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Conservator Administration Inventory

In all conservatorships, a fiduciary’s relationship with the commissioner begins with the filing of an inventory, generally due four months after qualification with the circuit court.1 The inventory provides a record of all assets under the fiduciary’s supervision and control. As all future actions are based upon this inventory, it is “of vital importance. It is the starting point and the basis upon which the accounting rests.”2 Correct addition and subtraction of the columns in the inventory will accelerate its review and approval.

Inventory assets should be valued at the fair market value as of the date of qualification, not the date the inventory was prepared. Estimated values are acceptable in the case of ordinary household goods. The fiduciary should obtain appraisals of personal property which has unusual value or is a collectible. Real estate may be listed at the assessed value for local real estate taxes or the fiduciary may submit an appraisal of its fair market value. Assets are listed at the gross value of the asset, without reduction for any debt, mortgage or lien against the property. The valuation of assets for inventory purposes has tax implications. The fiduciary may wish to consult with a tax advisor before filing the inventory.

The inventory form states that “[t]he Commissioner of Accounts has not independently verified the value of the items on the inventory or the fact that they are the only assets of the estate.”3 From the perspective of the commissioner, the inventory is presumed to be correct. There is controversy among the commissioners of account whether a commissioner has authority to conduct a hearing to determine objections to an inventory.4 The office of the Fairfax commissioner has consistently taken the position that objections to an inventory are proper matters to be heard pursuant to § 64.2-12095, and the commissioner’s approval of the inventory does not preclude an objection to its contents in the context of a hearing about the account. As the Code section refers specifically to an account, it is generally the practice of the Fairfax commissioner to at least require the filing of an account before convening a hearing pursuant to § 64.2-1209 concerning objections to an inventory. This gives the fiduciary an opportunity to make adjustments to the assets stated in the inventory in the account prior to the hearing.  Thus, it may be more than a year after qualification before the commissioner may hold a hearing on any objections to an inventory.

Under § 64.2-1300.E of the Virginia Code, in the case of after-discovered assets, a fiduciary has the option of filing an amended inventory or, with the permission of the commissioner, showing the after-discovered asset as an adjustment on the next regular account. In Fairfax, the commissioner routinely gives permission to show after-discovered assets on the next regular account, eliminating the need for most amended inventories.

Fiduciaries frequently make erroneous reports of an incapacitated adult’s real estate holdings. The fiduciary must first determine whether the fiduciary has the power to sell real estate. This can only be determined from an examination of the order appointing the fiduciary. If the fiduciary has unconditional authority to sell real estate, or if any conditions on such power have been satisfied, the fiduciary should report the value of Virginia real estate in part 2. If the fiduciary does not have power of sale or if the exercise of that power is subject to conditions not yet met, the value of Virginia real estate is reported in part 3. The value of all real estate outside Virginia is reported in part 4. Jointly owned real estate which passes pursuant to a retained right of survivorship is reported in part 5. Fiduciaries should take care to classify real-estate related assets correctly. Interests in a real-estate partnership or a real-estate limited liability company are personal property, reportable in part 1 of the inventory. Interests in condominium property,6 cooperatives,7 or time-share interests8 are real estate interests9, reportable in parts 2, 3, 4 and 5 of the inventory.

The reporting on the inventory form of assets which the incapacitated adult owns jointly with another is far from uniform. The assets to be reported in part 5 of the inventory include all the interests of the incapacitated adult in property that will pass to another at the death of the incapacitated adult by virtue of a right of survivorship. Unlike estate inventories, this is not limited to bank accounts, but includes all types of assets, including jointly-held brokerage accounts, mutual funds, or real estate. Life insurance policies, IRAs, pensions and other contractual relationships are also included in this section.

The portion of such accounts includible in the inventory is only the incapacitated adult’s interest in the accounts. Generally the valuation should be limited to the proportionate share of the incapacitated adult in any such assets. Fiduciaries should also note that divorce extinguishes rights of survivorship in multi-party accounts and renders them tenancies in common.10 The incapacitated adult’s interest in multi-party accounts that are subject to this statute should be reported in part 1 as assets of the incapacitated adult.

The incapacitated adult’s rights to periodic payments from United States Government agencies are reported in part 7.  All other periodic payments are reported in part 8.  The reported value should be the annual total.

How the fiduciary sets up accounts for receiving federal benefits affects the reporting of such funds.   If the fiduciary receives social security, supplemental security income, veterans affairs or black lung benefits as the designated representative of the incapacitated adult, the fiduciary is only  required to account to the commissioner of accounts for such receipts if these monies are commingled with conservatorship funds.11 While many fiduciaries find it easier to maintain one account and report to the commissioner of accounts, the fiduciary has the option to maintain separate accounts for these funds. 


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1  Va. Code Ann. § 64.2-1300.B.

2  Lamb, Virginia Probate Practice § 16 (1957).

3  Circuit Court Form CC-1670.

4  See Manual for Commissioner of Accounts § 5.801.

5  Virginia Code § 64.2-1209 provides “Any interested person, or the next friend of an interested person, may, before the commissioner of accounts, insist upon or object to anything which could be insisted upon or objected to by such interested person if the commissioner of accounts were acting under an order of a circuit court for the settlement of a fiduciary's accounts made in a suit to which such interested person was a party.”

6  Va. Code Ann. § 55-79.41.

7  Va. Code Ann. § 55-428.A.

8  Va. Code Ann. § 55-363.

9  See generally Manual for Commissioners of Account § 5.202. Commissioners around Virginia generally subscribe to the tenet that if an interest is transferred by deed, it is real estate

10  Va. Code Ann. § 6.1-125.4.

11  Va. Code Ann. § 64.2-1312.





 



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