, some courts automatically give you additional time to file the first IAMP. Check with the individual clerk’s office to see when the first report is due. Be sure to file before the deadline. If you need an extension, request the extension before the deadline.
  5. You are entitled to statutory compensation for serving as a conservator. If you file the reports late and without an extension, you have waived your right to compensation. If you want to receive compensation, please contact an attorney to review the laws governing how much you can be paid in this role.
  6. While the IAMP is a standard form, some counties use their own IAMP. Notably, guardians under the Fulton County (GA) Probate Court need to use the form shown on the Fulton County Probate Court’s website.
  7. If the Ward’s financial needs changes between reports, the conservator needs to file a modified asset management plan for approval.
  8. Try not to leave a section blank. Write N/A or draw a line through it so that the Court knows that you did not forget to complete that part of the form.
  9. If necessary, explain on a separate sheet of paper any question that you anticipate the court may have. For example, you may need to describe how you came up with a particular number or tell the court that you have not been able to find information and what you have done to locate the missing information.

As you have gathered by this point, the IAMP is an important document because it helps the court understand how the Ward’s money is being spent and assures the court that the money is being spent for the Ward’s benefit. It also provides guidance to the conservator by helping the conservator identify the Ward’s long-term financial needs. Unfortunately, it is not an easy document to complete, and most of our clients require assistance with the reports for the first two years of the conservatorship. Please take the time to properly set up your method for tracking income and expenses in the beginning of the conservatorship so that you can focus for time more on taking care of the Ward and less on the court-required administration.

Additional resources from Weinberg Elder Law for conservators include the following videos:

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