What Is a Bond in an Estate Case?

In the state of California, as is the case across the United States, there are two primary kinds of probate processes: testate estates and intestate estates. A testate estate probate process is one in which a person died with a last will and testament. On the other hand, an intestate estate is one involving a person who died without a will. In both types of probate processes, a fiduciary is approved or appointed by the court to oversee the affairs of the estate. In an estate with a will, that person is called an executor. In a case without a will, the court appoints an administrator. In either situation, the court can order the executor or administrator to obtain a bond. Like many people, you may not fully understand what is meant by a bond in a probate setting.   

Probate Bond Defined

A probate bond is akin to different types of insurance and is designed to protect against certain types of losses during the probate process. Specifically, a probate bond protects the estate as well as the beneficiaries (heirs) in the event that the executor or administrator fails to satisfy his or her legal duties and obligations. A probate bond protects the estate and beneficiaries if an executor or administrator misuses assets of the estate in some manner. For example, and unfortunately, there are situations in which an executor or administrator uses money from an estate for personal purposes.

Probate Bond and Fiduciary Duty

A probate bond is intimately connected with what legally is known as a “fiduciary duty.” In a probate case, a fiduciary duty is the legal obligation of the executor or administrator to the estate and its beneficiaries. Legally, a fiduciary duty is the highest obligation that is owed to another individual or entity. It is a legal duty to engage in activity associated with the probate of the estate only for the benefit of the estate and its beneficiaries.

Directives in a Last Will and Testament

Oftentimes, a person includes within his or her last will and testament a directive that the “executor can serve without a bond.” What this means is that the person who created the will has full confidence in the person selected to serve as the executor of the estate and that a bond is not necessary.

A probate court is not bound by a directive in a will stating that the executor can serve without obtaining a bond. More often than not, a court will permit the executor to serve without bond when the person who wrote the will so directs. However, eliminating a bond requirement is at the discretion of the court.

How to Obtain a Probate Bond

The probate determines the amount of the probate bond that will need to be posted by an executor in a particular case. The amount of the bond largely is determined by the value of the assets in a particular estate.

An executor can post a probate bond in one of two ways in California. The most common way is for an executor to obtain a probate bond from what legally is known as a professional surety. This is a type of company that provides different types of bonds, including those used in probate proceedings.

The less common way is for an executor to post a cash bond with the probate court. Rarely does an executor want to use his or her own funds for this purpose. Moreover, taking this route can be prohibitive considering the amount of a bond a court may order in a probate matter. Funds from the estate cannot be used as a cash bond in probate proceedings. If this were permitted, an executor or administrator could engage in improper conduct with the assets of the estate and the estate would end up losing money in the first instance and then paying for it via a bond it posted.

Return of Cash Probate Bond Posted With the Court

If an executor or administrator posts a cash bond with the probate court, that individual is entitled to a full refund of that money if nothing goes awry because of his or her conduct during the probate process. The posting of a cash bond by an executor or administrator with the probate court is not something that oftentimes occurs, as was noted previously.

Payment of Probate Bond Professional

When a surety company is used for a probate bond, a certain amount of nonrefundable money is paid to the company, the company in turn posting or guaranteeing the full amount of the bond with the court. In most cases, the cost of this type of probate bond is not particularly significant. In the significant majority of cases, the need to pay for executor or administrator misconduct does not occur. In other words, the risk to a bonding or surety company is not considered particularly significant in these probate cases involving estates.

The payment for the cost of a probate bond provided through a surety oftentimes will be made by the estate itself rather than the executor. The reality is that even if an executor or administrator engages in misconduct, a third-party (the bonding company) pays for the losses within the parameters set forth in the bond.