Probate courts often require executors, administrators and trustees to purchase probate bonds as a guarantee that they will perform their duties. They have a fiduciary duty to be faithful and competent. For this reason, probate bonds are also called fiduciary bonds. A decedent may waive any bond requirements in a will, and the court will waive the bond requirement as long as state laws permit the waiver. Here are 3 probate bonds that are often required before a court will permit individuals or companies to administer the estate or trust:
1 - Guardianship Probate Bonds
A guardian has to be appointed when the decedent leaves behind minor children with no surviving spouse, or, when the probate court is referred cases involving minor children where custody is not contested. The decedent often names a guardian in a will, but if the will is invalid, then the judge has to appoint one.
Guardians have to post a guardianship bond, or guardian bond. Guardianship bonds guarantee that the guardian will provide an honest accounting of the property that the child inherits. It's also a guarantee that the guardian will be faithful in carrying out his duties regarding other important decisions that they must make on behalf of the child. Guardianship bonds are also applicable to guardians of adults who have been adjudicated incompetent or are shown to be developmentally disabled.
2 - Executor Probate Bonds
An executor is responsible for managing the affairs of the estate. They must make sure that the property is disposed of in accordance with decedent's will, or as ordered by the court. Paying off debts with creditors, paying estate and probate taxes and distributing property to beneficiaries and heirs are just a few of the duties required of an executor. The executor often doesn't have to purchase a bond if there’s a will, because it’s common for individuals writing a will to waive the requirement. If a bond is required, then an executor bond is appropriate. The bond guarantees that the executor will faithfully comply with the orders given by the probate court in carrying out his duties.
3 - Testamentary Trustee Bonds
Some wills create a trust that goes into effect when the trust creator dies. A trustee, named or appointed by the court, is in charge of managing the financial affairs of the trust for the benefit of the beneficiaries. For example, the trustee may use his discretion to sell a house and distribute the proceeds, or manage brokerage and other accounts in the trust on behalf of the beneficiaries. A testamentary trustee bond guarantees that the trustee will uphold the trust agreement, preserve the assets of the estate and properly distribute assets as directed by the trust instrument.
You can purchase probate bonds from insurance carriers. Many companies specialize in surety bonds for courts and offer these three bonds for purchase. Probate bonds can be expensive, so many individuals waive the bond requirement in their wills. The costs are often paid by the estate or trust.