Probate & Fiduciary Bonds: A Quick Guide

Probate & Fiduciary

What is a fiduciary?

A fiduciary is a person appointed to handle the affairs of someone who cannot handle their own. If the reason is that the person is a minor, the fiduciary is a guardian. When the reason is death, the court appoints an administrator — or, if the deceased left a will naming someone, that person qualifies as executor. Mental incompetence or physical disability calls for a committee, conservator, or guardian; a businessman’s tangled finances call for an assignee for the benefit of creditors; a receivership calls for a receiver. In nearly every case, statute requires the fiduciary to furnish a bond conditioned on faithfully performing the duties of the appointment.

The bond types at a glance

• Guardianship Bond — protects a person deemed incapacitated by the court, ensuring the guardian doesn’t abuse or neglect the ward financially or physically.
• Personal Representative / Administrator / Executor Bond — required after a death to administer final expenses and distribute assets.
• Curator Bond — guarantees the estate’s assets will not be misused, stolen, or wasted; amounts vary by county and estate value.
• Trustee Bond — required by the trust document or the supervising court; protects the trust from losses if the trustee fails in their duties.
• Receiver / Assignee Bond — required in corporate bankruptcies to prevent mishandling of rents or payments owed the defunct company.
• Custodian of Veteran Bond — filed with the Department of Veterans Affairs when a veteran with VA-invested funds is deemed incapacitated.

Costs and requirements vary by jurisdiction. All probate bonds are underwritten with credit in mind — we have markets that will consider lower scores (somewhat more expensive, but they get the job done) — and most bonding companies require an attorney to remain involved until the matter concludes.

When is a guardianship bond required?

Picture a couple married forty years. They own their home, rental properties, savings and brokerage accounts. Then one spouse becomes incapacitated by Alzheimer’s — no longer having the legal “capacity to contract,” unable to consent to any transaction involving the property. If the healthy spouse dies suddenly, the court will often appoint a guardian to handle the incapacitated person’s estate for their benefit — and require a guardianship bond to protect the ward’s interests from mishandling. The bond amount is based on all the ward’s assets — real estate, bank accounts, trusts — and the premium is a fraction of the bond amount. Underwriting looks at the guardian’s personal credit and financial picture.

How administrator bond amounts are set

In most states the bond amount is based on the estate’s personal property, because administrators generally have nothing to do with real estate unless personal property can’t cover the claims — real estate can’t be conveyed without the court authorizing additional bond based on the expected sale proceeds.

Why is the bond a fixed amount? Because estates appreciate, and additional assets are sometimes discovered but never reported — occasionally deliberately, to avoid a bond increase and its premium. Whether additional bond is furnished or not, the surety is liable up to the loss but never beyond the bond penalty — which is why premium is computed on the bond amount, not the personal property.

Becoming a bonded administrator

The administrator is generally the family’s choice — the person they believe most able — which usually makes for a good risk. Before collecting the moneys due the estate, the administrator furnishes a bond guaranteeing they will faithfully perform: file the inventory promptly, pay claims, distribute the residue according to law, and make proper return to the court in a final accounting. When the court approves that accounting, the bond can be released.

For attorneys

Since 1949 we have specialized in the bonds the legal profession needs — administrator’s, executor’s, and personal representative’s bonds; guardian, conservator, and committee bonds; testamentary trustee bonds; receiver bonds; and trustees in liquidation or reorganization — available nationwide, with an expertly staffed underwriting and claims operation behind them.

Discuss your probate, fiduciary, or guardianship bond at bfbond.net/probate/ or call 800.921.1008.