An executor’s bond is a type of surety bond the executor of an estate must sometimes provide in order to serve as executor of an estate. An executor’s bond is also sometimes called a probate bond or a fiduciary bond.
The purpose of an executor’s bond is to guarantee the performance of the executor’s duties in administering the estate, including paying all valid debts of the estate, managing estate property, and distributing the estate to the legal heirs or beneficiaries. A probate bond or executor’s bond is designed to insure against the risk that the executor will defraud the estate by stealing estate assets or mismanage estate property to the detriment of the heirs or beneficiaries. When an executor’s bond is required, it usually must remain in effect until the probate of the estate is closed or the estate is settled.
Who Pays the Cost of an Executor’s Bond?
The cost of obtaining a probate bond is paid with funds from the estate. Premiums are due for each year the bond remains in effect. Since probate can last one or two years and in some cases even longer, when a bond is required, it can increase the costs of settling an estate.
Bonds for Executors and Personal Representatives
More detailed information on bonds for executors and personal representatives is available in Administration of Wills, Trusts, and Estates. Written by an estate planning attorney, this is a comprehensive guide with information on wills, trusts, intestate succession, probate, non-probate transfers, will contests, gifting, uniform transfers to minors, living wills, organ donation, and related matters. It discusses executor bonds both in the context of drafting a will and probate or estate administration.
Administration of Wills, Trusts, and Estates also provides an overview of the duties of an executor or personal representative and how to probate a will. It discusses the types of income tax returns due for the deceased and estate taxes. The author provides numerous examples throughout the book. The last wills of celebrities such as John Lennon and Elvis Presley are used to illustrate key points. Administration of Wills, Trusts, and Estates is an excellent book to have during the process of probate or estate planning.
Pass Your Estate with a Living Trust to Avoid Surety Bond Requirements
Probate fees, attorneys’ fees, surety bond premiums, and other costs associated with probate can greatly diminish the size of your estate. One way to avoid these fees and expenses is to pass your estate through a living trust. With a living trust, your trustee distributes trust property to your designated beneficiaries without posting a bond and without going to court. See our Guide to Living Trusts.
Is an Executor Required to Post a Bond?
In most wills, the requirement that the executor post a bond is waived. However, if the will does not specifically waive this requirement, the executor is required to obtain a bond as part of the probate process. If you are the executor of a will and are unsure if a bond is required, start by reviewing the will.
Even if the will does not waive the requirement for a bond, the executor can try to reach agreement with the legal heirs and beneficiaries of the will to waive the requirement for a bond. If they agree, the executor can have the heirs and beneficiaries sign written waivers and submit them to the probate court with a petition to waive the bond. Nevertheless, the court may still require a bond for a variety of reasons.
If the decedent died without a will and the estate is submitted for probate, the probate court will appoint an administrator to administer the estate. Administrators are generally required to post a bond.
If you are required to file a bond with the probate court, consult a probate lawyer for assistance. In addition to completing an executor bond application with an insurance company, you will need to complete a form or submit a filing with the probate court. In order to avoid the application being denied or the filing being submitted incorrectly, it is best to have a probate attorney assist you with the process.
How to Post Bond for Probate of an Estate
Contact an insurance broker, surety agency or bonding company and ask for a probate bond application. Be prepared to complete a detailed personal financial statement about you and your spouse. You will be required to provide information about your credit history, bank accounts, other assets, mortgages, and other debts. The application will also require information about the estate you are administering, including the financial status of the estate, whether there are any disputes among the heirs, and information about the heirs and beneficiaries such as name, age, and relationship to the decedent. In addition, you will be required to submit documentation with the bond application, such as a copy of the will and the probate court order showing the amount of bond required.
If you have very few financial assets or a poor credit history, your application for an executor’s bond may be denied. Companies that offer surety bonds have stringent requirements. If they do agree to issue a bond in such circumstances, it may be classified as high risk which means the bond premiums will be much more expensive.
How is the Amount of the Probate Bond Calculated?
The amount of an executor’s bond is based on the value of the assets in the estate and any income of the estate, as well debts or claims owed by the estate.
Reasons to Waive the Executor Bond Requirement in Your Will
When you ask a relative or friend to be the executor of your estate, it is important to understand the tremendous burden it may involve. Depending on the size of your estate and the nature of your heirs, it can involve a huge commitment of time. Executors can also be held personally liable for any failure to perform their duties and may experience a lot of stress during the probate of an estate. If you fail to waive the executor’s bond requirement in your will, you will be making the executor’s job even more difficult.
When an executor is required to post a bond to probate an estate, he or she must complete a probate bond application with an insurance company or surety agency. Applying for an executor’s bond is similar to applying for a bank loan. The executor will have to provide a detailed financial statement regarding the executor and the executor’s spouse. The executor must agree to a credit check and disclose information about past credit history. If the executor does not have adequate financial assets and good credit, it will be difficult and sometimes impossible for the executor to post a bond for estate administration.
If the bond application is approved, the executor will have to sign a contract agreeing to indemnify the bond issuer. The executor may also have to put up cash or other property as collateral for the bond. Many bond companies require the executor to retain an attorney throughout the probate process as a condition of the bond. If the executor is required to hire a probate lawyer, the costs of settling the estate will increase substantially.
When a will is drafted, the testator must decide whether to require the executor to post a bond or whether to include a bond waiver clause. While requiring an executor’s bond is necessary and prudent in some cases, it is important to understand the ramifications of this type of provision. Consult an estate planning attorney if you have questions.
. Written by an estate planning attorney, this is a comprehensive guide with information on wills, trusts, intestate succession, probate, non-probate transfers, will contests, gifting, uniform transfers to minors, living wills, organ donation, and related matters. It discusses executor bonds both in the context of drafting a will and probate or estate administration.