If you have never been (or dealt with) an executor of an estate, you may have never heard of a surety bond. Or have heard the term in passing and want to understand what it is and how it pertains to you. More importantly, you should have a solid grasp as to how they protect you.
If you were to pass away without having done any estate planning or even drafted a will, then you are said to have died intestate. In other words, your assets go to a probate court and get distributed per the laws of the estate. There will still be an executor to oversee this process, but the deceased’s wishes are not considered. Even if the deceased had been estranged from a specific person, that person still receives a piece of the estate if the law demands it.
Why Surety Bonds Exist
Imagine that you are an immediate relative of someone who passed away. The deceased did not write a will or do any estate planning. An executor is appointed, but that person steals the money or mishandles the assets within the estate. Are there any existing protections for the beneficiaries or creditors?
A surety bond is that insurance policy. It exists to protect the beneficiaries and creditors if an executor fails to handle the estate.
If there is no will or waiver (more on that in the next section), the personal representative will likely be forced to take out a surety bond. The cost of which is the decedent’s estate’s value. It is a way of assuring the court that you won’t take the money and run.
People may petition the court to become the administrator when someone passes away. The court will likely be meeting you for the first time. The surety bond is a way to get the court to trust you.
Waiver Of Bond
There are circumstances when a bond can be waived. A legal and valid will may expressly waive the bond requirement. The adult heirs (beneficiaries) may also sign a document waiving the bond. Presumably, this is done because the beneficiaries know and trust the person who will be the estate’s administrator.
Another way is to ask the judge to waive it. Imagine that your brother passed away and that you are petitioning the court to be the executor of his estate. You may request that the bond be waived, especially if you are dealing with a relatively small estate.
Jayaraman Law
Take control of your estate and make the hard decisions regarding its future right now. If you have further questions regarding estate planning and how it benefits you and your chosen beneficiaries, contact Jayaraman Law to schedule a free consultation. Each client is a unique individual with their own set of challenging problems. We are here to help you resolve them.
Jayaraman Law
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