In a lot of movies, we often see grieving families gather together to observe the reading of the deceased’s will, after which, everyone receives their inheritance without a lot of fuss. The reality concerning the distribution of assets (also known as probate), though, is far more complex. An executor must be named to oversee the collection, assessment and appraisal of all assets, as well as the forgiveness of debts and other financial matters. What most people may not know is that this executor may also be required to post a probate bond prior to executing his or her duties.
Why? What is a Probate Bond?
Also known as a fiduciary, executor or estate bond, a probate bond guarantees that the appointed executor complies with all mandated state laws and will ethically fulfill his or her duties. If the executor does not faithfully execute the will, claims can be made against the bond, allowing the defrauded to be compensated for their full inheritance.
Do I need to post a bond?
Not always. Bonds apply when a will is drafted and includes a requirement. However, the executor may seek to waive the bond by collecting signed written waivers from all of the beneficiaries and providing the court a written declaration that details the solvency of the estate as well as all of its creditor, tax and other contingent liabilities.
Bonds also apply to intestate probate (in other words, probate wherein a will was not drafted). In most cases, the court will require a personal representative or administrator to post bond unless all beneficiaries waive the requirement.
In either case, the court has complete discretion to require an executor or intestate probate representative to post bond in an amount up to the maximum estimated value of the estate.
How do I post a bond?
The executor will be required to fill out an extensive financial application from an insurance broker, surety agent, or bonding company. This application will then be provided to the court along with the will, detailed estate information, disputes among heirs, court bond orders, and the amount of the bond. Because bond issuers are acting as loan agents within the process, there are very high restrictions placed on these applications, and may be denied if the executor has very little assets or a poor credit history.
In any case, it can be very difficult and costly to navigate the process of probate court, especially as an executor, so it’s always best to consult an attorney before diving head first into the murky waters of probate.
