Probate Surety Bond
A probate court bond is a type of surety bond that is issued on the performance of an executor of the estate of a recently deceased person. It essentially acts as a guarantee that the executor of an estate will act according to state laws and the terms of the trust or will of the deceased. Should the executor fail to comply with state laws or act in a way that violates the terms of the will or trust, the deceased’s family members, heirs, and other stakeholders can file a claim against the bond. Should the claim prove to be valid, the surety who sold the probate court bond to the executor will reimburse the party who filed the claim according to the terms of the bond. Like other surety bonds, it is the responsibility of the executor or administrator to purchase a probate bond.
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How Does a Probate Surety Bond Work?
Much like other surety bonds, a probate court bond is a contract between three parties. The first of the parties is the principal, or the one who is responsible for purchasing the bond. This is the executor or the administrator assigned to the estate of a deceased person. The second party is the obligee. In the case of a probate surety bond, the obligee is the heir to the estate. This is usually a member of the deceased’s family, although it can refer to anybody who has a legitimate claim to the estate. The third party is the surety. The surety sells the bond to the principal and is the one who reimburses the obligee should a claim be filed.
When a person dies, their assets often go to probate court to be distributed to the proper parties. This process involves:
- Locating and interpreting the deceased’s will
- Assembling all of their property and having it appraised
- Paying all outstanding debts the deceased may have
- Paying property and estate tax
- Covering the cost for a funeral service
- Distributing any remaining assets among heirs
This process mainly falls to an executor or administrator of the estate, who is also required to have a probate bond. If there is any malfeasance on the part of the executor, the heirs of the estate can file a claim against the bond. This claim is then investigated by the surety. If it is found to be legitimate, the surety reimburses the heirs for damages according to the terms of the bond. It is then up to the executor to reimburse the surety for what was paid out.
Who Needs a Probate Court Surety Bond?
As a rule, most administrators and executors who are in charge of a deceased person’s estate should buy a probate court surety bond even if it isn’t required. In many cases, the will or trust of the deceased will require that a probate bond be purchased and put into effect. Most courts will not order a bond to be purchased if there are no outstanding debts and the deceased’s heirs agree to waive the bond. If the executor doesn’t have the agreement of all the deceased’s heirs or if there is considerable outstanding debt, a probate bond is almost always required during the probate process.
Types of Probate Bonds
There are several types of probate surety bonds, although they all essentially have the same function. Our staff can help you decide which probate bond you will need as an executor of an estate. The types of probate surety bonds include:
- Administrator Bond – This is a bond that is purchased by an administrator. An administrator is assigned to an estate when there is no will present. An administrator bond ensures that the administrator handles the estate in a responsible and ethical manner.
- Personal Representative Bond – A personal representative is someone who is named as the representative of an estate in the deceased’s will. Like an administrator, they are responsible for handling the estate according to the terms of the will.
- Conservatorship Bond – A conservatorship bond ensures that a court-appointed representative will fulfill all of their obligations to a deceased person’s heir.
- Trustee Bond – A trustee bond is purchased by a trustee, or someone who is in charge of a deceased person’s assets. It ensures that the trustee will handle all of these assets according to the terms of the deceased’s will.
Why You Need to Be Bonded
As we said before, you technically don’t need to buy a probate bond to handle an estate. If the deceased doesn’t have considerable debt and their heirs wish to waive the bond, you can go without one. However, it is always in your best interest to have a surety bond. First of all, it represents a show of good faith to the heirs of the deceased. Even though an executor or administrator can still commit some kind of fraud or other wrongdoing while they are bonded, they will have to pay for it if they are bonded. Having a probate court bond is a guarantee that you will fulfill your obligations to the best of your ability.
Second of all, having a probate court surety bond is highly beneficial to anyone who is new to acting as an executor or administrator of an estate. If you have experience and a good reputation as an executor, people might be willing to waive a probate bond and trust that you will perform your duties admirably. If you are largely untested, your obligees will be more likely to want some insurance. Purchasing a probate court surety bond even when you’re not legally required to do so shows that you are taking your obligations seriously and that you can be trusted.
If you are acting as the executor of an estate and you need to purchase a probate court bond, NFP Surety will be more than happy to assist you in getting a proper probate court surety bond! Contact us today for more information.