April 19, 2011 § 7 Comments
- Always accompany the executor, administrator, guardian or conservator to the bank or other financial institution to open the estate account. That way you can make sure that the funds are properly deposited into a restricted account, and that the fiduciary does what she is supposed to do.
- Always ask that a duplicate bank statement be sent to you for the estate account. If the bank balks, direct that the bank statement be sent to you and not the fiduciary. Review each bank statement promptly when you receive it to make sure that no unauthorized disbursements are being made. Also, when the next accounting comes due — Voila! — you have a complete set of bank statements.
- Have your secretary or paralegal call the fiduciary every couple of months to inquire how things are going, to remind of upcoming deadlines, and to ensure that the address and telephone info in your file is accurate. This is not only great client relations, it’s one of the best means possible to discover and address problems in their early stages.
- Accompany your fiduciary to inventory that safe deposit box, and, if possible, bring a witness. It seems that there is often someone lurking in the wings ready to allege that there were all sorts of valuable items in there that the fiduciary is not accounting for.
- Do an inventory even when one is not required. Inventory establishes the baseline for accounting. It also can help neutralize the claims of many disgruntled heirs and sideline-sitters.
April 11, 2011 § 16 Comments
_____ State the time period covered by the accounting, starting with the date of the last accounting, or if a first account with the date the estate, guardianship or conservatorsip was opened.
_____ List all assets of the estate as of the ending date of the last accounting. (MCA §91-7-277, §91-7-93, §93-1333, §93-13-67, and §93-113-259 and UCCR 6.03).
______ List the date, source, and amount of each item of income since the last accounting. (MCA §91-7-277, and §93-13-67).
______ Total the income and state a total.
______ List the date, payee, explanation or description, amount, and authority (the date of each authorizing court order) for each disbursement since the ending date of the last accounting. (MCA §91-7-277, 91-7-279, §93-13-67p, and §93-13-71 and UCCR 6.04 and 6.05).
______ Attach all documents supporting all income and disbursements. This is the “voucher” requirement that was previously posted about here. The required documentation includes ALL statements of any accounts or investments showing income or disbursements. This may also include canceled checks and receipts. (See statutes and rules cited above).
______ Total the disbursements and state the totals.
______ List and explain for all non-financial assets that appeared on the previous accounts, but are no longer in the control of the fiduciary.
______ A request for payment for the fiduciary including a bill or itemization to support request. (MCA §91-7-299 and §93-13-67 and UCCR 6.11).
______ A request for attorney fees, including a bill or itemization to support said request. (MCA §91-7-281 and §93-13-79 and UCCR 6.12).
______ Close with a summary calculation of the value of the estate coming into the hands of the fiduciary at the opening of the accounting period, a total of the income, a total of the disbursements, and a total balance in the fiduciary’s control that will be the beginning figure for the next account.
______ Have the fiduciary sign and swear to the accounting. (MCA §91-7-277 and §93-13-37 and UCCR 6.02).
Thanks to Jane Miller, Senior Staff Attorney for the 12th District.
November 10, 2010 § 2 Comments
Here are some things you may not already know about guardianships. Some of them have teeth that can draw blood if they catch you unawares …
- MCA § 93-13-38, provides that “All the provisions of the law on the subject of executors and administrators, relating to settlement or disposition of property limitations, notice to creditors, probate and registration of claims, proceedings to insolvency and distribution of assets of insolvent estates, shall, as far as applicable and not otherwise provided, be observed and enforced in all guardianships.”
- MCA § 93-13-33, requires that the guardian return an inventory within three months of the appointment, and states: “Any guardian who shall fail to return inventories may be removed and his bond be put in suit, unless he can show cause for the default.”
- When closing out a guardianship, the requirements of MCA § 93-13-77, must be satisfied. That section requires that a final accounting filed, and that the ward be summoned and given notice to be and appear before the court on a day not less than one month after the date that the summons is served or after completion of publication, to show cause why the accounting should not be approved. The accounting can not be approved earlier than one month after completion of process. All the requirements to close a guardianship are here.
- When a guardian has more than one ward, each ward’s business must be accounted for separately. MCA § 93-13-69.
- A child 14 or older has a statutory right to choose his or her guardian. If the ward is over 14, you should have the child join in the petition.
- Guardianship of a minor ceases by operation of law at age 21, and, in the discretion of the Chancellor, at age 18. The guardianship may also be terminated by order of the court at any time that the estate has a value less than $2,000 and no further funds or property are anticipated to come into the guardian’s hands. MCA § 93-13-75.
- Any claim for a guardian’s fee must include the information required in Uniform Chancery Court Rule 6.11.
- A “solicitor’s fee” (MCA § 93-13-79) may be allowed for the attorney, and the claim for it must be supported by an itemized statement of services rendered in the same form as that required for the guardian’s fee, plus the information required in Rule 6.12 of the Uniform Chancery Court Rules.
October 25, 2010 § 4 Comments
The time has come to close that guardianship you opened a few years back to receive a personal injury settlement on behalf of a minor ward. So how are you going to go about closing it?
MCA § 93-13-77 provides that “When the guardianship shall cease in any manner, the guardian shall make a final settlement of his guardianship, by making out and presenting to the court, under oath, his final account, which shall contain a distinct statement of all balances of his annual accounts, either as debits or credits, and also, all other charges, expenditures, and amounts received, and not contained in any previous annual account.”
The final account must include a re-cap of the previous annual accounts, and must also set out the final annual of disbursements and charges since the last account, supported by proper vouchers as required in MCA §§ 93-13-71, -73 and 91-7-277. The only exception to the requirement of proper vouchers is when the guardian is a federally regulated bank, thrift or trust company, and there is a sworn statement of an officer that the vouchers are available for inspection. What constitutes a proper voucher was the subject of a previous post that you can find here.
After the final account has been filed, it must be on file for inspection by the ward for not less than “one month,” and you must issue a summons to him or her to appear in court on a day after the one month period has expired to show cause why the final account should not be approved. If the ward does contest the account, the court will hear evidence and adjudicate whether it should be approved.
In the judgment closing the estate, the court may make an allowance to the guardian not to exceed 10% of the value of the estate, and shall order that the property of the estate be delivered to the ward and the guardian discharged.
If the ward has reached 21 years of age, the ward may petition the court under oath to waive the final account, ” … and the court shall grant the same unless there be reason to suspect that the petition was procured by the guardian through fraud or undue influence over the ward, in which case the court shall require proof of the good faith thereof.”
So when is it time to close a guardianship? You can read about that here.
September 23, 2010 § 6 Comments
by Jane Stroble Miller, Senior Staff Attorney for the Twelfth Chancery Court District
Shortly after graduating from law school I was confronted with a baffling legal question. An older and more experienced attorney was attempting to do something that Mississippi statutes and case law clearly stated he could not do. In my naiveté I assumed he knew of a statute or case about which I was ignorant that allowed him to act as he did. After several hours of exhaustive research I called a former professor and mentor, the Honorable William Champion. On hearing my dilemma, he chuckled and informed me that I had just encountered an attorney who had been practicing law for so long that he had lost touch with what the law was.
Recently I again encountered this phenomenon in my duty as staff attorney in monitoring probate matters. One of my tasks is to try to explain to attorneys why the chancellor feels that their accountings do not meet the requirements of both the statutes and the Uniform Chancery Court Rules (UCCR). In a meeting with an older attorney, I pointed out that he had failed to attach vouchers to his accounting. He insisted that he could not provide the necessary documentation “because the banks no longer returned the original canceled checks,” and remained firmly stuck to that position. I realized that I would have to do some research to arrive at a definitive answer.
Section 91-7-277, MCA, requires that the annual account show ” … disbursements, every item of which and the amount thereof to be distinctly stated and supported by legal voucher …” Sections 91-7-279 and 93-13-71, MCA, prescribe the form for vouchers and provide that the account shall be rejected by the clerk unless the vouchers are in the proper form. The only exception to the voucher requirement is when the guardian is an approved financial institution.
Over time, attorneys began using original canceled checks as “legal vouchers,” and the courts recognized them as such. Although neither the statutes nor case law identify canceled checks as “legal vouchers,” there is authority in UCCR. In fact, UCCR 6.04 does specifically refer to “a receipt or cancelled bank check …” as a voucher.
The problem with canceled checks as vouchers, however, is that if you stop at the check, you have omitted the most important, and meaningful, part of Rule 6.04. The sentence of the Rule dealing with vouchers, in its entirety is as follows: “Every such voucher shall consist of a receipt or cancelled bank check showing to whom and for what purpose the money was paid.” [Emphasis added]
In other words, if the canceled check fulfills the function of showing “to whom and for what purpose the money was paid,” then it is a proper voucher within the meaning of the Rule. If the canceled check does not do that job, it is not an acceptable legal voucher. Put even plainer: if the canceled check would not otherwise be acceptable as a receipt, it simply is not a legal voucher.
UCCR Rule 6.06 (Lost Vouchers) reinforces my conclusions. It states that if the original voucher is lost or destroyed, a duplicate or ” … receipt from the person or corporation to whom the money was paid or the property was delivered … ” may be accepted by the court. Again, the function of a voucher is to document actual payment, the recipient and the purpose.
I even looked at Black’s Law Dictionary, which defines voucher as ” … an account, receipt, or acquittance, that shows on its face the fact, authority, and purpose of the disbursement.”
Given no hard and fast definition of a “legal voucher,” I formulated the following requirements for a voucher to be sufficient to comply with our laws:
- A voucher must first and foremost be legal evidence that the money was disbursed for the purpose for which it is authorised or allowed.
- It must be in writing or printed and show the payee, amount and date, and services or goods for which the disbursement was made.
- A check made out to “cash” , even an original canceled check is not a “legal voucher.”
Canceled checks, whether copies or original, really only prove that a payee was paid a certain amount of money. In some circumstances, canceled checks may not be adequate proof. For instance, when a court has authorized the purchase of a computer for a minor ward, a canceled check to Best Buy or Sam’s Club does not prove the money was disbursed for a computer. The check could have just as likely been used to purchase a big screen television or a new set of tires for the guardian’s car. The same holds true for many canceled checks for clothing or personal items. Since vouchers are supposed to be “evidence,” the better practice is for an attorney to have printed receipts that match the date and amount of a canceled check. The guardian should provide the attorney with register tapes, tags or price stickers from the items purchased to prove that the disbursements were actually made for the ward and not for another party or purpose.
The best yardstick that both a judge and attorney could employ in determining the adequacy of a voucher would be to ask whether or not the proof would be of such a nature and sufficiency to be admissible as evidence at a trial and contains all the information necessary to convince the average person that the disbursement was made for what the guardian claimed it was made.
It took me a little time, digging and thought to arrive at my conclusions, but I had Professor Champion’s wisdom as a starting point and a reminder that sometimes we can practice law so long that we lose touch with what the law is.
August 9, 2010 § 2 Comments
Not too long ago, during a proceeding involving a minor’s settlement, the following exchange took place between a veteran lawyer (who practices primarily in Circuit Court) and me:
Judge: Your claim for attorney’s fees has to be supported as set out in Rule 6.11.
Lawyer: I am sorry, your honor, I was not aware of your local rules.
Judge: That is not a local rule; it is the Uniform Chancery Court Rule.
Lawyer: When were uniform chancery rules adopted?
If ignorance is bliss, that is one happy lawyer.
Sometimes I feel that even lawyers who are fully aware of the Uniform Chancery Court Rules (UCCR) have no idea what they include because they do not bother to read them. Take the requirements for lawyers in probate matters. From time to time, I have to remind lawyers of their duties, and when I do it often happens that they are surprised to learn of it. Could it be that lawyers nowadays are just too busy to familiarize themselves with the law? Now that’s a scary thought.
My best advice is to get out your rule book and read UCCR 6.01 – 6.17 right now.
Okay, I know you’re too busy to do it right now, so here is an overview:
- Rule 6.01 requires that every fiduciary must have an attorney unless the fiduciary is licensed to practice law. The attorney’s compensation will be fixed by the Chancellor, and the attorney may not withdraw unless permitted to do so by the Chancellor. As a practical matter, you will not be allowed to withdraw unless and until an attorney takes your place, so you need to think twice before entering an appearance in a probate matter.
- Rule 6.02 expressly states that “Every fiduciary and his attorney must be diligent in the performance of his duties. They must see to it that …” publication to creditors is promptly made, inventories and accounts are timely filed and presented, all other statutory requirements are timely and properly met, and that ” … estates of decedents are completed and assets distributed as speedily as may be reasonably possible.” In plain English, that means that the lawyer is every bit as responsible to the court as is the fiduciary. Your professional standing, reputation with the court, and even your license in some cases, are on the line. It also means that estates are not to be kept open for years while the attorney deals with other matters.
- Rule 6.02 also provides as to guardianships and conservatorships that the attorney shall report promptly to the court a guardian’s or conservator’s failure to perform his or her duties, and if the lawyer fails to do so, the lawyer may be held in contempt.
- Rule 6.03 requires that every accounting must include a statement of all assets of the estate. For money, bonds or securities, a computer printout is not adequate; the accounting must include a sworn certificate by an officer of the bank that the funds are actually on deposit in the amount claimed.
- Rule 6.04 is perhaps the most overlooked of all, but it is perhaps also the most crucial. It requires that every disbursement be accompanied by a voucher in the form required by §91-7-279 and 93-13-71, MCA. It is not enough to recite in the accounting, for example, that “The guardian spent $50 on clothes for the ward as authorized by the court in the last accounting.” The accounting must include vouchers documenting the expenditure. In reporting the expenditures, Rule 6.05 mandates that where the expenditures are spelled out in the accounting, the voucher number, date of the disbursement, name of the payee, purpose of the expenditure, and date of any court order authorizing the payment must be stated.
- Rule 6.06 spells out how to deal with lost vouchers.
- Rule 6.07 states that claims arising after death of the decedent such as for funeral bills, monuments and attorney’s fees, must be approved by the court before payment.
- Any request for funds for support of a ward must include the present amount of the estate, the amount of the ward’s income, and the amount of any previous allowance, according to Rule 6.08. Any request to expend funds for necessities that are the responsibility of the parent will not be approved unless the guardian justifies the request under oath.
- Rule 6.10 deals with settlement of wrongful death or injury claims. An outline for handling minor’s settlements is here.
- Rule 6.11 sets out the required information to support a claim of the fiduciary for a commission or extraordinary compensation, which includes the total amount of the estate handled, the total amount disbursed, the balance on hand, the nature and extent of services rendered, the expenses incurred by the fiduciary, and the total amount of any amount previously allowed. The rule also states that neither fees for fiduciaries nor for attorneys shall be based on the value of any real property.
- Rule 6.12 governs petitions for attorney’s fees. The attorney must support the request with the same information required of a fiduciary as in Rule 6.11, and an itemized statement of services rendered. There are separate requirements for recovering damages for wrognful death or personal injury, and where a contingent fee contract has been approved.
- Rule 6.13 requires that the fiduciary swear to and sign every pleading, accounting and report. It is not adequate, as sometimes happens, that the attorney sign the documents.
- Rule 6.14 provides that a copy of the will must be attached to the petition to open the estate. Recently a lawyer (from out of town) argued with the clerk that the rule means that only a copy needs to be submitted, and that he should retain the original. That is not the meaning of the rule, and it is not the law. § 91-7-31, MCA, requires that the original will, when admitted to probate, shall be recorded and retained by the clerk. The rule merely requires that a copy of it be attached to the petition for ready reference by the court and other interested parties, and so that the original can be secured.
- Finally rule 6.17 bears stating verbatim: “If, without cause, an attorney fails to file accountings or other matters in probate cases (estates, guardianships and conservatorships) after being so directed in writing by the Court, the Court may consider such misconduct contempt.” Misconduct; such a meaningful, menacing word fraught with professional peril.
Practice Tip: Quit relying on forms to do everything and start reading the rules. I repeat: Start Reading The Rules. You stake your career on your performance; start staking your performance on knowledge of what you are doing. You have a professional duty to your client to know the law, to inform, advise and guide your client, and to keep your client as well as yourself in compliance. As the attorney in a probate matter the rules make it clear that you will be held every bit as responsible as the fiduciary when things go wrong. The fiduciary, however, seldom has a law license and career on the line like you do.