Estate bonds are also called “executor bonds”, “fiduciary bonds”, or “probate bonds”. When a person dies or is disabled, often there is a legal document or will that details what is to be done with the deceased’s estate. When this happens, either the document or the court will appoint someone called the executor to distribute the assets of the estate according to the written wishes of the deceased. An estate bond is a safeguard to ensure that the executor faithfully complies with the written wishes of the deceased.
The estate bond acts like an insurance policy. The executor purchases the bond from a company that will compensate the beneficiaries of the will for any negligent or intentional bad acts of the executor. Some states require the executor of an estate to post an estate bond when the estate holder dies, as part of the distribution process. Estate bonds are usually purchased as a surety bond from an agency that deals specifically with those types of transactions. The executor or representative of the estate usually must apply for the bond amount, and can sometimes be subjected to a credit check.
In some states, the probate court will require the estate administrator to secure a probate bond, especially for larger estates. However, even if an estate bond is not required by state law, a will can still list it as a requirement for a specific estate. A bond will often help ensure the legitimacy of the process, and can provide peace of mind for the beneficiaries.
On the other hand, the estate holder may specifically state that they do not wish the executor to obtain an estate bond, as they can sometimes be costly, and delay the process of distributing the assets of the estate.
If an estate bond is required, but isn’t posted correctly, it can delay the entire process for distributing the assets. Beneficiaries may not receive the distributions that they’re entitled to at the desired time. This can complicate the matter and subject the process to various legal issues such as a will challenge.
Estate bonds are an important aspect of estate planning. It may be in your best interests to consult with a qualified estate planning lawyer if you need legal advice regarding an estate bond. Your lawyer can inform you of the estate laws in your area, and can help make sure that you’re following the legal requirements for a valid estate plan.
Last Modified: 04-25-2018 01:12 AM PDTLaw Library Disclaimer
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