What is a Probate Bond?
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. Probate is a complex legal process to handle this task, but many people don’t understand what it is. 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.
What is Probate?
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 role of the court is to ensure the will is valid and that the decedent’s wishes are honored. 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.
Definition of a Bond
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.
What is a Probate Bond?
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.
How Much does a Probate Bond Cost?
The cost of a probate bond isn’t a set price. It will vary based on several factors, such as the value of the estate. Bonds come in different amounts, which also impacts their cost. It’s important to note that you won’t pay the full cost of the bond when you purchase it. You pay just a percentage of the amount of the bond. You will then be given paperwork to show to the court that you are bonded.
Types of Probate Bonds
A probate bond is a broad category with several different types. The type of bond you must get depends on your role in the estate and probate process. Each bond does the same thing in protecting the estate from loss.
Administrator Bond – This type of probate bond covers a person who has been appointed by the court to handle the estate. They are appointed when there is no will.
Personal Administrator Bond – This type of bond is for a person who has been named in the will to act on behalf of the estate.
Conservatorship Bond – This type of bond is for someone who is taking care of the finances of a person who is incapable of handling it on their own.
Trustee Bond – With this type of bond, the person being bonded is acting on behalf of a trust left by the deceased person.
How Does a Probate Bond Work?
When a person gets a probate bond, they are paying for protection of the estate. An heir or other involved party can file claim against the person who is bonded if they believe they haven’t fulfilled their duties adequately or if they failed to comply with the will’s terms or a court order.
If someone files a claim against you, it will be your responsibility to take care of the claim. If you don’t, the bond company will probably begin an investigation into the claim to determine if it has merit. They will contact both parties. The company may determine the claim isn’t valid, which would end the process.
If the company determines the claim is valid, they will once again expect you to take care of the claim. If you fail to do so, they will settle the claim on your behalf. However, it doesn’t end here. The surety company will look to you to be reimbursed for the amount paid as well as legal costs.
Do I Need a Probate Bond?
Not all executors or personal representatives will need to get a probate bond. Sometimes the will states that no bond is necessary or that one is required. However, the court can override the will’s provisions if it determines a bond to be necessary from other information.
If the will doesn’t mention a probate bond, the court may order that one be provided. In some cases, the representative may not be required by the will or by the court to provide a bond.
The Difference Between a Probate Bond and Other Bonds
A court bond is the overall term for surety bonds which are necessary for a person involved in a settlement involving the court. However, there are differences between a judicial bond and a probate bond.
A judicial bond requires the promise of a specific sum of money which would need to be paid in a court case. A probate bond doesn’t require payment of money, only that the person serving would do so in an honest and responsible manner.
A judicial bond is also known as a litigation bond, and it is used in civil cases. This type of bond may include bail bonds, attachment bonds, injunction bonds and others.
Probate bonds are limited to situations where a person is handling or managing someone else’s assets.
If you will be serving as executor or personal representative of an estate, you will need to find out if a probate bond is necessary. You will need to apply for a bond with a surety company and show evidence of being bonded with the court.
BOND | meaning in the Cambridge English Dictionary
What is Probate? | Nolo
What Is A Probate Bond? (suretysolutions.com)
What Is The Difference Between A Judicial Bond And A Probate Bond? (suretysolutions.com)