Area of Law: Insurance Law
Answer # 2792
Estate BondsRegion: Ontario Answer # 2792
What is an Estate Bond?
An Estate Bond is also known as a Fiduciary or Probate Bond. The Court often requires an executor (also known as an Administrator, Personal Representative, or Estate Trustee) to post an Estate Bond as a means to protect the beneficiaries and creditors in the event of improper administration of the estate assets of the deceased or incompetent person and minors for whom they are appointed to act on behalf of. These duties may include:
- filing tax returns,
- liquidating assets,
- providing financial recommendations, etc.
The bond states that if the executor fails to perform the duties as agreed then he or she would be liable to pay the entire bond amount.
When is an Estate Bond needed?
An Estate Bond is usually required:
- where an executor appointed in a Will resides out of province,
- where there is no Will, or
- where an alternate executor is applying to the Court for appointment as executor.
The bond application is always completed in the city/province/country where the duties are to be carried out and applications are examined by a judge to confirm if all conditions have been satisfied.
Types of Estate Bonds
There are a number of different types of Estate Bonds. The most common are:
Administration Bonds are required when there is no Will or a Will cannot be located. The purpose of an Administration Bond is to protect the creditors and lawful heirs of the estate. Different types of Administration Bonds exist depending on the situation, such as when beneficiaries include minor children.
Guardianship Bonds are required by the Office of the Public Guardian and Trustee or the Court to ensure that an individual assigned to serve as a guardian will perform his or her obligations as required by law.
Foreign Executor Bonds
This type of Estate Bond is required when the executor(s) named in the Will resides outside the province or Canada.
Trustee in Bankruptcy Bonds
These types of Estate Bonds are required by the Court appointed Trustee in Bankruptcy to guarantee that the trustee complies with the Bankruptcy Act.
Executor Bonds are mandated by the Court in order to provide assurance that the the executor of an estate appropriately handles, and distributes, the assets of the disabled or deceased person whom they are duty-bound to act on behalf of.
For more information on executors and estate administration, refer to Wills and Estates.
For more information about Estate Bonds, or to purchase a bond, contact Ai Surety Bonding.
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