A probate bond is required either by the terms of a will or a probate court. Also known as a fiduciary bond, it protects the heirs and creditors of an estate from mismanagement or malfeasance by the executor or administrator.
While most bonds protect the public — not the bondholder — probate bonds serve the unusual purpose of protecting both parties. In this case, the public would include heirs and creditors being protected from harmful actions made by the person managing the estate. These executors or administrators are protected by the bond if any false claims are made against them.
If the executor mismanages the estate, he or she will need to settle the claim either by paying the claimant directly or via the bond. If a claim is paid out of the bond amount, the company that issued the bond will make the payment and then require the bondholder to reimburse them.
Costs vary, but often the bond amount is based on the estimated worth of the estate and your credit history.
For a probate bond that is less than $200,000, the cost to the bondholder will range from $150 to $1,700; pricing is based on the creditworthiness of the bondholder.
For a bond amount that is more than $200,000, the premium will be more than $1,700. In this case, pricing is based on both the creditworthiness of the bondholder and the amount of the bond. For example, a $2.6-million probate bond will cost between $4,910 and $9,120.
You’ll need a probate bond if you’re the executor or administrator of an estate. An estate bond may be required by the provisions of the will or the laws of the locale where the will was filed. A bond may also be necessary if the deceased person died without having a will in place.
A will may include provisions waiving the need for a probate bond. However, a judge has the authority to overrule this and require a probate bond at his or her discretion even if the rules of the state or locale where the will was filed don’t require a bond.
The bondholder pledges his or her personal or corporate assets as payment if there is a claim against the bond. These costs can include the entirety of the bond amount, plus court costs.
Unlike other bond types, a probate and estate bond are not cancellable.
There are a number of documents you must provide to get a probate bond, including:
Yes. Probate bonds are often referred to as fiduciary bonds because courts require the fiduciary to demonstrate they can be trusted with another party’s assets.
While “probate” is the legal process of properly carrying out a deceased individual’s will, a “fiduciary” is the person in charge of that process.
Probate bonds may be known under a number of different names or descriptions depending on the court or jurisdiction, including:
No matter the label, they serve the same purpose.