A probate bond, sometimes also called a fiduciary bond, is a type of court bond that may be required before an individual or entity can be appointed as the personal representative of an estate.
The purpose of the probate bond is to ensure that the executor or administrator of the estate will perform their duties honestly and in good faith.
What you need to know
A probate bond is designed to protect the heirs, beneficiaries and creditors of an estate, not the executors or administrators
Probate bonds are usually required by probate courts, but not always
Probate bonds are a type of surety bond, and may also be called a fiduciary bond or an executor bond
Probate bonds are often priced at 0.5% of an estate’s value
The executor or administrator is responsible for paying for a probate bond, but they can be reimbursed by the estate
A probate bond is a type of court bond that is issued against the performance of the executor or personal representative to protect the estate of the decedent.
It can be helpful to think of a probate bond like a form of insurance— it essentially protects beneficiaries and creditors if the executor or administrator is negligent or participates in fraud with the estate’s assets.
This analogy to insurance isn’t perfect, though. Probate bonds are used to protect an estate’s beneficiaries, not the executor or administrator who purchases the bond. If the surety company (the company that provides a line of credit to guarantee payment of a claim) has to resolve a claim, the executor must repay the surety company.
In other words, even when executors buy probate bonds, they are the ones ultimately responsible if something goes wrong when settling an estate.
How much do probate bonds cost?
The executor or administrator purchases a probate bond from a surety company. The cost of the probate bond varies, but is usually around 0.5% of the estate’s value and often purchased using the executor or administrator’s own money, however once the estate is dispersed they can reimburse themself with the estate funds.
Are probate bonds required?
Most of the time, yes. The probate court decides if a bond is required, and they usually opt for it. However, a probate bond is not needed if the will specifically waives the probate bond requirement, or if there is no will, all heirs are adults (over 18), and they all sign a waiver of bond. When a probate bond is waived, all parties involved trust that the executor or administrator will act in good faith and carry out their fiduciary responsibility.
If a will specifically waives the bond, the probate court can override the waiver if they determine that one is necessary. These overrides tend to happen if the estate has a lot of debt and courts want to protect the creditors of an estate.
How to find a trustworthy probate bond company
When getting a probate bond, take the time to find a reputable surety bond company. There are a lot out there, and there are several things to consider in picking a company.
They need to:
- Be licensed to provide probate bonds
- Authorized to do business in your state
- Provide the type of bond you need (probate bond)
- Offer the amount of money you need.
Ask for written quotes, check out third-party reviews on Google, and see if they operate locally in your area. If they have been in the bond business for a long time and have good reviews, chances are they’re fine. And if you’re working with a probate lawyer, they will likely have recommendations.
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Learn moreJames discovers that he is one of the beneficiaries of his Uncle Mike’s estate, who just passed away. This came as a surprise to James, as he was unaware of his Uncle’s large estate. Uncle Mike named his best friend Tommy as the executor of his estate.
James found out that since the passing of his uncle, Tommy has been on an extended vacation to Europe, blowing through all of James’s inheritance. In this case, Uncle Mike’s will waived the probate bond requirement, thinking that Tommy would act in good faith, but unfortunately he was wrong. Because there was no probate bond, James has to make a claim against Tommy in civil court, but if Tommy cannot pay, then James will not receive his full inheritance.
In this case, if a probate bond was required by the probate court, James would have received his full inheritance from the surety company, leaving Tommy liable to pay the company back.
In collaboration with
Jack Wilkes
Jack Wilkes is a trust professional and Private Wealth Client Account Manager at Northern Trust Wealth Management in Boston, MA.
Jack received his undergraduate degree in Trust and Wealth Management from Campbell University in North Carolina, along with a minor in Financial Planning. Jack continued his education with an MBA in Financial Services, also from Campbell University.
Jack is a frequent industry writer on trust, wealth management and fiduciary topics.
In collaboration with
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