An encumbrance is anything that negatively affects or limits the title of real or personal property, or the value of that property.
Encumbrances include:
any type of debt secured by your ward's real or personal property
rental agreements for property owned by your ward (such as leases and month to month agreements)
easements against your ward's property (i.e. for utilities, rights to travel across real property, rights to extract minerals, rights to build something on, over or under the property, right to graze animals, etc.)
liens against your ward's property (tax liens, mechanics liens, judgment liens, etc)
any type of orders against your ward's property that would impact your ability to sell the property (i.e. local, state, or federal orders affecting the use of the property, cease and desist orders against continuing with a construction project, etc.)
Placing a value on the encumbrance can be difficult. To value an encumbrance you might determine how much the encumbrance reduces the Fair Market Value of the property. Sometimes this will be simple. If there is a lien for $5,000 against the property, then the amount of the encumbrance is $5,000. However, a cease and desist order stopping a current construction project because of a code violation will be a little more difficult. One way to value such an encumbrance might be what it will cost to bring the construction within the code.
Unless the valuation of the encumbrance is straight forward, you should consider consulting with an attorney or accountant for guidance.