Accountings. Dunning Place

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1 Accountings Dunning Place

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3 Accountings How to do an Accounting When you act as an attorney under a power of attorney, property guardian appointed by the Court, executor under a will, an administrator of a deceased estate or as a trustee, you may be required to provide an accounting. This booklet attempts to provide you with basic information about an accounting and some suggestions as to how best to provide and prepare such an accounting. All Acts, Regulations and Forms referred to in this booklet can be found on our web site at What is an Accounting? When you are asked to provide an accounting, you are being asked to provide information about the actions you have taken and the decisions you have made on behalf of the person or estate for which you are acting. In other words, you will be providing information on the assets you looked after, the funds you received, the expenses you paid, the assets you sold and the investments you made you are being asked to account. When do you have to Account? If you are an attorney under a power of attorney, you have to account when the grantor asks you to (a grantor is the person who signed the power of attorney) or a person named in the power of attorney asks you to account. You also must account if a family member or the Public Guardian and Trustee (PGT) demands an accounting under section 18 of The Powers of Attorney Act, Finally, you will have to account if the Court orders an accounting. If you are a property guardian appointed under The Adult Guardianship and Co-decision-making Act, you are required to account annually to the Court and the PGT. See section 54 of that Act. If you are property guardian of a child s property, you are required to account to the Court and the PGT, as required by the court order. You are also required to account to the child when he or she turns eighteen years of age and your guardianship is complete. 1

4 If you are an executor or administrator of a deceased person s estate, you should account to any beneficiary if he or she requests an accounting. You will have to account if the Court orders you to account and you will have to account to the beneficiaries if you wish them to release you or if you request the Court to order your discharge as an executor or administrator. If you are a trustee, you should account to a beneficiary of the trust when he or she asks for an accounting. You should account as required under the document appointing you as trustee. You will have to account if the Court orders an accounting or if you wish the beneficiaries of the trust or the Court to release you as trustee. When you act in any of these capacities, you may have to account. The principles under which you operate are very similar regardless of whether you are an attorney, property guardian, executor, administrator or trustee. What should I do to prepare? At the time that you are appointed to act, you should think about how you will account for your actions and decisions and you should immediately start to do the following: Have a complete, accurate list of the assets you are managing. Keep all records on this matter separate from your personal records. Obtain a notebook or binder, or computer program, which will allow you to record every payment made and each item of income received. Get prepared to keep every piece of paper you receive including, invoices, statements, contracts, letters or legal documents. File each document by the date received or by category (house, utilities, investments, bank accounts, etc). Be prepared to file every financial institution statement. Ensure that every financial institution sends you a monthly statement. If you can, use cheques for as many payments as possible as a cancelled cheque is a record proving the payment. Avoid using debit cards, but if you do, record each withdrawal and note what the funds were used for and retain each receipt. If you use a credit card, keep each credit card slip and attach them to the monthly credit card statement. Keep a written list of the major decisions you have made, i.e. selling a car, house, or farm, redeeming an investment, or making 2

5 a new investment. Recording the date, the decision and the reason for the decision, will provide information to those reviewing your accounting. This list is much like a diary or daily journal. If you do all of the above, you will be in a very good position to prepare an accounting when requested or required. You can ask your accountant to prepare the accounting. Each accountant may have a slightly different approach and format but the end result will be much the same. Reasonable accountant fees are a legitimate expense that can be charged to the estate or trust. Alternatively, you can prepare the accounting yourself. If you decide to use your accountant, you should discuss the matter with him or her at the beginning and obtain his or her advice on the best way to keep records and do the accounting. The more organized you are and the more records you keep, the easier it will be for the accountant to complete his or her part of the work,which will keep the fees lower. After you are appointed, you may take steps to change the name on ownership certificates, banking documents or registrations. You should not register assets in joint names and use wording such as the following: - Joe Smith property guardian for Jane Smith - Joe Smith attorney for Jane Smith - Joe Smith executor for Jane Smith deceased - Joe Smith administrator for Jane Smith deceased - Joe Smith trustee for Jane Smith What are the major records you should keep? - A list of assets at the beginning of your appointment. - A list of debts at the beginning of your appointment. - A list of payments and funds received during the accounting period. - A list of actions taken and decisions made during the accounting period (diary or daily journal). A List of Assets This list should record every asset that is being managed by you. In some instances, the form required is set out in regulations or the Rules of Court: 3

6 If you are a property guardian of an adult, Form K in The Adult Guardianship and Co-Decision-making Act is required. If you are an attorney, Form H in The Power of Attorney Regulations. If you are an executor or administrator, Form 123 in the Queen s Bench Rules of Court must be used (See PGT web site) If you are a property guardian of a child s property, you could use Form K, referred to above, as a guide. If you are a trustee, you could use Form K, referred to above, as a guide. It should be noted that Form 123 under the rules has two parts. Part I lists all the estate assets and Part II lists all the assets that are not considered part of the estate. They still have to be dealt with but sometimes in a different way. Joint bank accounts or land in joint names are examples of assets listed in Part II. This beginning list is important it lists what you are going to be responsible for. Beneficiaries will expect you to explain what was done with each asset on the list. As careful as you may be, you might find you have missed some assets. If you discover them later, you can add them to your beginning list. It is advisable to give an explanation as to when you discovered them and why they were not found earlier. Assets Example: Financial Institution Accounts Jointly Owned With Financial Institution Account Number (if applicable) Value 1. Royal Bank Not applicable $5, (chequing account) 2. Royal Bank Jane Doe (wife) $10, (savings account) Term Deposits Financial Jointly Owned Institution Interest Rate Maturity Date (if applicable) Face Value 1. TD Canada Trust 3.5% June 2/09 Jane Doe (wife) $101,

7 Real Estate Jointly Owned Legal Description (if applicable) Value N ½ W2nd Not applicable $45, Alport Crescent, Regina Not applicable $132, Life Insurance Company Description/Policy Number Value Co-operators Life Insurance CI $500, Vehicles Jointly Owned Description (if applicable) Value 2007 Pontiac Vibe Jane Doe (wife) $18, Personal Property: Jointly Owned Description (if applicable) Value Miscellaneous household furnishings Jane Doe (wife) $2, List of Debts In a similar way, you will need to list and know all the debts of the person or estate. These are the debts at the beginning of your administration and they may have to be dealt with as soon as you can depending on whether you have enough cash. Sometimes you will pay these debts, a bit at a time. For example, you might make monthly payments. At other times, you will sell an asset and use the proceeds to pay off a debt. Beneficiaries will need to know the beginning amount of a debt and what steps you took to reduce or deal with that debt. Also, you may discover debts later. Again, you can add them to the bottom of the list, with a date when discovered and an explanation. Debts Example: Financial Institution Loans Security Held Owing To Description (if any) Amount Owing Royal Bank Line of Credit None $1,

8 Credit Cards Owing To Description Amount Owing Visa Various miscellaneous purchases $ Alford s living room furniture $3, Mortgages Security Held Owing To Description (if any) Amount Owing Royal Bank Mortgage on N ½ W2nd $54, Alport Crescent Other Debts Security Held Owing To Description (if any) Amount Owing John Brown (brother) Personal Loan None $10, (to pay off some other debts) List of Payments and Funds Received This will be your longest list. It will list the date, type of payment, description, to whom paid, the amount and possibly an explanation. It will also list the money received, the date, from whom, the reason and the amount. This list should be in date order. As you make a payment or receive money, you add another line to the list. If you act as property guardian, The Adult Guardianship and Co-decision-making Regulations set out Form L are for recording payments and receipts. If you are an attorney, Form H in The Power of Attorney Regulations, can be used to record payments and receipts. If you are a property guardian for a child, executor, administrator or trustee, you could adapt the above forms for your use. The exact format of the form is not as important as keeping track of each payment and each receipt of money, giving the date, the person involved, the reason and the amount. It is advisable that each line on this list has a related invoice, statement, cheque, letter, credit card slip, or debit card slip to support the payment or receipt. 6

9 Funds Received Example: Jointly Owned With Monthly Yearly Paid By Description (if applicable) Amount Amount Gov t of Canada cpp Not applicable $ Gov t of Canada OAS Not applicable $ Gov t of Canada gst Not applicable $ Gov t of Sask. Employee Pension Not applicable $2, Art Wood Rental income Not applicable $ (on 55 Alport Crescent) Funds Spent Example Date Spent Paid To Description Amount Feb. 1/07 - Feb. 1/08 Pioneer Village Nursing home costs $8, Feb. 1/07 - Feb. 1/08 SaskTel Telephone in room $ Feb. 1/07 - Feb. 1/08 Access Comm. Cable in room $ Feb. 1/07 - Feb. 1/08 Gladys Snider Hair care $ Feb. 1/07 - Feb. 1/08 Shoppers Drug Mart Medication and supplies $ Feb. 1/07 - Feb. 1/08 Various clothing $ February 15, 2007 ABC Law Firm Cost of Guardianship $2, Application July 1, 2007 Beltone Hearing Hearing Aid $1, August 15, 2007 Linens & Things Bedding (duvet & cover) $ List of Actions or Decisions Long lists of payments or receipts become hard to follow or understand. A short list showing the major actions taken or decisions made is most helpful when someone is reviewing an accounting. For example, a decision that a person will move to a nursing home, with a date, the name of the home and the initial payment explains a series of monthly payments to a particular care home. Another example, a decision to sell a farm will explain a number of entries on the list of payments and receipts. A decision to redeem an investment will explain why a major amount of money was received. 7

10 Lists at the end of the period for which you are responsible You will account for your actions and decisions for a period of time. At the beginning of the period, you were responsible for certain assets and debts. Over the period, you received money and made payments. At the end of the period, you held certain assets and still owed certain debts. Usually the accounting period is one year after the anniversary date of the appointment. For example, if the order were granted October 4, 2007, the accounting would run from October 4, 2007 to October 3, Alternatively, it can be the period from when you started until the time when you have completed your work. Either way, you need to provide a list of assets and a list of debts as of the end of the accounting period. This list should look, in appearance, similar to the list of assets you prepared at the beginning. The only difference will be that some assets have been sold and some new investments have been made. You should use the beginning form, edit it to delete assets sold and add assets acquired. In a similar way, you need to prepare a list of remaining debts at the end of the period of accounting. You can delete the debts that were fully paid. You would also reduce the amount of the debts where partial payments were made. Also, you would add any new debts incurred during the accounting period. When you Account When you are asked to account or required to account, you would provide the following to those asking: A list of assets at the beginning of your appointment. A list of debts at the beginning of your appointment. A list of payments made and moneys received during the accounting period. A list of actions taken and decisions made during the accounting period. A list of assets at the end of the accounting period. A list of debts at the end of the accounting period. These would be the six documents you would provide to the grantor, adult, a beneficiary, the PGT or the Court. Of course, if there were no debts, you would not have to provide the beginning or ending list of debts. 8

11 When you provide the accounting to the grantor, adult, a beneficiary or the Court, you do not have to provide the backup documents. However, if you are asked questions or asked for copies of these documents later, you should provide them. Gifts Gifts of the person or estate s property to yourself or your children are considered totally inappropriate. It is strongly recommended that you do not do this. This type of conduct will result in a beneficiary, the PGT or the Court asking questions. Your accounts may not get approved and you could be sued for return of the property. An exception to all of this is that an executor can gift to himself or herself anything specified in the deceased s will. Loans Loans to yourself or your children should be viewed the same as above. Joint Bank Accounts In making banking arrangements, you should not put the person s or the estate s assets into a joint bank account. Joint bank accounts usually have survivorship rights. It is best to set up an account in your name and indicate you are acting as attorney, property guardian, executor, administrator or trustee. Land in Joint Names Taking steps to put the person or estate s land in joint names with you is also inappropriate, because it changes who will get the property on death. Charitable Donations If the person you act for made charitable donations in the past and you understand his or her wishes would be to continue those donations, you can make charitable donations provided you follow the same pattern and amounts as in the past. You should proceed very carefully in making charitable donations. A property guardian should also consider whether the dependent adult is in a financial position 9

12 to continue making donations. It should be noted, that an executor or administrator can only make payments directed by the will or permitted by law. Maintenance of Dependants A spouse or children may have relied on payments from the person or estate in the past. Making maintenance payments to a dependant can be viewed as a reasonable expense. You should receive legal advice before making such payments. Fees Depending on your appointment and your personal choice, you may be charging a fee. If you are a property guardian, the fees must be provided for in the court order. If they are not, then you need to discuss this with your lawyer who could make an application to amend the court order. If you are an attorney, the fees need to be set out in the power of attorney. If you are an executor or administrator, you are entitled to a fee, which is based on time spent, responsibility undertaken, risks involved and effort and expertise expended. You will have to discuss with your lawyer what would be an appropriate fee. Beneficiaries of a deceased s estate will have to consent to your proposed fee or the Court will have to approve it. Trustees would be entitled to charge a fee if authorized under a trust agreement or a court order. If you are charging a fee, you should provide a statement showing what the fee is, how you calculated it and the reasons for charging the fee. This booklet is a summary and a guide based on the law. It is not as comprehensive as the law itself. It is not legal advice. If, after reading this booklet, you have questions or are uncertain about how to interpret the information, you should consult with a lawyer. 10

13 Contact Information Public Guardian and Trustee of Saskatchewan Smith St. Regina, Saskatchewan S4P 4W4 Telephone: (306) Toll Free: Fax: (306) Web site: Office Hours: Monday through Friday, 8:00 a.m. to 5:00 p.m. (Closed for the noon hour and holidays) 11

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