Estate Bond

An estate bond ensures that an executor performs their duties ethically and legally. If they break the law or act dishonestly at any point and cause beneficiaries harm, they will face bond claims. A surety will cover costs to settle any claims upfront, but the bondholder must pay back the surety in full.

When purchasing your bond, you will sign an indemnity agreement, which holds you accountable for paying for any losses you cause.

Certain states require executors to post estate bonds and sign indemnity agreements. An indemnity agreement ensures the executor pays for any damages they cause. Even if your state doesn’t require an estate bond, your county or city might. This bond may also be necessary if the will document or your probate court requests it.

Frequently, an estate bond is required when minors are involved or if an executor is located outside the estate’s jurisdiction. Probate courts and will documents typically only request estate bonds if the estate is large or a lot of money is involved. Another scenario that may require an estate bond is if someone dies without a valid will.

You will not need to obtain an estate bond if the requirement is waived or the court decides it’s unnecessary. Financial institutions appointed as fiduciaries (to manage money and property for the deceased) often don’t need to be bonded to carry out their roles.

Depending on your state, an estate bond may go by one of the following names.

1. Administration Bond

An administration bond is required of individuals handling the administration of a deceased person’s property, debt, and belongings (i.e., their estate). The court appoints an administrator if the deceased person didn’t execute a will or if an appointed executor can’t perform their assigned duty.

2. Foreign Executor Bond

A foreign executor bond ensures that any court-appointed executor residing outside the court’s jurisdiction follows all applicable laws and regulations while managing an estate.

3. Probate Bond

Probate bonds are often used interchangeably with estate bonds. A probate bond is another type of court bond that guarantees the performance of an estate’s executor. It ensures that the executor fulfills their duties honestly and legally, according to the law and the deceased person’s will.

4. Guardianship Bond

Those applying for legal guardianship of someone deemed legally incompetent (a minor, disabled person, or elderly adult) may need a guardianship bond. This bond ensures that a guardian puts the needs of their ward first and acts in their best interests regarding health and financial decisions. 

5. Fiduciary Bond

A fiduciary bond is another term used interchangeably with probate bond and estate bond. A fiduciary is someone charged with protecting another person’s interests. The courts may require fiduciaries to post a bond to ensure they fulfill their duties faithfully.