FIDUCIARY/PROBATE BONDS

Probate bonds are required by the court when one person is handling the affairs of another person. They are a fiduciary guarantee, obligating one person to act on behalf of and in the best interest of another. A bond is required at the discretion of the court and varies from state to state. The bond amount is set by the court, usually based on the value of assets, such as cash, stocks, bonds and real estate. Once filed, all bonds are controlled by and remain in force until they are released by the court. The principal, agent and surety do not have the authority to cancel a probate bond.

There are two main types of probate bonds: administrator/executor bonds and guardian/conservator bonds.

WHAT IS AN ADMINISTRATOR OR EXECUTOR?

The administrator or executor is the person who gathers the assets of a deceased individual, pays any outstanding debts, and distributes the remaining assets, either according to the deceased’s will or state law if there is no will.

The administrator or executor bond guarantees the honest accounting and faithful performance of duties while handling the affairs and assets of the deceased individual. This administrator/executor must file documents with the court showing they handled the assets appropriately, paid any creditors, and filed the necessary tax documents. They also request a release of the bond when the estate is settled.

WHAT IS A GUARDIAN OR CONSERVATOR?

A guardian or conservator is a person appointed by the court to handle the affairs of those who are unable to care for themselves. The reason for the appointment can vary, but it is most often due to physical or mental disabilities or if the ward is under 18 years old (a minor).
A conservator bond guarantees that the appointee will handle the ward’s finances, preserve the assets, maintain an accurate record of transactions, file regular accountings with the court, and obtain a discharge of the bond if the person recovers, reaches the age of majority, or passes away.

The guardian may be the same person as the conservator. In some cases, a second person is appointed to make decisions regarding the ward’s health and well being.

UNDERWRITING

The underwriting information varies, depending on the bond amount and circumstances of the case. A new submission will often require the following:

  • A completed, signed and witnessed commercial  bond application, including the probate section on page two.
  • Often a personal credit report will be reviewed. On larger bonds, a personal financial statement will be required.
  • We require an attorney involved on all probate bonds.
  • Copies of court documents pertaining to the case.
  • An established relationship or recommendation of the applicant from the agent or attorney.

HOW DO I GET A SURETY BOND?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

WHAT IS A SURETY BOND?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.

All information provided is subject to change.