Probate is a series of judicial proceedings whereby the decedent’s affairs are wound up. The process generally involves informing heirs and creditors, handling any claims made against the estate, paying debts and taxes and distributing assets. A probate bond provides protection to creditors and heirs from executor misconduct.
The executor is a fiduciary of the estate. This means that he must act in the utmost of good faith and loyalty toward handling and administrating the deceased’s property and assets. The role requires handling finances, notifying heirs and creditors and making periodic reports with the probate court. If the executor does not complete his duties in a timely, ethical and lawful fashion, the heirs and creditors of the deceased could suffer damages, financial or otherwise.
A probate bond helps protect the heirs and creditors of an estate from executor misconduct or malfeasance. Companies may call this type of bond an estate bond, executor bond or fiduciary bond. According to U.S. Legal, a legal information website, the bond helps cover costs from fraudulent acts, errors, negligence and theft. Policy limits vary by surety company. In Washington State, for example, a personal representative may take out a $10,000 policy for a $100 annual premium (at the time of publication).
Requirements and Exceptions
State laws generally require an executor obtain a probate bond unless an exception exists. For example, in Washington State, the executor must obtain a probate bond unless the decedent’s will explicitly waives the bond requirement or if the decedent’s surviving spouse is the personal representative and only heir. Connecticut Code Section 45a-169 also allows the court to set aside the bond requirement if the fiduciary is a bank or trust company authorized to do business in that state, among other reasons.
Specific probate bond requirements and exceptions vary by state and may be dependent on the language in the decedent’s will. Further, policy limits and premium amounts vary by company. Because probate and probate bonds implicate legal matters that could affect a person’s legal rights, readers should seek independent legal advice before proceeding.