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  • Writer's pictureTroyer & Good, PC

Case Study: Guardian Penalized for Not Keeping a Proper Accounting

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Some individuals are not legally able to handle their own affairs due to minority (under age 18) or incapacity. They may have been born incapacitated, or they may have become incapacitated because of an illness, accident, or decline in physical or mental capacities later in life.  What can be done for such individuals?

It may be necessary to establish a guardianship to protect such persons. A guardianship is a proceeding where an interested person or corporate entity petitions the Court to be appointed as guardian to handle the affairs of an incapacitated individual. A person may be appointed as guardian over health care and living arrangements and/or financial affairs.

In a recent Court case, Peter Gallo was appointed the guardian of the personal and financial affairs for his mother, Josephine. After Josephine died, Peter submitted his final guardianship report as required by law. Margaret, Josephine's daughter, objected to Peter's final report as to how the assets were handled.

One of the important duties of a guardian is to handle the assets and income of an incapacitated person responsibly. The guardian is required to file an accounting with the Court showing the receipts, income, and distributions. If the guardian wants to sell any major assets, he must first get a Court order. The guardian cannot engage in transactions between himself and the guardianship estate without a Court order.

Because of Margaret's objection to Peter's final report, a hearing was conducted. In the hearing, the trial court surcharged Peter $28,715.63. This amount represented the assets of Josephine that were spent without court approval and without providing a satisfactory accounting of where the assets went.

Peter appealed the trial court decision, arguing that the trial court failed to document its methodology for calculating the surcharge. He also argued that since the money was spent on caregiving for his mother, any loss to the estate was less than if he had placed his mother in a nursing home.

The Superior Court upheld the trial court decision. The court held that the surcharge clearly represented the difference between the income received by Josephine and the amounts spent on caregivers or other substantiated expenses. In addition, the Court stated there was no merit in Peter's argument about the loss being greater if he had put his mother in nursing home care.

This case illustrates the importance of keeping an accurate accounting when a person is serving as guardian for someone. A guardian should handle the guardianship estate in the protected person’s best interests. Our attorneys have over 35 years combined experience in guardianship matters. Simply schedule an appointment with one of our attorneys to help with the guardianship process and accounting.

In re: Gallo, 2019 WL 421780 (Pa. Super. Feb. 4, 2019)


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