Surety Bonds, What Are They and Do I Need One for Probate?

Surety Bonds, What Are They and Do I Need One for Probate?

When a person dies and the estate must be managed, one of the aspects of administration that confuses the majority of executors is whether there will be a need or not for a bond.

A bond is a deposit made to the Court while an estate is being administered. This deposit or bond is made to the court as insurance that if the estate is administered improperly or money is lost/stolen, the heirs and creditors can be reimbursed through via the surety bond.

One of the many benefits to writing a will is that a will can specifically waive the need for a bond. If a will contains a provision waiving the need for a bond, the Court shouldn’t require it and the executor can be allowed to administer the estate without depositing money first, thus saving a lot of stress, financial burden, and headache for whoever is chosen to serve as executor.

If there is no will, the Court will more than likely require a bond to be deposited before Letters of Office will be given to an executor. The Court has discretion to waive the need for a bond and have done so in the past. An example of a situation that would likely result in a bond being waived would be when there are very limited assets in an estate and the estate has a very small group of heirs or beneficiaries, all of whom are in agreement as to how the estate will be administered and who will be doing it. Waivers signed by the heirs and beneficiaries can be filed along with the Petition for the Letter’s Office which will go towards influencing the judge’s decision on whether or not to grant Letters of Office with no bond requirement. Ultimately though, if there is no will waiving the need for a bond it is up to the judge to decide if he/she wants to require it.

If the bond is being submitted by individuals it is likely a cash bond that is being submitted and a cash bond, cannot be less than double the value of the personal estate. The personal estate does not include real. However, even when real estate is not involved, personal estates can carry high value, thus making the bond a very expensive deposit, especially for an individual executor.  A surety bond, which is deposited through a recognized third-party surety company is often more approachable as then it must only be at least 1 1/2 times the value of the personal estate rather than double. In addition to the lesser bond amount, utilizing a surety company can further reduce the financial burden on the executor as surety companies often only require 1%-15% of the value of the bond to be deposited with them and they will then submit the much higher required bond amount to the court.

If a cash bond is submitted, and the duties are faithfully fulfilled by the executor, the cash bond should be returned at the end of probate. The surety bond, upon the closing of the estate and end of probate would be returned as well, except that the fees paid by the executor to the surety company in order to secure the surety bond from them are almost always non-refundable.

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 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, whom we work with on a regular basis, that can help provide you a fair and affordable deal for your surety bond should it be needed.

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