Understanding Guardianships
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Monday, August 29, 2022 in Education
In the Netflix movie “I Care A Lot,” Rosamund Pike’s character, Marla Grayson, is an icy, ambitious, court-appointed legal guardian who fleeces her wards out of their homes, cash, and personal property with amazing efficiency. It is at once entertaining and disturbing to watch. The story is fiction, but it shines a (dramatic) light on the predicament of individuals who become wards due to mental incapacity, inability to care for themselves, addiction, or disability. Whether the individual has assets or not, if there are no family members, or friends willing to care for them, they may find themselves under guardianship.
Establishing a guardianship is a legal process that involves the removal of some, or all, of an individual’s rights. The court puts protections in place for that individual in the form of providing access to the courts, to counsel, and the ability for the ward to review the guardianship, among several other protections. After a petition to determine incapacity is filed with the court and verified, the judge appoints a guardian. The guardian can be a family member, a friend, or public or private entity, such as a lawyer, bank, or trust company. If, as in a plenary guardianship, where the ward is determined to be completely incapacitated, the appointed guardian will have complete authority over the person and the estate, with the ability to exercise all delegable legal rights and powers of the ward.
It is important to note that the laws governing guardianships differ from state to state. In Florida, where I practice, there are Florida Statutes, Chapter 744 for Guardianship, where one can look up the statutes on topics such as powers and duties of a guardian, conflicts of interest, prohibited activities, court approval, and breach of fiduciary duty. There are also statutes provided for appraisals and selling property belonging to the ward. A guardian has a responsibility to the court, and they are obligated to provide the court with an inventory of the ward’s assets. Also, the guardian must be granted permission by the court prior to selling the ward’s property. While guardians are fiduciaries and expected to act in a manner that will benefit someone else, appraisers are not. We are independent, impartial, and unbiased when assisting clients with appraisals of their personal property.
There are national standards for guardianship set forth by the National Guardianship Association (NGA) that provide guidance. They do not, however, have the authority to regulate standards, nor do they have a disciplinary function. In Florida, a complaint can be filed with the Office of Public & Professional Guardians (OPPG), which is housed within the Department of Elder Affairs. On the NGA’s website, there is a searchable map of the U.S. that shows which states have guardianship associations. Surprisingly, there are only about 25 states that have them. In the state of New York, for example, a statewide guardian system does not currently exist. Judges generally seek to appoint private attorneys or community organizations to be guardians. Appointing an attorney may leave a gap in needed social work skills. Combine that with payment limitations for guardians, and there is a real shortage of them in New York. Other states such as Illinois and Texas have guardianship associations that are affiliated with the NGA.
It is advisable for appraisers who want to include guardianship in their practice to become familiar with their state’s laws and terminology. Depending on your jurisdiction, you may be asked to provide fair market value, as is the case in Florida. Fair market value is a hypothetical concept that assumes the property is not going to be sold. But I have found, in many guardianship cases, the property is sold at some point to provide needed funds for the ward’s housing and care. Sometimes the ward must be moved to an assisted living facility and simply cannot take much of their personal property. Using FMV (orderly liquidation market) as the objective can present a problem if the property must be sold later to raise immediate cash by way of a liquidation sale. In this circumstance, the appraiser could provide a second appraisal using liquidation value as the objective (forced liquidation market) to provide a more accurate picture of what the guardian could expect to receive from a quick sale. Or, if there is sufficient time to sell the property, the guardian may be interested in knowing the market value. This is a conversation to have at the point of contact.
The guardian may have already written an inventory and submitted it to the court to comply with the court’s timeframe. Subsequently, they may need to consult with an appraiser to identify items of value that should be removed from the home for protection or determine if a written appraisal is necessary. The appraiser may perform a consultation service first to assist the guardian in determining the next steps. Care should be taken to include a summary of the consultation notes for the appraiser’s workfile, along with photographs, as the appraiser could be asked to write a report in the future. Make sure you do not misrepresent yourself when performing consultations as opposed to appraisals.
Guardianship cases can be difficult when there is evidence that the ward has been financially abused. Many times, valuables have already disappeared from the home. There may not be much money available to pay for appraisal services. The guardian may say they do not want a “full-blown” appraisal report and may ask you to take shortcuts, provide a letter, or give them an oral opinion. (Remember, if the appraiser’s oral opinion contains values, they have effectively rendered an appraisal.) It may take a little effort, but it is worth explaining the benefits of preparing a report that complies with the ISA Appraisal Report Writing Standards and USPAP. The appraiser can discuss ahead of time with the guardian what must be clearly stated in the report: the objective (type of value being sought), intended use, effective date, scope of work, etc. The sales comparison approach will be utilized to determine value conclusions.
If a guardian has not managed the ward’s property ethically, the guardian could be sued. A thorough personal property appraisal is an effective way to capture exactly what was in the home at a specific point in time. It is always a good idea to take sufficient photographs, especially in the event you are called to testify.
What is guardianship like from the ward’s perspective? Some wards are relieved to have the help a guardian can provide and are cooperative, while others can be angry, resentful, and oppose the guardian. The level of satisfaction can depend on whether the guardianship is temporary or permanent, and how many rights the ward has lost, as well as the ward’s state of mind. Be aware that an appraiser may be instructed to arrive onsite at a coordinated time when the ward is being taken to a doctor’s appointment, out to lunch, or shopping. The ward is not told about the appraisal inspection and is not aware that a “stranger” is about to enter their home and essentially “go through” their personal property. These situations can have short timeframes (assignment conditions), and the appraiser must take care to leave everything as they found it.
In my experience, most guardians provide excellent services for their wards. The guardian makes informed and thoughtful decisions with the ward’s best interest at heart. For example, in one guardianship, two valuable Picasso ceramic plaques needed to be sold to raise funds. The plaques were each held in an iron mount on the wall above the sofa. The guardian was concerned the ward would notice they were missing and become upset. He came up with a brilliant solution to replace the plaques with facsimiles while keeping the brackets in place. The ward never noticed the change. These workarounds may seem nefarious on the surface, but the guardian has the power to do so, and the good intentions to spare the ward unneeded worry.
Guardianship appraisals can be difficult at times because of unpleasant circumstances that often surround them. But it is rewarding to provide services that benefit persons under guardianship who can no longer fully care for themselves and must depend on their guardian. When thinking of ways to expand your appraisal practice, consider guardianship appraisals.