When someone passes away, their estate must go through a legal process known as probate to be distributed to the deceased’s heirs. This process can be lengthy and expensive, so many people choose to hire an estate administrator to handle it for them.
An estate administrator is responsible for ensuring that the will is carried out according to the deceased’s wishes and all of the necessary paperwork is filed with the court. To do this, they often need to purchase an estate administration bond.
This article will discuss an estate administration surety bond and its types.
What Is An Administration Surety Bond?
An administration surety bond is a type of court bond required to obtain probate. This bond guarantees that the administrator will faithfully discharge their duties when handling the estate.
Surety bonds are financial instruments that tie the principal, the obligee—often a government entity—and the surety. It helps protect the obligee from losses due to the principal’s failure to meet their obligations.
The premium for an administration surety bond is typically a small percentage of the total bond amount. It is based on the applicant’s personal credit score and starts as low as one percent for those with excellent credit.
Types of Estate Administration Bonds
1) Guardianship Bonds
A guardianship bond for estate administration is a type of court bond. This bond is required when someone is appointed by the court to serve as a guardian for either a minor or an incapacitated person. The purpose of the guardianship bond is to protect the ward’s (the person for whom the guardian has been appointed) assets from being misused by the guardian.
If you are interested in becoming a guardian, you will need to contact your local probate court to determine their requirements for obtaining a guardianship bond.
Two types of bonds may be required to be appointed as a guardian:
a) A conservatorship bond is required when the ward cannot take care of their own finances and property.
b) A guardianship bond – this type of bond is required when the ward is a minor.
2) Estate Administration Bonds
Estate administration surety bonds are a type of court bond required by the executor or administrator of an estate. The purpose of this bond is to protect the estate’s assets from being misused by the executor or administrator.
Suppose you have been appointed as the executor or administrator of an estate. In that case, you will need to contact your local probate court to determine their requirements for obtaining an estate administration bond.
3) Foreign Executor Bonds
If the executor resides outside of the United States, they may be required to post a Foreign Executor Bond. This type of bond is also called a Non-Resident Executor Bond. This bond aims to protect the estate from any fraud or misconduct the executor might commit.
Whether you are the executor of an estate, a trustee, or someone else with fiduciary responsibility, you may be required to post an estate administration bond. An estate administration bond is a type of surety bond that protects the beneficiaries of an estate from any financial loss caused by your actions.