What is a Probate Bond?

A probate bond, also known as a court bond, may be one of several bonds required of individuals appointed to act on behalf of another. People purchase probate bonds to protect heirs’ or creditors’ interests from potentially illegal actions of a court-appointed fiduciary.

Types of Probate Bonding

Executors, guardianship, conservatorship, and administrators are all court-appointed fiduciaries who may be required to adhere to a probate bond. The probate bond guarantees that they will perform their duties ethically and legally, and that financial compensation will be available through the bond in the event of misdeeds by the fiduciary.

A guardianship of minor probate bond is required for those who take up guardianship of minor children. The bond ensures that they will perform their duties in the best interest of the children and honestly report the properties and assets due to the children. If the guardian fails in this duty or illegally appropriates the children’s property, the guardianship bond will provide compensation. Most Carriers will require that the premium is paid in full from the current age of the minor until they are 18 years of age.

Guardianship bonds of incompetent are a type of probate bond required for individuals who are appointed as guardians of incapacitated adults. These bonds ensure that the guardian will perform their duties in the best interest of the ward, managing their assets and well-being responsibly and ethically. The bond provides financial protection by guaranteeing that if the guardian fails in their duties or misappropriates the ward’s assets, compensation will be available to cover the losses. Guardianship bonds are typically required by the court to safeguard the interests of the ward and to ensure that the guardian adheres to legal and ethical standards. This requirement helps protect the vulnerable individuals under guardianship from potential financial abuse or neglect.

Executor probate bonds ensure that the executor of a deceased individual performs their duties in accordance with the deceased’s will and the law. If a will exists, a bond may not be necessary. However, an executor bond can help ensure that the deceased person’s property is distributed and their debts expunged in accordance with their wishes and the court’s orders.

Trustee bonds assure that trustees will handle the assets of their trusts and uphold the trust agreements legally. As with guardianship bonds and executor bonds, trustee bonds ensure that the trustee performs duties legally.

If a will exists, the decedent may have waived bond requirements in their final wishes. In these cases, a bond will not be required. However, probate bonds exist to ensure those responsible for acting on behalf of others do so faithfully, helping to protect the rights of surviving heirs.

Different states have different requirements for bonds. Typically, the bond amount is set to protect liquid assets. What are liquid assets? These include amounts in bank accounts (savings or checking), 401(k)s, investments, pensions, life insurance proceeds, and personal assets such as vehicles, belongings, and collectibles. Typically, real estate is not included in the amount needed to be bonded until it is sold.

For Ohio, the bond is typically twice the value of the assets (excluding real estate). For example, if an estate has $10,000 in a checking account, a $200,000 home, a $15,000 vehicle, and $100,000 in a 401(k), you add up the assets excluding the real estate and multiply by two to get the bond amount. $10,000 + $15,000 + $100,000 = $125,000, which is then doubled to have a bond amount of $250,000.

In Michigan, the bonds tend to be at or slightly above the value of the assets (excluding real estate). In the above example, the bond would be $125,000.

States vary in their calculation methods, so it is best to consult with an estate attorney to determine the bond amount needed. The courts will make the final determination.

If you have questions regarding probate bonds or need a bond, please feel free to contact Smith Bond and Surety for a consultation. We can help write bonds in all 50 states.

Call us at 866-451-4222 or email Jon@smithbondsurety.com.