Every now and then people make a conscious decision not to write a Will and die intestate — which may serve the needs of some people. However, when someone dies intestate, the Surrogate’s Court must make a decision as to whether or not the Administrator must post a bond to secure the proper performance of their duties. When one writes a Will, it is common for the Will to waive the requirements of a bond. However, absent a written Will, there is no such statement from the deceased.
Simply put, a bond is an insurance policy that promises the Court, the Estate, and those people interested in the Estate (including beneficiaries, next of kin, and creditors) that, if the Administrator runs away with the assets of the Estate, the insurance company will reimburse the funds to the Estate to protect all of the aforementioned people.
How Does One Get an Administrator’s Bond?
To get an Administrator’s Bond, you need to go through a surety agency. This is an independent office that represents the underwriters who issue these bonds. Often Trusts and Estates attorneys will have a relationship with one or more of these surety agents, and can put you in touch with them, but if not a simple Google search can usually uncover many in your area. There is generally no difference in the costs between one surety agent or another — outstanding customer service is key. I’ve used the same surety agent for over twenty years for just this reason.
The surety agent will provide an application whereby you can request the bond. They will need to know the penal sum of the bonds — you can get this information from the Courts. They will also ask if you have ever been convicted of a felony and make an inquiry into your credit history. Again, what the underwriter is insuring against is how likely it is that you will run away with the assets of the Estate.
Once the underwriter determines that you are a reasonable risk for them to take, they will issue the bond.
What Does One Do With the Bond Once They Get It?
Once you have the bond you will need to sign it, have your signature notarized, and file it with the Surrogate’s Court.
There will be a small filing fee to pay for the bond, which will be a matter of public record going forward. You will also need to pay the first annual premium for the bond. This is important because this will be an Estate asset for which you can seek reimbursement.
Please note that this is an annual premium that you will need to pay until the Court discharges the bond or the surety company is otherwise satisfied that you have completely and honestly completed your duties as the Administrator.
An Administrator’s Bond should not necessarily be a deterrent for potential Administrators. It is something common that the Surrogate’s Courts and Trusts and Estates attorneys deal with every day.
For more information on this topic, please contact me.