The purpose of a fiduciary surety bond is to protect anyone who might have an interest in an estate or property from any loss that is caused by unacceptable acts of the fiduciary. Parties with an interest in an estate may include children, incompetents, creditors, heirs, or other beneficiaries. Fiduciary surety bonds can also be referred to as probate bonds, since the probate court is in charge of the appointment and control of fiduciaries.
Three categories of fiduciary surety bonds are:
The fiduciary’s job is to protect the interest of everyone that has a claim against the estate, whether it is a beneficiary or a creditor. All funds must be held by the Fiduciary until no more claims can be filed.
If there is not enough money, the fiduciary must pay claims according to the priority set forth by the law. Accurate records must be maintained and supported by bills and receipts, along with a comprehensive report for the court. A fiduciary should seek all the assistance they can obtain from their attorney and the surety company.
Frequently, fiduciaries wrongly conclude that a request for joint control is an indication of honesty. Normally, the primary purpose of a joint control is to protect the beneficiary of an estate from loss caused by neglect of a fiduciary in disbursing property, particularly when the estate is of reasonable size and the fiduciary is not a corporate trust company or otherwise experienced in the field.
It would be most beneficial for the fiduciary to seek the advice of an attorney who specializes in probate law. The fiduciary may be held liable if each aspect is not executed in accordance with the law.
The responsibility, and thus the fiduciary surety bond, will not terminate until the fiduciary gives an accounting to the court and the court has issued a discharge order or the beneficiaries of the estate have signed a release.
Fiduciary surety bonds are typically long term obligations and remain in effect whether renewal premiums are paid or not. It can be beneficial to take advantage of discounts offered for advance prepayment of premiums.