How do probate bonds work

The probate process includes:. The probate process helps an individual transfer and disperse of assets in an orderly and supervised manner. Want to learn more about the probate process? Check out this post on how the probate process works. Many courts may require the appointed executor, guardian, administrator or trustee to get a Probate Bond before they start their duties. A Probate Bond also know as an Estate Bond or Fiduciary Bond is a type of court bond that ensures you will fulfill your duties as an appointed individual.

Probate Bond s can also be known as Fiduciary Bonds. You can learn more about these bonds in our Court Bond Guide. The cost of a Probate Bond varies. Probate Bonds range in amount, therefore they range in cost. Usually your Probate Bond amount will be based on the value of the estate, along with other factors.

When a person dies, it can be complicated to disperse their estate. The family may be at a loss as to what they should do to get everything taken care of and transfer the assets to the heirs.

They may not realize a probate bond is necessary or even what it is. This tool is often a required part of the process before any other steps can be taken. Probate is the legal process where an estate is distributed after a person dies. The court oversees the process in accordance with the will or with the state law if no will exists.

A person is named to be executor in the will or a personal representative who will act on behalf of the estate and see that the assets are distributed.

The probate process includes notifying creditors and paying any outstanding debts, filing tax returns and paying taxes, taking inventory of the assets of the estate and getting them appraised if necessary, and distributing the remaining assets to the heirs. The executor may also have the task of maintaining assets or liquidating them if cash is needed to pay debts or maintain other assets.

A bond is a surety for someone to protect another entity from loss. In general, a bond is financial security paid by the person being bonded as insurance that they will do what is promised. A probate bond is a type of financial protection for the estate of a deceased person against the executor. It is used to protect the estate from loss from poor decisions made by the executor or other actions that result in a reduction of value to the estate. A probate bond is also known as an estate bond or fiduciary bond.

It will vary based on several factors, such as the value of the estate. Bonds come in different amounts, which also impacts their cost. Probate bonds are needed by a person acting in a fiduciary capacity.

There are various types of probate bonds: administrator bonds, conservator bonds, tutor bonds, etc. The type of bond depends on the circumstances: handling the assets of a deceased person versus handling the assets of a minor. A common example of when an administrator bond is needed is when the fiduciary lives in a different state from the deceased a child living in a different state from a parent.

The bond is required because the estate is subject to a different jurisdiction than that which the principal lives in. The court will determine if a bond is required and the amount. There are many things the surety looks at when reviewing a probate bond application.

What is the makeup of the estate? Is there any dissension between the heirs? Is there an attorney involved?

The answers to these questions help to determine the favorableness of the risk for the surety. For example, real estate property may be viewed as more favorable than cash or jewelry which is easier to pocket and sell as was the case in our above example. Having an attorney involved may also provide some more oversight to the fiduciary. As discussed above, the surety will recoup any losses it incurs from the principal. The principal will sign an indemnity agreement prior to bond issuance promising payment to the surety should a claim arise.

For non-family members, agents should determine 1 why their client has been asked to be the fiduciary, and 2 if they have any financial interest in the estate. Disputes amongst the heirs are a red flag for most underwriters. If there is a dispute, agents should gather as much detail regarding the dispute and provide this detail to the surety company.

For wards with health conditions, the underwriter will need to determine if your client is capable of providing the necessary health care for the well-being of the ward. If the ward does not live with your client, the underwriter will want to know why your client is not the caretaker of the ward. Probate bonds will be required as long as the ward is a minor or, in the case of an incompetent until the ward is deceased.

The age of the ward and their health condition will help an underwriter determine how long the bond will be needed. In general, bonds for young minors or incompetents will be considered riskier due to the longer-term required on the bond. Surety companies typically determine the premium rate for probate bonds based on a tiered structure.