Fiduciary Bonds (Probate Bonds) Explained
Fiduciary bonds are a type of court bond which are often required by probate courts. They are required of individuals who have been appointed to act on behalf of others, such as to take care of their property or finances. These bonds are often also called probate bonds and estate bonds.
Fiduciary bonds guarantee that a court-appointed fiduciary will comply with all legal requirements and instructions, as well as comply with state regulations for fiduciaries. These bonds guarantee that fiduciaries will perform their responsibilities in an honest and faithful manner, and without taking advantage of their appointment. Thus, they protect the fiduciary’s ‘clients,’ as well as the state, from dishonest practices, such as fraud, embezzlement or misrepresentation.
Probate bonds work like an agreement between the obligees (the court and the person(s) the fiduciary acts on behalf of), the principal (the fiduciary) and the surety bond company.
Questions about Court Bonds/probate Bonds
Who needs to obtain a probate bond?
Fiduciary bonds may be required of anyone who has been appointed to take care of another person or entity's property or estate, assets, finances, or even affairs. Usually the recipients of a fiduciary’s services are minors, or disabled, deceased or incompetent persons. Heirs and beneficiaries also fall within this category.
Probate, or estate, bonds might be required of guardians, administrators, executors, trustees, custodians, and others. These bonds are typically requested by probate courts appointing fiduciaries, rather than by individuals.
Are there different types of fiduciary bonds?
Probate bonds and estate bonds are alternative names for fiduciary bonds.
There are also more specific types of probate bonds such as Veteran Affairs fiduciary surety bonds required when a fiduciary is appointed to take care of the assets of a veteran who cannot do so themselves. Other commonly used estate bonds are guardianship bonds, as well as executor bonds, which refer to specific types of fiduciaries being appointed.
Occasionally there may be minor differences between these bonds according to state legislation, because they address different types of fiduciaries, but in practice, they are usually used interchangeably and are not seen as separate types of bonds.
How much does a fiduciary bond cost?
The cost of a fiduciary bond is a percentage of the whole amount of the bond. The amount of the bond, in turn, is directly linked to the value of the estate or assets that the fiduciary has to take care of.
When determining your rate or premium, sureties will take your personal credit score into account. If you have a high score, you can expect your bond to cost between 1%-3% of the total amount of your bond. In the case of probate bonds, the percentage of the premium often falls as the amount of the bond increases. It is common to see rates below 1% for higher bond amounts.
Can I get a fiduciary bond with bad credit?
Getting a probate bond with bad credit is possible, although only in certain instances and with individuals whose credit issues are minor. Applicants who have a very low credit score typically do not get approved.
How do I get an estate bond?
In order to obtain a probate bond, you have to do the following:
Fill them out and send them to [email protected] or fax them to (267)-362-4817.
Want to delve into the details of the bonding process? You can consult the extensive guide on our How to Get Bonded page.
If you have further queries or need help with your application, you can reach us at (877) 514-5146.
How are bond claims handled?
If a fiduciary is found to be in breach of regulations and of their responsibilities, the probate bond offers legal recourse to obligees and relevant harmed parties. They can file a claim against the bond and receive compensation up to the full penal sum of the bond. The fiduciary must then compensate the surety for its backing by covering all costs on proven claims, as per the bond indemnity language.
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