Probate Bond is also known as the estate, executor, and fiduciary bonds. These bonds are required to be purchased by a person responsible for distributing a person’s estate after he or she passes away. The probate bond protects the deceased’s assets.
Trustees have certain duties (some of which are fiduciary).
- Carry out the expressed terms of the trust instrument
- Defend the trust
- Prudently invest trust assets
- Be impartial among beneficiaries
- Accountable for actions and keep beneficiaries informed
- Be loyal
- Not delegate
- Not profit
- Not be in a conflict of interest position
- Administer in the best interest of the beneficiaries
A trustee carries the fiduciary responsibility and liability to use the trust assets according to the provisions of the trust instrument (and often regardless of their own or the beneficiaries’ wishes). The trustee may find himself liable to claimants, prospective beneficiaries, or third parties. In the event that a trustee incurs a liability (for example, in litigation, or for taxes, or under the terms of a lease) in excess of the trust property they hold, they may find themselves personally liable for the excess.
HOW DOES A PROBATE BOND WORK?
Much like other surety, they are a contract between three parties. The first of the parties is the principal, or the one who is responsible for purchasing one. This is the executor or the administrator assigned to the estate of a deceased person. The second party is the oblige. In the case of a probate surety bond, the oblige is the heir to the estate. This is usually a member of the deceased’s family, although it can refer to anybody who has a legitimate claim to an estate. The third party is the surety. The surety sells the bond to the principal and is the one who reimburses the oblige should a claim be filed.
When a person dies, their assets often go to probate court to be distributed to the proper parties. This process involves:
- Locating and interpreting the deceased’s will
- Assembling all of their property and having it appraised
- Paying all outstanding debts the deceased may have
- Paying property and estate tax
- Covering the cost for a funeral service
- Distributing any remaining assets among heirs
This process mainly falls to an executor or admin of an estate, who is also required to have one. If there is any malfeasance on the part of the executor, the heirs of the estate can file a claim against the bond. This claim is then investigated by the surety. If it is found to be legitimate, the surety reimburses the heirs for damages as stated by the terms in the surety. It is then up to the executor to reimburse the surety for what was paid out.
Most Court Bonds are issued in house and on the same day and the cost start from $4 per thousand
For any questions call our agents @ 800-374-9227 9:00am – 5:00pm CT M-F