As an appointed conservator, you have a fiduciary responsibility to conserve and manage the estate of a protected person. This duty includes taking charge of the financial assets and day-to-day spending. Because of these responsibilities, it is imperative for conservators to have a rudimentary understanding of basic money management and accounting practices.
To help you out, here are a few best accounting practices for conservators.
Keep a Strict Records of Spending and Financial Documentation
Arguably the single most important aspect of conservatorship is financial bookkeeping. Keeping organized and extensive records is absolutely vital, not only because it helps conservators properly manage an estate, but because it keeps them in good standing with the courts.
In many states, the courts can and will ask for all documentation regarding the finances of a protected person’s estate. Sloppy record keeping can be interpreted as a red flag that mismanagement and/or fraud may be taking place.
In order to keep proper financial records, hold onto and organize any and all documents related to the estate and spending\. These can include:
- Bank statements
- Investment statements (i.e. stocks, bonds, retirement accounts, etc.)
- Billing statements (utilities, mortgage, medical treatment, etc.)
- Receipts from any and all spending done with money from the estate
- Tax documents
- Records of conservatorship fees (conservators are allowed to charge a fee for their services, which is paid by the estate of the protected person)
Be Prepared for Audits
Because of the power that is placed in the hands of conservators, the courts, along with the individual state governments, are tasked with ensuring that fraud and mismanagement of funds are not taking place.
The rules guiding conservators can change from state to state. Many states, including Minnesota, have an annual accounting audit. In Minnesota, this audit is known as CAAP. Minnesota orders a full audit of all conservators after the first year (it is random after the first year), and conservators will usually have an annual accounting with the court, as well. These audits are very comprehensive, which is why keeping all financial records and statements is an absolute must for conservators.
Use an Accounting Software or Hire Experts
If you are unable to manage financial records and documents, it’s a good idea to purchase a personal finance planning software (Quicken, QuickBooks, etc.) to help you manage the assets of the estate. You can also hire accountants to take care of taxes, investment opportunities and other financial responsibilities. Paying these professionals does not have to come out of the pocket of the conservator, and conservators can usually still be paid for managing the estate even if they are hired.
If you are using the conservatorship to pay for these services, be mindful of the cost. Even though it is not your money, that doesn’t mean you should overspend on products or services.
Your First Step: Secure a Bond
The courts in most states require that conservators secure a surety bond before taking control of the estate. These bonds help ensure that the estate will be financially protected should funds be mismanaged. To secure a surety bond, contact The Patrick J. Thomas Agency today.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.