THE WHEN AND WHAT OF PROBATE BONDS
If the term “probate bond” sounds a little intimidating, don’t worry. Once you’re comfortable with what probate is and what a bond is, the idea of a probate bond will fall into place. Fortunately, we’re here to help you navigate the confusion, as among the variety of improprieties Financial Forensic Services researches, probate disputes are common. Allow us to shed a little light on the subject of probate bonds …
First of all, probate is the process of administering a deceased individual’s estate through court proceedings. If the deceased had a will, the probate court will grant probate to an executor, whose job is to carry out the last will and testament of the individual who passed away. One of the executor’s main duties is to distribute the property and assets of the deceased’s estate.
If there’s no will, the court will appoint an administrator instead of an executor. The administrator oversees distribution of property and assets. Instead of doing so in accordance with the wishes of the person who has passed away, however, the administrator will do so in accordance with the laws in that area’s jurisdiction because the wishes of the deceased are unknown.
So, that’s a little bit about what probate is and how it works. Now, let’s take a look at what a bond is. A surety bond is essentially a fiduciary promise in which one party agrees to meet an obligation but is on the hook financially if he or she fails to meet the obligation.
In the case of probate, say you’re an executor of a will. The judge might require you to get a probate bond, which means there will be money to compensate heirs and creditors if you are negligent or fraudulent in your dealings with the estate such as taking some of the money to pay for your own expenses. For an estate that’s worth $1 million, it might require $5,000 to acquire a bond for $1 million in coverage. If something goes wrong, the bond company is responsible for paying out the full value of the estate to heirs and creditors.
Needless to say, it’s a pretty risky situation for any company to put up the money for a probate bond, which is why they’re as stringent about it as any other lender would be about loaning money to a private party. Probate judges won’t always require a probate bond, but it can be a challenge when they do. This is due to the money required to obtain the bond in the first place, but you can’t access the estate as executor or administrator until the bond is issued.
Even after you’ve obtained a bond, you may feel pressure to wrap things up quickly so that you don’t have to pay new premiums on the bond when it comes up for renewal after the first year. Another challenge is the time it takes to actually obtain the bond, even if you qualify. While that process is underway, the estate is just sitting there.
Fortunately, most wills that are drafted by an attorney can include clauses that waive the requirement of a probate bond. As long as the will names the executor, and that executor is the one submitting the will to probate, there won’t be a bond requirement. In any other case, it depends on the judge, the heirs, and whether there is any unsecured debt that the creditors are eyeing.
Love is the one treasure that multiplies by division: it is the one gift that grows bigger the more you take from it. It is the one business in which it pays to be an absolute spendthrift; give it away, throw it away, splash it over, empty your pockets, shake the basket, turn the glasses upside down, and tomorrow you will have more than ever!
The Scriptures tell us that the very essence of God is love…always reaching out to touch the needs of people. But love fulfilled must be received. Loving and caring for one another is part of His plan.
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