What is Probate?
What is a Probate Bond?
Are There Other Types of Probate Bonds?
Who needs a Probate Bond?
How Does a Probate Bond Work?
How Much Does a Probate Bond Cost? How to Get a Probate Bond?
A probate bond is a legal requirement often arising when someone passes away, and their assets must be managed. It works as a guarantee made by the person in charge, called the executor, to follow the deceased person's wishes as stated in their will or ordered by a court. This bond is a way to reassure the deceased person's estate that everything will be done correctly, just as they wanted or as directed by the court. Sometimes, a court may also require a probate bond when someone is declared unable to handle their affairs or when dealing with the assets of a minor. In such cases, the executor takes care of these assets until the person becomes capable again. The cost of getting a probate bond depends on how much is needed and is usually less than 1% of the total amount being managed.
Probate is a legal process that occurs when a person passes away and involves the distribution of their assets. The court oversees this procedure and follows either the instructions in the deceased person's will or if there is no will, the state's laws. In the course of probate, an executor is appointed either by the court or named in the will, and their responsibility is to manage the distribution of assets as outlined in the will. This includes informing creditors, settling outstanding debts, and paying any taxes owed. The deceased person's family can choose to waive the need for a probate bond, which is a type of surety bond, but the court has the authority to require one, mainly if the estate is substantial or complex. This step is taken to safeguard the deceased person's wishes and protect their family from actions that might violate the will. The executor must adhere to the deceased person's will throughout the probate process, and if they fail to do so, a claim can be filed against their probate bond.
A probate bond is a three-party agreement between the surety company providing the bond, the executor of the estate (Principal), and the heirs to the estate (Obligee). As the principal, the executor of the estate will need to obtain a probate bond, and by purchasing the bond, they are guaranteeing that they will fulfill their obligations in the will to the heirs of the estate, the obligee. The amount that the executor will need to get bonded for will be determined by the value of the deceased’s estate and will be determined by the courts. This ensures that if any unlawful acts happen, there would be financial coverage up to the estate’s value. In addition, if the heirs to the estate would like to waive the requirement for a bond, the court will most likely allow that if there are no outstanding debts. If the estate's heirs do not want to waive the requirement or if there is a substantial debt, the courts will still require a probate bond to be purchased.
The court can require probate bonds for situations other than death, such as when an individual cannot care for their affairs. Guardianship and conservatorship bonds, also known as fiduciary bonds, are financial instruments that protect individuals deemed legally incapacitated or minors, requiring a court-appointed guardian or conservator to manage their affairs. A guardianship bond ensures that the appointed guardian, typically responsible for personal and healthcare decisions, acts in the incapacitated person's best interests. In contrast, a conservatorship bond pertains to the financial management of the individual's assets, safeguarding them from mismanagement or misuse by the court-appointed conservator. These bonds provide a financial guarantee to the court and the incapacitated individual, assuring that the guardian or conservator fulfills their legal obligations faithfully and responsibly. These bonds act as the same guarantee as a bond required after the death, ensuring that the person’s estate is handled legally and ethically, with the parties' best interest in mind.
A probate bond can be required for someone appointed by the court or a person designated in the deceased person's will. When the court selects the executor, a probate bond is often required to ensure they carry out their responsibilities with financial responsibility. If the will explicitly name the executor, a probate bond can still be required to ensure the will is handled responsibly. It's also important to know that the court might choose not to require a probate bond, but only if everyone involved agrees, and the court believes it's the right decision. This way, the rules about probate bonds can be adapted to each case's unique circumstances, considering the best interests of the estate's beneficiaries and ensuring that the will is handled correctly.
If the courts deem a probate bond required, then the executor of the bond will need to purchase a probate bond at the value of the estate. The bond will ensure that all the obligations of the executor are fulfilled, meaning that they will distribute the contents of the will to all the beneficiaries according to the deceased’s request. Suppose aspects of the deceased’s assets were not solidified or require finalization. In that case, the executor will ethically handle that and keep the beneficiary's best interest in mind. The probate bond can be seen as “completed” once the deceased’s estate has been distributed to all parties and all agree that the estate was accurately distributed. If anyone questions whether the executor fulfilled their role correctly, a claim can be filed to correct the error and financially compensate the affected parties.
Essentially, the bond serves as a safeguard to ensure the deceased’s estate is distributed according to their request. Without requests, the estate should be distributed ethically and with the beneficiaries' best interest in mind.
Getting a Probate bond is straightforward and can be completed completely online. During the application, one can expect to supply their Social Security Number for a soft credit check, the executor's name and the bond's value requested. A probate bond's premium, or cost, will be a percentage of the total bonded amount. The court will determine the bond amount needed based on the estate's value, and then the surety company will determine the premium for a bond of that size. For example, if an estate is valued at $20,000, then a $20,000 bond will be required. If an applicant has a great credit score, they can expect to pay around 1% of the bonded amount, or $200 for their bond. For a large bond, the applicant can expect to supply more documentation and underwriting from the surety company to fully understand the best premium they can offer for such a complex bond.
Each surety company will rate each business differently because of its unique underwriting. To find our customers the best prices available on the market, we’ve partnered with over 10 surety partners, enabling us to compare quotes with different companies and find the lowest price for each of our customers.