The fiduciary bonding process can be tricky to navigate for executors and administrators. We’re here to answer the most common questions about surety bonds for estate administration in this quick guide.
Estate Bond Quick Overview
- Bond Amount: Typically 1–2x the estate value
- Typical Premium Cost: 0.5–3% of the bond amount
- Typical Term Length: 12–24 months
- Parties Involved: Estate executor or administrator, surety, probate court
What Are the Estate Bond Requirements?
When a fiduciary is given control of estate funds, surety bonds help ensure the funds are distributed properly to beneficiaries and all debts and taxes are paid. Estate bonds are typically required when someone with a sizable estate passes away without a will naming an executor.
How Does an Estate Bond Work?
Probate courts set the bond amount based on the estate value. The price the executor or administrator must pay is calculated as a small percentage of the total bond coverage. Exact pricing depends on the applicant’s credit score, starting as low as 0.5%.
There are three parties in an estate bond contract:
- Principal: Executor/administrator purchasing the bond
- Obligee: Probate court requiring the bond
- Surety: Provider issuing the bond and backing the principal’s obligation
Estate bond applications typically require details about the court case, a soft credit check and a background check.
How Long Do Bonds for Estate Administration Last?
Typically, fiduciary bonds remain in effect until estate administration is complete. This means all debts and taxes are paid and assets are fully distributed to heirs and trustees.
The estate settlement process can last for several months up to several years, but 12–24 months is the typical timeframe for estate bonds. A fiduciary must be formally released of their duties by the court before the surety company can cancel the bond policy.
When Does the Fiduciary of an Estate Need to Be Bonded?
An estate fiduciary can be the executor named in a will, or it can be a professional administrator appointed by the state. Fiduciary bond requirements are often determined by probate courts on a case-by-case basis. Legislation also varies between states and counties.
If beneficiaries have concerns about the current fiduciary, they can request a bond rather than removing them from appointment. Bonds are also commonly required if the chosen fiduciary has a questionable financial or criminal history.
What Type of Bond Does the Executor or Administrator of an Estate Need?
The personal representative of an estate may need an executor bond, which is a type of fiduciary bond. This surety bond ensures the managing executor adheres to the decedent's wishes.
Administrators play the same role as executors when there is no one named in the deceased’s will. They are appointed by the state and must follow more stringent probate court processes, including being bonded in many cases.
Get Your Estate Bond Quote Today
If you need to be bonded as an estate executor or administrator, visit our probate bond guide and get your free quote now!
