A fiduciary bond is a type of judicial bond that is imposed on a fiduciary. A fiduciary is a person who is entrusted with financial responsibility and decision making for another person. This can include many different persons, but it generally applies to the executor or administrator of an estate (i.e., the person in charge of executing a person’s will).
Basically, the court requires the fiduciary to deposit a certain monetary amount with the court. This will act like insurance, and will ensure that the fiduciary performs their fiduciary tasks and responsibilities. The fiduciary bond may help prevent instances of fraud, theft, or embezzlement of the estate holder’s property and money.
Fiduciary bonds may be called by different names depending on the context; these can include: probate bonds, executor bonds, administrator bonds, conservatorship bonds, guardianship bonds, and many others.
Who are Fiduciary Bonds Applied To?
Fiduciary bonds are applied to any person or party that is acting a fiduciary capacity. Basically, any person that has a fiduciary duty or responsibility to another may become subject to a court-order fiduciary bond. Such persons may include:
- Estate executors or administrators
- Financial advisors
- Legal guardians
- Lawyers and other professionals
The definition of a fiduciary may vary from jurisdiction to jurisdiction. Usually, the test to determine whether or not person is a fiduciary generally analyzes the amount of control the person has. If the financial representative exercises a great deal of control and decision-making over the person’s finances, they will likely be considered a legal fiduciary of the person.
What if the Fiduciary Violates Their Duties?
It can happen that a fiduciary violates their legal and financial duties as the person’s agent. In fact, that is the main purpose of a fiduciary bond- to help encourage fiduciary to adhere to the law and/or the terms of any financial contract existing between the parties.
Some types of fiduciary violations may include:
- Stealing or embezzling funds
- Unlawfully gaining access to accounts or personal information through fraud or misrepresentation
- Purposefully giving the person bad advice in order to lead them into a certain decision
- Coercing the person to make decisions through physical harm or threats of physical harm
- Making alterations or serious errors in an account report
While a fiduciary bond may not always prevent every single violation, they can be very useful in terms of providing general protection against losses. In the instance of a violation, the fiduciary may need to pay a damages award for the economic losses caused to the person.
Do I Need a Lawyer for Help With Fiduciary Bond Issues?
The state and local laws covering fiduciary bonds may be different in each area. You may wish to consult with an estate lawyer if you need help with a fiduciary bond. Your attorney can help resolve any fiduciary bond issues you may be encountering. Also, a qualified lawyer near you will be able to represent you in case you need to file a civil lawsuit for damages.