What is a Fiduciary Bond?
A fiduciary bond is a type of court bond which is often required by probate courts. This bond often must be obtained by 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.
Fiduciary bonds guarantee that a court-appointed fiduciary will comply with a court’s 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.
A fiduciary bond protects the fiduciary’s ‘clients,’ as well as the state, from bad and dishonest practices, such as fraud, embezzlement or misrepresentation. This means that fiduciary 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.
If a fiduciary is found to be in breach of regulations and of their responsibilities, the bond offers legal recourse to obligees. These can file a claim against the bond and receive material compensation up to the full penal sum of the bond. In return the fiduciary must then compensate the surety for its backing.
Questions about Probate Bonds
Who needs to obtain a fiduciary bond?
Fiduciary bonds may be required of anyone who has been appointed to take care of someone’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.
Fiduciary bonds might be required of guardians, administrators, executors, trustees, custodians, and others. These bonds are typically requested by probate courts appointing fiduciaries, rather than individuals.
Are there different types of fiduciary bonds?
A probate bond, an executor bond, a guardianship bond and an estate bond are alternative names for fiduciary bonds. There are also more specific types of probate bonds such as VA fiduciary surety bonds required when a fiduciary is appointed to take care of the assets of a veteran who cannot do so themselves.
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 these 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. For an exact and entirely free quote on your bond, simply submit a surety bond application form and you will be shortly be contacted by one of our experts.
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. Those who have a very low credit score typically do not get approved for such a bond.