Probate surety bonds are estate bonds that are issued to guarantee the performance of an executor or administrator of an estate. The bond guarantees that individuals will faithfully discharge their duties as outlined in the will and by state law.
If the bonded person fails, the bondholder can claim the bond. This article will discuss some of the basics that one should know about probate surety bonds.
1) What Is the Purpose of a Surety Bond?
A surety bond is a type of insurance product that helps protect the estate’s beneficiaries from any fraudulent or dishonest actions taken by the executor or administrator. The bond also provides financial compensation if the executor or administrator fails to perform their duties satisfactorily.
It is important to note that a probate bond is not like life insurance. The bonds are typically required in cases where the estate is worth more than $75,000.
2) Who Needs To Purchase A Probate Surety Bond?
Here are some reasons why a personal representative may be required to purchase this bond:
- The decedent died without a will
- The decedent’s will was not properly executed
- The decedent’s estate is insolvent
- There are objections to the appointment of the personal representative
- A family member or heir of the decedent requests a bond
- The court orders a bond to be purchased
If you are named a personal representative in any of these situations, you will likely be required to purchase a surety bond.
The bonds are not always required. A bond may only be required in some states if the estate meets specific criteria, such as worth a certain amount of money. The court can require or waive a bond for any estate in other states.
3) How Much Does A Probate Surety Bond Cost?
The cost of the bonds depends on the following factors:
-The state in which the probate is taking place
-The size of the estate
-The type of surety company chosen
For example, a surety company may charge a premium that is a percentage of the estate’s total value. The rate charged by the surety company will also be based on its creditworthiness.
Another factor that affects the cost of the bond is the type of surety company chosen. There are two types of surety companies: stock and mutual. Stock surety companies are owned by their shareholders, while mutual surety companies are owned by their policyholders. Mutual surety companies typically charge lower premiums than stock surety companies.
4) How Long Does A Probate Surety Bond Last?
The bonds can last for as long as the probate process, typically around one year. However, some states require that the bonds be renewed after some time has passed.
It’s important to note that if you are the executor of an estate, you may be required to purchase a probate surety bond even if the deceased left a will.
5) What Happens If An Heir Contests The Will?
If an heir contests the will, they may be required to post a probate surety bond. This bond would be in addition to any bond required by the executor. The purpose of the probate surety bond is to protect the estate from any losses that might occur if the contesting heir is successful in having the will overturned.
6) What Is The Role Of The Surety In A Probate Proceeding?
The surety is the party that provides the court with the assurance that the executor or administrator will faithfully discharge their duties. The surety bond protects the estate’s beneficiaries from any losses that might result from mismanagement or theft by the executor or administrator.
Conclusion
Surety bonds play an important role in the probate process, whether you are an executor, administrator of an estate, or creditor. It is essential to consult with an experienced probate attorney to determine which type of bond is right for you.
