Surety Bonds And How To Avoid Them?

When a person dies, and the estate must be managed, one of the aspects of administration and responsibilities of the executor is the obtainment of what’s known as a Surety Bond.

A Surety Bond is a deposit made to the Court while an estate is being administered. This deposit or bond is made as a form of insurance for the court to be able to provide the heirs of the estate. The surety bond allows for the protection of the heirs in the event of self-dealing or theft by the executor. If the estate is administered improperly or money is lost/stolen, the heirs and creditors can be reimbursed through the surety bond.

In some estates, the personal value can become quite high as many estates have significant amounts of money held in bank accounts. This can mean that a surety bond can reach into the hundreds of thousands of dollars, which is far beyond what a normal person can submit as insurance. This is resolved by obtaining a surety bond through a surety bond company, which will accept a small percentage of the bond amount as payment and will then provide the full bond to the Court.

A surety bond can be a nice protection in estates where the eventual decedent has suspicions that the powers of the executor could be abused by the person chosen but typically it is preferable to waive this requirement so as not to incur further bills towards the estate and lower the inheritance for each heir.

There are two ways to avoid a surety bond. The first is establishing a Will and stating in the Will that the requirement of a surety bond is waived and not needed. This will still result in probate being opened with the Court, but will not require a surety bond submission by the executor to begin administering the estate.

The second way to avoid surety is arguably the better route, and it is the creation of a trust. A trust is a legal entity created during life that holds a person’s property during their life and distributes it upon their death. A trust’s existence usually allows for the avoidance of probate with the Court and thus completely removes the possibility/need of a surety bond.

If you have suffered the loss of a loved one and are about to administer their estate, please consider contacting the Law Office of Andrew Szocka, P.C. online, emailing us at info@szocka.com or by phone at (815) 455-8430 before you make any filings. We are happy to assist with determining the likelihood of a need for a bond, and we have designated surety companies with whom we work on a regular basis. These companies can help provide you with a fair and affordable deal for your surety bond, should it be needed.

If it is your desire to avoid the need for a surety bond in your estate’s administration, our office will ensure your estate plan includes that provision!