Probate Bonds: What Are They and Why Do I Need One?

Probate Bonds for Attorneys

When a person passes away and leaves property behind to their loved ones, their family and friends may need to enter into the probate process. The person who handles this process is called an administrator (or executor) of the estate, and this position has a tremendous responsibility to meet all legal requirements and honor the decedent’s wishes. 

To ensure these responsibilities are met, courts will often require the estate administrator to obtain a probate bond before being appointed. This article will explain the purpose of probate bonds, why they are required, and how they impact you.

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What Is a Probate Bond? Why Do I Need One?

A probate bond is a type of financial guarantee that ensures that the person handling the estate will pay all debts and distribute all assets as required by law. The bond also ensures to the court that the administrator or executor will follow all legal obligations and court procedures. If the administrator or executor fails to fulfill their duties, any creditors or beneficiaries to the estate can file a claim against the bond to be reimbursed for any losses or damages they incurred.

The probate process is a significant legal proceeding that essentially gives the ownership rights of one person’s property to another, and this legal transfer of rights also comes with a major responsibility in the eyes of the court. The court requires a bond as a way to guarantee that the administrator or executor will fulfill their responsibility and will not act unethically while they have control of another person’s property.

Probate Bonds Protect Estate Beneficiaries and Heirs

The underlying purpose of probate is to ensure that a decedent’s property goes to the person legally entitled to it. The courts place their trust in the person they appoint as administrator, leaving them responsible for ensuring all estate beneficiaries receive what they deserve. Having a probate bond in place gives reassurance to the beneficiaries of an estate by giving them the means to be compensated in case anything goes wrong.

For example, let’s say an administrator is appointed over an estate with $40k to distribute to all the heirs. If the decedent left a will, then the administrator should follow the will's instructions when distributing. If there is no will, the administrator must distribute the assets according to intestacy laws in their state. If the administrator does not follow state laws and chooses to give one person more than they are legally entitled to, or if they do not pay someone with a valid stake, then that beneficiary could be reimbursed from the bond for any inheritance that the administrator did not give.

Probate Bonds Provide Financial Security to Estate Creditors

When an administrator is appointed over an estate, they must first identify all of the assets and debts of the estate. The most common estate debts are taxes and unpaid loans, such as overdue mortgages or car notes from a creditor. The top priority for the administrator should be to pay off all these debts using the estate funds, and this aspect of probate is crucial in closing the estate. If a creditor does not receive payment for their open debts with the estate, they are legally entitled to file a claim against the administrator’s bond to receive payment for the unpaid debt. 

For example, let’s say someone passed away with an estate and only owned a home. A family member is appointed as administrator and is in charge of closing out that decedent’s estate. When they gain control of the property, they realize that there is an unpaid mortgage on the home. If that administrator does not pay off that mortgage using the estate funds, the mortgage company could seek reimbursement from the bond for not receiving payment.

Probate Bonds Ensure Responsible and Ethical Behavior

Probate bonds help prevent misconduct and mismanagement of estate assets by imposing financial accountability on executors and administrators. If there is evidence that an administrator is acting unethically, such as embezzling money or failing to pay debts, then any interested party could file a claim on the bond to be reimbursed for any financial harm. 

If the claim is valid, the bond company investigates and compels the administrator to rectify the issue. If necessary, the surety company will cover the losses caused by the administrator and pay out the damages, holding the administrator liable for reimbursement. Since the administrator is ultimately responsible for any claims that are paid out, the bond incentivizes the administrator to act ethically in the first place.

How To Apply for a Probate Bond with Jet

Jet’s application process is simple and fast - our goal is to get the fiduciary bonded as quickly as possible so they can focus on their obligations. All we need is the bond amount and information about the estate. Once completed and submitted, you will receive your purchase price immediately or a Jet underwriter will review the application. Some of the factors Jet considers when underwriting these types of bonds:

Begin your probate bond application today by clicking the button below.

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Types of Probate Bonds

Two common types of probate bonds are administrator bonds and executor bonds. While they are very similar and serve the same purpose, the difference is how the person handling the estate is appointed. The difference between an administrator and an executor is simply that the court appoints the administrator, whereas the executor is named in the will. Both titles carry out the same duties and are most often called personal representatives.

Other types of bonds are required in probate cases, most notably guardianship bonds or conservatorship bonds. These bonds are required when taking custody of an incompetent person’s property, and we explain these requirements in depth in our Conservator and Guardian Bond Guide. Another less common type of probate bond is a trustee bond, which is required when someone handling a trust disperses the assets to the trust beneficiary. Learn more about each type of probate bond below.

ADMINISTRATOR & EXECUTOR BONDS

Executor bonds, sometimes called administrator bonds or personal representative bonds, are a type of financial protection for beneficiaries used when the will or a probate court has determined it necessary for there to be someone who handles the distribution of assets of an estate on a decedent’s behalf.

The bond is typically required at the discretion of the probate court judge when there are signficant assets to be protected, and Jet will provide this financial guarantee in the form of a bond that no person is left short-handed.

CONSERVATOR & GUARDIAN BONDS

Guardian bonds and conservator bonds afford financial protection to the individual receiving care and other interested parties from fraudulent and negligent actions of the fiduciary, who must complete their duties with the ward’s best interest in mind.

Generally, conservators are those making financial decisions for an incapacitated person until the person passes away, becomes of age, or otherwise becomes self-sufficient. Guardians are charged with making medical decisions for an incapacitated person or taking care of minors.

TRUSTEE BONDS

Trustees are assigned to administer a trust and disperse the property and assets to the beneficiaries. The person who creates the trust generally selects someone they trust to be the trustee (makes sense, right?). However, there can be times when an added assurance is put into place to guarantee financial security—enter the surety bond.

A trustee bond holds the trustee financially liable in cases of malfeasance while protecting the trust's beneficiaries. The terms of the trust may dictate a surety bond requirement or the court may deem a bond necessary.

Notary Bond Application:

X

Business Information:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Employee Dishonesty Bond Application:

Business Information:

Business Description:

Coverage Requirements:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Contract Bond Application:

X

Business Information:

Owner Information:

Job Details:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Worker's Compensation Application:

X

Business Information:

Business Description:

Coverage Requirements

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information: