What is an Account ?
An account is a report to the Commissioner of Accounts of all financial transactions by the conservator during the period of the conservator’s appointment by the Court. It is an item by item, penny for penny account of all receipts, all disbursements and all distributions. You are encouraged to keep every piece of paper associated with transactions which you conduct on behalf of the incapacitated adult. You will be required to produce many of those documents to the Commissioner of Accounts and may find those documents helpful in balancing your account before it is submitted to the Commissioner’s office.
The proper form required by the Commissioner of Accounts for an account by a conservator is Form CC-1682. The form shall be used by the conservator in reporting all financial transactions to the Commissioner’s office. Failure to use this form will result in the return of the accounting to you to be re-submitted on the appropriate form. Form CC-1682 (INST) gives a clear and accurate description of how you should account on the form for all of your transactions and the assets of the incapacitated adult which have come under your control.
For your additional use and review at the time you qualified you were given a sample account for an incapacitated adult. Form CC-1682 (SAMP) shows the correct reporting of the information required on the account summary.
Note: The account is not complete with just the account summary page. You shall submit with the account individual attachments itemizing the various line items shown on the account summary.
Preparing the Account
Please use a font size not less than 10 point if you are typing your account. To be acceptable the account must be legible and comprehensible, otherwise it will be returned to be restated.
THE ACCOUNT FORM
You must use the appropriate account Form CC-1682 and you will attach an additional report of each individual transaction shown on any give line on the account summary. For instance, you should attach a page showing beginning assets and list all of those beginning assets from your inventory or prior account. You should likewise attach a page itemizing by date, payor and amount all receipts of government benefits. Item 2b would be an additional page listing all other receipts in the same manner. All other line items, if applicable, should also have an attachment itemizing the specific details of those transactions.
LINE 1. Beginning Assets.
If the account is a first account the assets shown on Parts 1, 2 and 5 of the inventory are listed on a schedule attached to the account and the total entered on Line 1. Do not add assets not reported on the inventory as those additions ( or subtractions) are made on Line 4.
If the account is a second or subsequent account the beginning assets will be the ending assets from the prior account and will also be listed on a schedule attached to the account and the total entered on line 1.
Do not adjust the value of assets based on changes in the market value. Use the carrying value (the value stated on the inventory or for bank accounts the ending value on the prior account). Changes in value are reported upon sale of the asset and will then be reported as a gain on Line 3 or a loss on Line 7.
LINE 2. Receipts*
List on an attached schedule by date, payor and amount all income items received including pension or retirement payments from non-federal government agencies, annuities, interest, dividends, capital gains, refunds, rents or any other source. Each individual receipt must be shown, not just a total of all receipts or a total of all receipts from a particular source. Each receipt is listed by the date received as a separate entry.
Note: You will see an asterisk beside Line 2. At the bottom left of the account summary there is a line for the entry of the total amount you have received from governmental agencies as Representative Payee. All such sums are reported on the bottom line and are not included in the Line 2 receipts. They are therefore not included in the total on Line 5. As a Designated Payee you are not required to account to the Commissioner of Accounts for the payments received from governmental agencies because you will file an annual report with that agency as to how you spent those payments.
Are you really a “Representative Payee”? Only if you have been so designated by the federal agency are you a Representative Payee. This is done by application to the agency. If the monthly payments are deposited directly to the incapacitated’s account in his name, or the check is issued in his or her name for deposit and does not have your name as Designated Payee or Representative, you are not a Designated Payee or Representative and all such governmental receipts must be listed as part of Line 2 Receipts. Your designation letter as “Representative Payee” must be presented to the Commissioner’s office with the filing of your inventory.
What if you have comingled the Designated Payee receipts with all other receipts? In almost every case where the funds are comingled in a single account rather than maintaining a separate account for the Designated Payee receipts you will have to report the receipts on Line 2, otherwise you will have a very difficult time trying to balance your account and the Commissioner’s office will not be able to follow the documentation in auditing the account.
For additional information associated with your appointment as a Representative Payee see “Duties of Conservators”.
LINE 3. Gains on Asset Sales.
Enter the gains realized on the sale of any asset. If the asset is not sold do not show a gain due to increase in value due to market fluctuations. Gains should be shown as follows:
100 shares Exxon stock at $10.00/share carrying value..........$1,000.00
100 shares sold at $20.00/share................................$2,000.00
Gain on asset sale.............................................$1,000.00
All other gains would be likewise itemized.
LINE 4. Adjustments.
This line is for the reporting of assets discovered after the filing of the Inventory or for the removal of an asset incorrectly reported on the inventory which was after the inventory filing found not to be an asset of the incapacitated’s estate. Therefore this entry, if necessary, may be an addition or subtraction on the adjustment line. For example, if after the filing of the inventory you find a certificate of deposit worth $50,000.00 dollars, the entry of the asset on line 4 is appropriate at the date of qualification value. Note that you will then have to report any interest on the certificate which has not been reported since qualification.
Do not report after discovered assets as Receipts under line 2b.
LINE 5. Total of Lines 1, 2, 3 and 4.
Enter the total of lines 1, 2, 3 and 4.
LINE 6. Disbursements.
All disbursements for expenses of administration of the conservatorship and payments for the well-being of the incapacitated will appear in chronological order on line 6 and be listed by date, payee and amount.
At the time you prepare the list match the disbursement with a proper voucher (bill from the person to whom the check was written) or a paid receipt and be sure you have a bank statement which has a copy of the front of the check for payment enclosed. If you do not request return of copies with the monthly bank statements you will have to provide copies of the checks, front and back.
Do not make payments in cash by cashing a check from the conservatorship account and giving a payee cash without getting a notarized receipt for each cash payment. The best practice is to handle all payments by check so that a record of payment will exist.
If reimbursement is being made to someone who advanced money or paid bills on behalf of the incapacitated, a voucher is required to prove the debt as the incapacitated’s debt along with evidence of the person’s actual payment of the debt.
Item 6 would include all disbursements for bills and expenses paid associated with the administration of the estate, the payment of taxes or the payment of the bills for the support and maintenance of the incapacitated adult. At the time that you list the disbursements, you should also verify that you have enclosed invoices and cancelled checks for each of the disbursements shown. If you fail to include an invoice and a corresponding cancelled check (or paid receipt) the disbursement will not be allowed and will be charged to you personally. Please organize all disbursements and cancelled checks in the order in which they are listed on the accounting. Do not submit a grocery bag full of receipts and expect the Commissioner’s office to arrange them in order. They will be returned to you to be arranged and to be re-submitted to the Commissioner’s office.
Note: If you are the Designated Payee of the federal government payments made to the incapacitated (social security, disability etc.) you do not have to account for the use of those funds to the Commissioner and will not list those disbursements. You should maintain a separate account for such benefits to prevent commingling assets for which you do have to account with those for which you do not have to account. If the check does not come in your name as Designated Payee you have to account to the Commissioner for the receipt and disbursement of the funds. You may be required to provide evidence of your designation as payee by the agency.
LINE 7. Losses on Asset Sales.
If you have disposed of any asset during the accounting period for less than the value you originally reported for the asset, you will enter the loss on line 7. The loss will be shown as follows:
100 shares Exxon stock at $50.00/share on inventory..........$5,000.00
100 shares sold on (date) at $25.00/share....................$2,500.00
Loss on asset sale...........................................$2,500.00
Any other losses will be likewise itemized.
Do not show a loss unless you have disposed of the asset during the accounting period. Do not show a loss for an asset still held just because of a change in value based on market price fluctuations.
LINE 8. Distributions.
Normally you will have no distributions until the end of the conservatorship, at which time you will list all assets delivered to the incapacitated, if he has been restored to capacity by Court order, or delivered to the duly qualified executor or administrator of the estate, if the incapacitated is now deceased.
Final distribution of assets held by the conservator would be shown to the appropriate person and a notarized receipt signed by the appropriate person would be presented with the accounting. If you have any questions about the distribution of the assets upon the death of the incapacitated or upon his restoration to capacity, consult with the Commissioner of Accounts’ office.
LINE 9. Assets on Hand.
Enter on line 9 the assets you still have under your control at the end of the accounting period by carrying value. The carrying value is the value which you initially set for the asset on your inventory. If you had 100 shares of Exxon at $10.00 per share, the carrying value would remain at $10.00 per share throughout all accounting periods until you have sold part or all of the shares, at which time you will show a gain or loss for the difference between the carrying value and the amount received. The difference in value is to be shown either as a gain on asset sale under line 3 or a loss on asset sale under line 7.
Do not adjust for changes in market value for any asset from one accounting to the other if that asset is carried forward in the accounting.
LINE 10. Total of 6, 7, 8 and 9.
Total lines 6-9 and enter that total on line 10.
LINES 5 AND 10 MUST BE EQUAL. IF THEY ARE NOT EQUAL YOU HAVE AN UNBALANCED ACCOUNT AND AN ERROR IN THE ENTRIES OR YOU HAVE FAILED TO ACCOUNT FOR RECEIPTS OR DISBURSEMENTS ON THE ACCOUNT.
Do not submit an unbalanced account. Seek the assistance of a CPA or Attorney practicing in the area of elder care or estate administration if you cannot determine your mistake in the account.
The market value of the assets on hand is shown as an entry for informational purposes for the Commissioner’s office at the bottom of the account summary after line 10. This is the only place that market value is shown on the account unless you are entering gains or losses under lines 3 or 7.
Documentation Required to be Submitted with all Accounts
Please keep all documents associated with your role as conservator. Bank statements, brokerage statements, cancelled checks, invoices, paid receipts, notarized receipts, are all required by the Commissioner’s office to verify the appropriateness of your actions as conservator, especially in regards to disbursement of funds from the estate. If you do not have an invoice for a charge payable from the estate, do not pay it. Do not cash a check to pay a bill in cash. Write a check. If the next door neighbor’s son cuts the grass at the incapacitated’s home, write him a check and get him to give you an invoice for the grass cutting stating the date , place of work and amount.
Request the bank, at the time you open your account, to return copies of all checks with the monthly bank statements. If you do not request these copies of the cancelled checks you will be required at a later time to obtain and provide these to the Commissioner of Accounts in order to obtain approval of your accounting. It is much easier to make the bank aware, from the beginning, of your requirement to obtain copies of all cancelled checks with each bank statement. Each bank statement, with those cancelled checks, shall be submitted to the Commissioner of Accounts with each accounting.
Submission of supporting data in electronic form is not acceptable.
FINAL CONSERVATORSHIP ACCOUNT
Restoration of the Incapacitated by Court Order:
You should only have a distribution shown on an accounting at the end of the conservatorship on the final accounting submitted. Distributions refer to payments made to the person entitled to receive the assets of the incapacitated person. It may be that the incapacitated person has been restored to capacity and the conservatorship has been ended by order of the Court. If this is the case, delivery of all of the conservatorship assets to the incapacitated upon the entry of that order and a receipt by the formerly incapacitated person would be an appropriate receipt, if notarized. This account should be filed within four (4) months of the order restoring the incapacitated, unless the peripod for filing of the final account is otherwise stated in the order.
Death of the Incapacitated:
In most cases it is the death of the incapacitated adult which results in the termination of authority of the of the conservator in any conservatorship. In such circumstance you cannot continue to pay bills. You must preserve the estate and continue to receive and preserve any assets until the assets are delivered to a person qualified to receive them. Those liabilities and assets then become the responsibility of the personal representative of the estate. Payment of the remaining assets of the estate is appropriate only to the qualified personal representative of the decedent, except where a Small Estate Affidvit may be used to distribute to the heirs at law of the now deceased incapacitated.
Someone normally qualifies as executor or administrator of the deceased incapacitated person’s estate, in the County in which the incapacitated last resided. (See the following paragraph if there has been no qualification on the incapacitated’s estate.) That personal representative will present to the conservator a certificate of qualification from the Court proving proper qualification as personal representative. The conservator is obligated to distribute to the personal representative the remaining assets under the conservator’s control and obtain a receipt (notarized) and to submit a final accounting to the Commissioner of Accounts with supporting documentation. This account should be filed with the Commissioner of Accounts within four (4) months of the incapacitated’s death.
Between the death of the incapacitated adult and the qualification of a personal representative, it is the conservator’s obligation to preserve and protect the estate. Additional money received should be deposited to the conservatorship account. However, no bills should be paid unless authorized by the Commissioner of Accounts.
NO QUALIFICATION ON ESTATE AND ASSETS VALUED AT LESS THAN $25,000
If after the death of the incapacitated all three of the following conditions exist, the conservator is authorized by statute to pay the remaining balance of the incapacitated’s estate to (i) the incapacitated’s surviving spouse, or (ii) if no spouse, to the incapacitated’s distributees or other persons entitled to the assets (which may include creditors, including payment of or reimbursement for funeral or burial expenses):
1. The value of the remaining personal estate must be $25,000.00 or less;
2. A personal representative of the estate has not qualified within 60 days of the incapacitated’s death; and
3. The conservator does not anticipate that anyone will qualify as personal representative.
Note that all three conditions must exist, otherwise someone must qualify as personal representative of the estate to receipt for the assets from the conservator.
See Section 64.2-2026, Code of Virginia (1950), as amended.
If distribution is being made under this statute the attached Conservator’s Affidavit must be executed and a Small Estate Affidavit pursuant to Section 64.2-2026 must be properly executed and presented to you as conservator, to be presented to the Commissioner as part of the documentation with the final account.
Also note that if there has been no qualification and none is anticipated, the Conservator is allowed by this office to pay the Conservator’s final commission due and the fee for the filing of the conservator’s final account with the Commissioner before making distribution to the statutory distributees.
ACCOUNTINGS AND FILING DATES
The first conservatorship account is for the first four (4) months from the date of qualification and is due in the Commissioner’s office within six (6) months of qualification. The accounting period should not be extended except to match the ending date of the conservatorship bank statement for ease of accounting.
Second and subsequent conservatorship accounts shall be for twelve (12) month periods, each beginning on the ending date of the prior account and covering the next twelve (12) month period. Do not extend the accounting period beyond twelve months. Second and subsequent accounts are due in the Commissioner’s office four (4) months from the ending date of the twelve (12) month account. (within sixteen (16) months of the ending date of the prior account).
If the incapacitated is restored to capacity or dies, the final account is due within four (4) months of the restoration or death.