What is an administrator bond?
Administrator bonds (or administration bonds) are a kind of probate bond. County courts often require these bonds for individuals handling the administration of a deceased person’s property, belongings, and debt (their “estate”).
If a deceased person left a valid will and named someone to serve as their executor, that person may need a different (but very similar) type of surety bond called an executor bond. However, if they did not execute a will, they are said to have died “intestate.” If this is the case, or if the executor(s) appointed by a will can’t or won’t perform that duty, the probate court will appoint an individual to be the estate administrator.
The administrator gathers the assets of the deceased’s person’s estate, pays their outstanding debts, and distributes their assets in accordance with state law. This can involve identifying heirs, closing accounts, and resolving other financial matters.
An administrator bond guarantees that the individual handling the estate satisfies all the estate debts and properly distributes the remainder to the appropriate individuals or entities. It also protects creditors and heirs from an administrator’s negligence, mistakes, or wrongdoing.
Get Your Administrator Bond:
- Probate courts will appoint an administrator if an individual dies without a will or if an intended executor can’t or won’t perform their duties.
- Typically, the court requires estate administrators to obtain a surety bond.
- An administration bond protects an estate against financial losses due to negligence or improper acts by its administrator.
- An appointed administrator is responsible for purchasing the administration bond upfront, although the estate will generally reimburse the premiums.
Who needs an administration bond for estate matters?
According to state law, if a person dies without a will, their next of kin (“heirs”) inherit their estate. The state probate court will appoint someone to administer the estate (usually one of the heirs).
State laws vary widely regarding how and which heirs inherit an estate. Some states, for example, require the notification and consent of all full and partial siblings to the decedent before any actions can be taken to satisfy debts or distribute assets. This responsibility falls on the administrator.
An administrator may also be appointed if a decedent’s named executor or executors are unable or unwilling to carry out their duties. The administrator is responsible for:
- Compiling the decedent’s assets
- Paying any outstanding debts and taxes
- Distributing the remainder of the estate to the beneficiaries under a will or the heirs in accordance with intestacy laws
The probate court often requires the administrator (an individual) to obtain a surety bond to guarantee they adequately carry out these tasks. If the appointed administrator is a financial institution, however, a bond generally isn’t required. In some states, all legal heirs may agree to waive an administrator’s requirement to obtain a surety bond. In others, this isn’t allowed.
How do administrator bonds work?
Administrator bonds guarantee that the person or entity tasked with distributing the assets of an estate will do so per the deceased’s wishes or state inheritance laws. The bond protects against financial losses to the estate due to dishonest, negligent, fraudulent, or otherwise improper acts by the covered administrator.
If the administrator does not act in accordance with the applicable intestacy laws or the terms of the will or the decedent’s heirs or legatees (the intended beneficiaries under a will) may file a claim against the bond for financial compensation. The surety may settle the claim, but the administrator must ultimately repay the surety in full.
Administrator bonds must usually be at least equal to the value of the decedent’s estate. Some state laws require administrator bonds to be issued for a specific percentage of the estate’s value (e.g., Illinois requires 150%).
The cost (bond premium) will be a small percentage of the total value of the bond. The percentage will depend on the administrator’s creditworthiness (based on how much risk is involved). Typically, the cost of an estate bond is relatively small. One-half of one percent (0.5%) of the value of the bond is common, although rates can vary up to 1%. Bond premiums must be paid annually until the estate is disbursed and fully settled (i.e., the probate court closes the case).
It’s the administrator’s responsibility to obtain and pay for the administration bond. However, the bond cost will generally be reimbursed out of the estate proceeds when the final accounting is filed with and approved by the court.
You are legally qualified to be an administrator if you meet the following requirements:
- 18+ years of age
- U.S. resident
- Not a convicted felon
- Not an adjudicated disabled person
Once the court names an administrator, it determines whether the administrator must obtain a probate bond and in what amount. If the court orders the entry of a bond, it will not permit the estate to be distributed until the administrator obtains and registers an appropriate surety bond with the court.
How to Get an Administrator Bond in Your State
If you’ve been appointed to be the administrator of a probate estate, ZipBonds can get you the bond you need in a flash. We offer the fastest and most secure option for getting bonded. Our all-digital platform is intuitive and straightforward. Apply online or call us at 888.435.4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.