Taking on the role of executor or administrator of a deceased person’s estate is a responsibility that must be taken seriously. Executors and administrators are responsible for managing the deceased’s affairs throughout the probate court process, and both positions confer important responsibilities that must be carried out. In many cases the duty of executor or administrator falls to a family member who may be grieving and dealing with other matters for the deceased. This presents a new challenge in an already difficult time.
To ensure that the executor or administrator’s obligations are carried out faithfully, probate courts often require executors and administrators to obtain special types of surety bonds called executor bonds and administrator bonds. This article will provide a brief guide to the fundamentals of executor bonds and administrator bonds, as well as what individuals should expect when applying for these types of probate surety bonds.
The Basics of Executor Bonds and Administrator Bonds
What is an executor bond, and what is an administrator bond? Executor bonds and administrator bonds are both types of surety bonds, three-party contracts that use a neutral guarantor to financially guarantee the fulfillment of an obligation. In the cases of executor and administrator bonds, the roles of the parties are:
- The principal is the executor or administrator who is required to obtain the bond.
- The obligee is the probate court that requires the principal to obtain the bond.
- The surety is an insurance company that acts as a neutral third party and financially guarantees the principal’s obligation.
If the probate court finds that the principal has failed to fulfill their obligations as executor or administrator, the injured party may file a claim against the principal’s surety bond.
Executor Bonds vs. Administrator Bonds
Executor bonds and administrator bonds are similar in function, but they are considered to be separate types of bonds due to the different natures of the executor and administrator positions. An executor is named by a deceased person’s will. The executor performs the duties of settling the deceased individual’s estate, such as:
- Paying the deceased’s debts, including taxes
- Making funeral arrangements
- Taking inventory of the deceased’s property
- Securing and protecting the deceased’s property until it can be distributed
- Distributing the deceased’s property to the beneficiaries of the will once all other debts are paid
An administrator performs similar functions as an executor but is appointed by the court when a deceased individual leaves no will or does not name an executor in their will, or when the named executor dies or declines to serve. Probate courts typically appoint family members (such as spouses or adult children) as administrators, but almost any competent individual over 18 years old can be appointed as an administrator, including a creditor of the deceased.
When Are Executor Bonds and Administrator Bonds Required?
In some cases, the court may be satisfied that the executor or administrator will perform their duties and will not require a bond. However, in many cases, the court will ask the executor or administrator to obtain a surety bond. Executor and administrator bonds are often required in the following situations:
- The deceased’s will is contested by family members or other parties.
- Someone other than a family member has been appointed as executor or administrator.
- The will’s named executor has died or declines to serve.
- The deceased’s estate is very large or valuable.
How to Get an Executor Bond or Administrator Bond
To obtain an executor or administrator bond, the principal will follow these steps:
- Gather copies of probate court documents including any case numbers or any specific documents provided by the court.
- The principal requests an executor bond quote or administrator bond quote from a surety bond agency.
- The agency works with the surety which performs underwriting and assesses the perceived risk of bonding the principal.
- If the surety is willing to bond the principal, the surety will determine a premium (cost) and the surety agency sends the principal a quote for the premium that the principal will pay.
- If the principal accepts the quoted premium, the principal pays the premium and purchases the surety bond.
- The surety agency sends the paperwork for the executor bond or administrator bond to the principal.
- The principal signs the paperwork and files the bond with the probate court.
The Cost of Executor and Administrator Bonds
The court will set a required bond amount, and the premium for a principal with good credit will typically be 0.5 to 1 percent of the bond amount. However, many factors can affect executor and administrator bond premiums, including:
- The principal’s credit score and other elements on the credit report
- Previous bond claims filed against the principal
- The principal’s criminal record
- Whether the principal is indebted to or has business interests within the estate
- Whether a will exists for the estate
- Whether the executor or administrator has given prior bond in the same estate
- Whether the executor or administrator is succeeding another fiduciary in the same estate
- Whether the executor or administrator has previous experience in such a role or is an attorney
- The principal’s occupation
- The principal’s relationship to the deceased
These factors can affect the principal’s bond premiums. In many cases, the executor or administrator will also be working with an attorney to help settle the estate. Working with an attorney sometimes lowers the bond cost. If working with an attorney, the executor or administrator will need to be bonded, not the attorney.
Getting an executor surety bond or administrator surety bond is easier and faster when working with Surety Bonds Direct, thanks to our network of highly rated sureties that offer affordable premiums. You can start by getting a free online surety bond quote today or contacting our surety bond experts by phone at 1-800-608-9950.