What Is a Guardianship Bond?
A guardianship bond, also known as a custodian bond, is a type of fiduciary bond. Like all fiduciary bonds– a subcategory of court bonds– the guardianship bond is required by courts when they have appointed someone to act on behalf of another individual.
More specifically, the custodian bond is required from persons who have been assigned by a court to take care of finances and other matters, for individuals that are incapacitated to do so themselves. Usually this means minors, disabled, or elderly persons.
The bond functions as a guarantee that the guardian will act in the interest of the person subject to guardianship. In case the custodian mismanages or abuses the finances, assets, estates, or affairs entrusted to them, a claim can be filed against their bond. This way, even if a guardian transgresses their legal obligations, the ward will be protected and financially secured.
Guardianship bonds, like all other surety bonds, constitute a three-party contract. The principal is the appointed guardian. The obligee is the court that selects the custodian and requires the bond. Lastly, the surety is the bond provider that guarantees the legal compliance of the guardian.
Questions about Guardianship Bonds
Who needs to obtain a guardianship bond?
If a court appoints you as the guardian of another person’s assets and affairs, you will likely be asked to post a guardianship bond. The requirement usually applies to both voluntary and involuntary guardianship cases. In some cases, you can apply for a waiver of this requirement, but this is rather unusual.
Like other fiduciary, or probate bonds, the guardianship bond safeguards the ward’s interests from potential harmful actions on the side of the caretaker.
Are there different types of guardianship bonds?
There are no differentiations between guardianship bonds. They can be considered a type of fiduciary bond, although in reality there are no major differences between probate bonds, estate bonds, trustee bonds, executor bonds and guardianship bonds.
Fiduciaries appointed for certain activities are referred to in different ways, such as trustees, executors and guardians. This is the source of the various subtypes of fiduciary bonds. In essence, all probate bonds protect an incapacitated person from the individual assigned to manage their assets, finances or affairs. In many cases, fiduciaries are required to report on how exactly they perform their duties.
How much does a guardianship bond cost?
The cost of a guardianship bond is a fraction of the surety bond amount required by the court that assigns the custodian. This percentage is called the bond premium.
The bond amount is determined on the basis of the assets and finances of the ward, or through another formula that the court deems appropriate. This amount varies greatly from case to case.
When you apply for a guardianship bond, the formulation of your surety bond cost will largely depend on your personal credit score and other financial information. For standard bonding market applicants, the usual premium is between 1% and 3% of the required bond amount.
For example, if you are asked to post a $200,000 guardianship bond, you’ll likely have to pay between $2,000 and $6,000.
With guardianship bonds, the premium often decreases with high bonding amounts. For the largest bonds, premiums are often below 1%.
Can I get a guardianship bond with bad credit?
Since fiduciary bonds require direct financial compensation in case of proven claims, they are considered high-risk bonds. That’s why obtaining them if you have bad credit can be challenging. It is possible only for applicants with minor credit problems and in specific circumstances.