INTRODUCTION
A court may appoint a guardian with full authority over an incapacitated person or may grant a guardian limited authority over an incapacitated person as indicated by the person's actual mental or physical limitations and only as necessary to promote and protect the well being of the person.
If the person is not a minor, the court may not use age as the sole factor in determining whether to appoint a guardian for the person.
In creating a guardianship that gives a guardian a limited power of authority over an incapacitated person, the court shall design the guardianship to encourage development or maintenance of maximum self-reliance and independence in the incapacitated person.
A Guardian is appointed by a Court to represent the interests of the ward, an incapacitated person. A Guardianship is a fiduciary position which carries with it certain duties and a high degree of responsibility. The activities of Guardians in a Guardianship are strictly regulated by the Texas Probate Code.
QUALIFICATION PROCESS
A Guardian is appointed to act on behalf of a Ward when the order creating the Guardianship is signed by the Court. However, the Guardian is not authorized to act on behalf of the Ward and will not receive Letters of Guardianship until the Guardian has qualified in the manner prescribed by law. To qualify, the Guardian must take the oath of office and execute a bond in the amount set by the Court. The bond and oath must be executed and approved by the Court within 20 days from the date of the order of appointment of guardian.
LETTERS OF GUARDIANSHIP
After the Court has approved the Guardian's oath and bond, the clerk of the court is authorized to issue letters of guardianship to the qualified Guardian. These letters serve as evidence to third parties of the Guardian's ability and authority to act on the Ward's behalf. Letters are reissued each year after the Annual Account/Report is reviewed and approved by the Court. The initial Letters of Guardianship expire in one year and four months, and subsequent Letters of Guardianship expire in one year.
GUARDIAN'S DUTIES:
The Guardian's powers and duties are set out in the order appointing the Guardian.
Duties of the Guardian of the Person
The Guardian of the Person is entitled to the charge and control of the Ward's person. The Guardian of the Person may possess full or limited authority depending on the extent of the ward's incapacity. The Guardian of the Person has the following powers:
1. right to have the physical control of the ward and to establish the ward's legal domicile;
2. the duty of care, control, and protection of the ward;
3. the duty to provide the ward with clothing, food, medical care, and shelter; and,
4. the power to consent to medical, psychiatric, and surgical treatment of the ward other than in-patient psychiatric commitment of the ward. Texas Probate Code Section 767.
The Guardian of the Person may be the Ward's representative payee for governmental benefits paid on behalf of the ward. The Social Security Administration requires the Guardian to make a yearly accounting as to the expenditure of the governmental benefits.
Duties of the Guardian of the Estate.
1. The Guardian of the Estate may possess full or limited authority depending on the extent of the ward's incapacity. If the Guardian of the Estate is granted full powers and authority over the Ward's estate, all estate assets are to be managed by the Guardian. The Guardian of the Estate is entitled to the possession and management of all property belonging to the estate, to collect all debts, rentals, or claims that are due to the ward, to enforce all obligations in favor of the ward, and to bring and defend suits by or against the ward. The guardian of the Estate has the duty to manage the ward's estate as a prudent person would manage the person's own estate. Texas Probate Code Section 768.
2. All the property belonging to the ward's estate should remain in the State of Texas unless prior Court approval is obtained. Any cash the Guardian of the estate receives on behalf of the ward should be placed in a bank account in the name of the guardianship (e.g. Jane Doe, as guardian of the estate of John Doe) separate from the guardian's personal funds. The Guardian must not mix the funds of the estate with the Guardian's personal funds. The Guardian must obtain prior Court approval before selling any property belonging to the ward's estate. Prior Court approval is also required for the Guardian to borrow money on behalf of the estate or to rent property belonging to the estate.
3. The Guardian of the estate shall immediately after receiving Letters of Guardianship collect and take possession of all the personal property of the ward's estate to include record books, title papers and all the ward's business papers. Texas Probate Code 771.
4. The Guardian of the estate may exercise the following powers upon written application to the Court and subsequent Court authorization:
5. The Guardian of the estate may take the following actions without an application to or order of the court (if doubt exists as to an action the Guardian may make application to and obtain an order from the court as to a desired action):
6. The Guardian of the Estate has a duty to give Notice to Creditors as follows:
Within 30 days after filing the bond and oath, the Guardian of the estate must publish a notice to creditors in a newspaper printed in the county in which appointed guardian advising any unsecured creditors of the appointment. Within 120 days, the Guardian of the Estate must send a registered letter, return receipt requested, to each secured creditor of the estate. Proof of the above two notices must be filed among the papers of the estate. This is required only for estates of adult wards who are incapacitated, not for estates of minors. A secured creditor is one who holds a claim secured by a deed of trust, mortgage, or other lien upon property.
7. The Guardian of the Estate must file an inventory.
Within 90 days of the filing of the guardian's bond and oath, a complete inventory of the assets of the Ward and the claims due or owing to the Ward must be submitted to the court. The inventory should reflect the fair market values of the assets as of the date of the Guardian's appointment, and must be verified by a sworn affidavit executed by the guardian of the estate. This inventory must contain a complete list of all real estate located within the State of Texas and list all personal property, no matter where located. If at any time during the pendency of this estate, any additional property is discovered, a supplemental inventory reflecting the newly acquired property must be filed by the Guardian of the Estate.
8. Texas Probate Code Section 855 sets out the types of investments that a guardian is allowed to make with a ward's monies without prior Court approval. Monies of the ward can only be placed in savings and banking institutions that are insured by the federal government or invested in bonds and other obligations of the federal, state or local governments. Mutual funds, stocks, bonds of private companies, ready assets or any similar type of investment with brokerage firms are not authorized investments.
Texas Probate Code Section 856 describes the required procedure for investments sought by a Guardian of the Estate that will require prior Court approval, to include investments in the Texas Tomorrow fund.
9. a. If the Guardian of the estate is the natural parent of the ward and can provide for the ward's support, the Guardian of the estate will not be allowed to use any of the estate funds for the ward's support and maintenance. But, if the Guardian of the estate, as parent and guardian, can satisfy the Court that he or she is (1) unable to support the child or children and (2) is currently receiving no funds from any agency, i.e., social security, veterans administration, pension, trusts, etc., then the Guardian of the estate may be allowed to expend funds of the estate for the ward's benefit. This will require prior Court approval and a hearing on this matter may be necessary.
b. If the Guardian of the estate is not a parent of the ward, the income of the ward may be used for the support and maintenance of the ward without prior Court approval. However, an accounting of all such expenditures must be made in the annual accounting, and the Guardian of the estate may be required to reimburse the estate for any improper expenditures. If the income of the estate is insufficient to provide for the ward's support, the Guardian of the estate may apply to the Court for permission to expend the corpus of the estate. The application must state specifically the amount of money requested and the purposes for which the funds will be spent. It is recommended that the Guardian of the estate obtain an order permitting a certain sum to be spent each month as an allowance for the ward's support and maintenance. The size of the allowance will depend upon the needs of the ward, the size of the estate, and the amount of other funds available for the ward's support. Any funds expended by the guardian must be included in the annual accounting.
c. If the ward is a beneficiary of the Veterans Administration, the Guardian of the estate must submit any applications to expend or invest funds, all claims, and accountings to their office prior to submission to the Court. If the Veterans Administration wishes to approve the request or account, they will execute a "waiver of hearing" so that it can be processed by the Court. No instrument can be processed by this Court without this waiver where the ward is a recipient of Veterans Administration funds.
d. When a guardian has in good faith expended funds out of Ward's estate for the support and maintenance of the Ward and is was not possible to first secure the Court's permission for such action, the Court has the discretion to ratify these unapproved expenditures up to $5000.00 per ward for each accounting period. Texas Probate Code Section 776(b).
10. Claims of creditors against the ward's estate may be presented to the guardian of the estate at any time while the estate remains open. The guardian of the estate may allow any claim which he or she feels is a just debt of the estate and is properly presented and authenticated, provided such claim is not barred by the statute of limitations. It is important to know that once a claim is presented to the guardian of the estate, it must either be allowed or disallowed, in whole or in part, within 30 days or it will be rejected by operation 0f law. If this occurs, the creditor will have to file suit to secure payment of the claim. If the claim is found to be a just one, then the Guardian of the estate will be personally liable for the cost of this suit and may even be removed from office for failure to properly act upon this claim. Once it has been allowed, it will then be presented to the Court for approval or disapproval. In order to pay debts owed by the estate, the guardian of the estate must obtain Court permission by first submitting to the Court an application.
ANNUAL REPORTS OF THE PERSON AND ANNUAL ACCOUNTS
Twelve months after the filing of the bond and oath (the date of the guardian's qualification), the Guardian of the Person must file with the Court an Annual Report of the Person. The Travis County Probate Court provides a form for the required Annual Report of the Person. A Court Visitor will be appointed and will communicate with the guardian concerning the ward. If all is found to be proper and correct, an order approving the Report will be entered. An Annual Report must be filed every twelve months thereafter while the ward's guardianship remains open. Twelve months after the filing of the bond and oath (the date of qualification), the Guardian of the Estate must file an Annual Account, attaching thereto a sworn affidavit stating that it is true and correct. The account must show all receipts and disbursements that have occurred in the estate during the year, that the bond premiums for the next accounting period have been paid, all tax returns filed and all taxes due paid with the name of the entity to whom the taxes were paid. The Annual Account must show the status of all claims pending against the estate and the nature and extent of all property currently being administered by the guardian of the estate. Any cash or securities in the guardian's possession or held by any bank or depository must be verified by an appropriate letter or certificate. The bank statement dated on the ending date of the accounting period will suffice for bank accounts. After the accounting has been on file for 10 days it will be reviewed and audited by the Court. A Court Visitor will be appointed and will communicate with the guardian concerning the ward. If all is found to be proper and correct, an order approving the account will be entered. The Guardian of the Estate must file an annual account every twelve months thereafter while the ward's estate remains open.
An individual who is both guardian of the Person and of the Estate must file both an Annual Report of the Person and an Annual Account with the Court.
DUTIES OF THE GUARDIAN IN CLOSING GUARDIANSHIPS
The Guardian of a minor must institute the procedure to close the minor's estate as soon as the ward reaches 18 years of age, or becomes married, or is emancipated, or by order of the Court. The Guardian of an incapacitated person may institute the procedure to close the guardianship when the ward`s mental capacity has been restored by order of the Court. The guardianship must also be closed when the ward dies, and may be earlier closed when the estate funds become exhausted.
The procedure to follow in closing a guardianship of the person is to file a final report of the person, a copy of the ward's death certificate, and an order closing the guardianship.
The first step in closing the guardianship of the estate is the filing of the final account. This account must show all property that has come into the guardian's hands since the last annual account, as well as the disposition that has been made of such property. The guardian must show the debts that have been paid and any debts that remain outstanding, as well as the reason for their non-payment. If any property remains in the guardian's possession it should be fully reported and verified in the same manner as for annual accounts. After the Court has audited the final account and entered an order approving it, the guardian may deliver the assets to the former ward or whoever the Court has determined is legally entitled to it. Obtain receipts, because once this delivery has been completed the guardian must file with the Court a receipt signed by each person who received the property. After all the property has been accounted for and the receipts of delivery approved, the Court will enter an order closing the guardianship and relieving the guardian of any future responsibility in connection with the guardianship. The closing process is very complicated and specifically detailed by the Probate Code.
This summary of the duties of a court appointed guardian should be used as a guide only. The Texas Probate Code should be reviewed as to the specific duties of court appointed guardians in Texas.
Attorney Kathleen Anderson is currently employed as a Court Investigator for the Travis County Probate Court No. 1 in Austin, Texas.