Managing the Protected Person's Property
If the protected person has a separate guardian and conservator, the conservator is responsible for managing the protected person's estate. If there is no conservator, the guardian has this responsibility, unless the court order does not give the guardian authority to make decisions about the protected person's estate.
Payments that can be made from the estate
You must use the protected person's money for the protected person's support, education, care and benefit. In deciding how much to spend and on what, you should take into account:
- what the protected person can afford;
- the protected person's accustomed standard of living, that is, how the protected person lived when s/he was able to manage his or her own finances; and
- any other sources of money or support that might be available to the protected person, like Medicaid payments for long term nursing home care.
You may also use the protected person's money to support members of the protected person's household who are in need of support and are unable to support themselves, such as the protected person's spouse or minor child.
Utah Code Section 75-5-425.
In addition to finding out what assets the protected person has, you should also find out what money the protected person owes to other people, which might include:
- a mortgage or home equity loan on the protected person's house or other real property;
- credit card bills;
- utility bills;
- insurance premiums; and
- other loans or past due bills.
The protected person may have stopped paying bills for some time. You should figure out what s/he owes and pay these debts as soon as possible. Otherwise, bad things might happen because of non-payment. Insurance might be canceled; the mortgage might be foreclosed; the utilities might be shut off; or late payment penalties might be imposed.
As bad as the circumstances may be, the consequences of non-payment usually get worse as more time passes. The more work creditors have to do to collect a debt the higher the cost to the debtor. In addition to late payment penalties, there may be collection agency fees, court costs and attorney fees. Most creditors want to be paid with a minimum of fuss. Many will work with you to arrange a payment schedule. Some may waive penalties if you explain that the protected person is incapacitated.
You should research whether the claim against the protected person is a valid claim, and challenge any that you believe are not. Seek legal advice if needed. You need to decide quickly whether a claim is valid. Utah law presumes that a claim is valid if it is not rejected in writing mailed to the claimant within 60 days after it is presented. Utah Code Section 75-5-428.
If it appears that the estate will be exhausted before all existing claims are paid, preference is to be given to prior claims for the care, maintenance, and education of the protected person and his or her dependents and existing claims for expenses of administration. Utah Code Section 75-5-428.
Once you have identified the protected person's valid debts, you can set up a payment schedule to make sure that, in the future, they are paid on time.
You are responsible for filing the protected person's income tax returns and making sure that income, property and other taxes are paid on time. You may hire an accountant or other tax preparer to prepare the protected person's tax returns.
If you have hired an aide for the protected person, you may be responsible for paying payroll taxes such as Social Security, Medicare, and unemployment insurance. Check with your lawyer or accountant if you have any questions about this. If you hired the aide through an agency, the agency may be responsible for paying payroll taxes.
Sometimes you will find that the protected person did not file an income tax return or pay taxes for previous years. It is your duty to correct this problem by filing the late returns and paying the taxes from the protected person's estate. If you explain to the IRS representative that the protected person did not file tax returns or pay taxes as a result of a disability, the IRS can waive penalties for late filing.
If the protected person does not have much income, s/he might not have to file an income tax return. Check with a tax preparer or the IRS to find out how much income the protected person can have before a return must be filed.
If the protected person owns real property, you are responsible for paying the annual property tax if it is not being paid by a mortgage company. Contact the lender that holds the mortgage on the property and the County Assessor of the county in which the real property is located.
Health and life insurance
You should review health and life insurance policies to make sure they are appropriate. Find out if the protected person has long term care insurance and what it covers. Have the protected person's financial planner review any life insurance policies and make recommendations regarding what to do. Sometimes the protected person has purchased too much insurance. For example, s/he may have several policies covering the same things. If so, you should cancel the unnecessary policies. Decide which policies are worth keeping.
If the protected person does not have adequate health insurance coverage, such as if s/he needs a supplement to Medicare coverage, or Medicare Part D drug coverage, arrange to purchase a policy that will cover the needs. Consult someone who has special knowledge of health insurance who can advise you on what the protected person needs, how to obtain the best policy, and whether the protected person is eligible for any other health insurance benefits. For example, your Area Agency on Aging may be able to give you helpful information about insurance benefit programs, Medicare, and Medicare-related benefits. Another helpful resource is www.benefitscheckup.org.
If the protected person owns a home or other real property, you should make sure s/he has adequate insurance that will cover damage to the property and lawsuits that might be brought by persons who may be injured on the property.
Most homeowner's insurance policies do not cover damages from fire and vandalism if the home is vacant for more than a month. If no one is living in the protected person's home (either the protected person or a caretaker), you should tell the insurance company and purchase a "vacancy rider."
If the protected person is being cared for in his or her home, you should make sure that there is insurance to cover work-related injuries of those you hire to help. If the protected person owns any motor vehicles, you should make sure that they are covered by enough insurance both for damage to the vehicle and for any lawsuits that may be brought against the protected person (or any person you let drive the car) because of an accident.
File insurance claims
Make sure that you file insurance claims, particularly health insurance claims, in a timely matter. This is an often time-consuming task, but claims might be denied because they were filed too late.
If the protected person's estate has enough money to support the protected person and dependents for the rest of his or her life, you may make gifts to other people or to charities that the protected person would make. The total value of the gifts in any year may not exceed 20% of the protected person's income in that year. Utah Code Section 75-5-408. Gifts exceeding 20% of the protected person's income may be made only if first approved by the court. Do not make gifts to yourself or to your immediate family even if the value of the gift is less than 20% of the protected person's income, unless doing so is approved by the judge.
If the protected person has enough assets to invest, you are responsible for investing them properly. On the one hand, you do not want to make risky investments; on the other, you want the protected person's assets to make a reasonable income.
You should use reasonable care, skill and caution to invest and manage estate assets as a prudent investor would, considering all circumstances, including investment opportunities and the protected person's estate plan and needs.
You should make a reasonable effort to verify relevant facts and evaluate investment and management decisions in the context of the estate as a whole and as a part of an overall investment strategy. You should consider the following in investing and managing estate assets:
- risk and return objectives reasonably suited to the estate;
- general economic conditions and the possible effect of inflation or deflation;
- the expected tax consequences of investment decisions;
- the role that an investment or course of action plays within the overall portfolio;
- the expected total return from income and the appreciation of capital;
- the total size of the estate, the need for liquidity, regularity of income, and preservation or appreciation of capital; and
- an asset's special value to the purposes of the estate or to the protected person.
Unless you are an expert in investments, you should consider getting professional assistance.
Selling estate assets
If there is not enough money in the protected person's estate to pay expenses, you may have to sell assets to meet those expenses. Before selling assets, there are several things to consider.
Consult with the protected person before selling. Some assets may have more personal sentimental value than others, and, if you can meet the needs of the protected person by selling assets that are less important, do so.
Selling an asset may affect the protected person's eligibility for Supplemental Security Income (SSI), Medicaid and other government benefits. This is particularly true if you sell an asset, such as the protected person's home, that is exempt (not counted as one of the protected person's assets) for the purpose of determining eligibility for these programs.
Selling an asset may have income tax or capital gains tax consequences. If you are not sure of the tax consequences of a particular sale, talk with an accountant or a lawyer who knows about these taxes before you sell an asset.
When you sell property, make sure you are getting fair market value for it. Fair market value is the amount of money a willing buyer would pay a willing seller. In other words, sell the property for the best price you can get. Also you should keep a record of how you determined fair market value. If you are selling real property, you should obtain an appraisal or at least a market analysis from a competent realtor. Do not sell an asset to a family member or friend for a reduced price. Doing so might make you liable for the balance and might cause you to be removed by the court.
Preserving the estate plan
You should manage the protected person's estate to try to preserve the estate plan. Utah Code Section 75-5-427. "Preserving the estate plan" means managing the protected person's estate to keep specified assets that the protected person expressly wants to give to particular persons after the protected person dies — to the extent that this is possible while providing first for the protected person's needs.
You may examine the protected person's will, trust and other papers to determine the protected person's intentions. Utah Code Section 75-5-427. Other evidence of an estate plan include joint ownership of property with the right of survivorship and named beneficiaries of annuity and life insurance policies, individual retirement accounts, certificates of deposit, and many other assets.
If you are managing an estate where it is difficult to preserve the estate plan, you should discuss the problem with your lawyer before selling assets or making any other decisions that affect who will receive the protected person's property after his or her death.
If you do sell assets that are expressly given to particular persons, keep good records of the price and of fair market value at the time of the sale. This will be important for your annual accounting filed with the court. Also, the person who would have received the asset is entitled, after the protected person dies, to receive the net amount received from the sale (or what is left of it).