Arizona Conservator Bond: A Comprehensive Guide
At a Glance:
- Average Cost: Calculated based on a tiered structure
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: Most conservators appointed as fiduciaries in Arizona
- Purpose: To ensure that the protected person receives compensation for financial harm if the conservator mishandles their estate
- Who Regulates Conservator Bonds in Arizona: The superior court of the county where the protected person resides or has property
Background
Arizona Revised Statute 14-5401 requires all persons seeking a conservatorship over a protected person to be appointed as a fiduciary by the superior court of the county where the person resides. The Arizona legislature enacted the appointment requirement to ensure that conservators act in the protected person’s best interests when managing their estate. To provide financial security for the enforcement of this requirement, most conservators must purchase and maintain a probate surety bond before becoming appointed as a fiduciary.
What is the Purpose of the Arizona Conservator Bond?
Arizona requires conservators to purchase a surety bond as a prerequisite to being appointed as a fiduciary over a protected person’s estate. The bond ensures that the protected person will receive compensation for financial harm if the conservator fails to abide by the regulations outlined in Arizona Revised Statute 14-5411. Specifically, the bond protects the protected person if the conservator fails to adhere to all court orders or mismanages the estate’s assets. In short, the bond is a type of insurance in favor of the protected person if the conservator does not fulfill their fiduciary duties.
How Can an Insurance Agent Obtain an Arizona Conservator Bond?
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How is the Bond Amount Determined?
Arizona Revised Statute 14-5411 dictates that the bond amount must be equal to the aggregate value of the estate’s property under the conservator’s control plus the estimated income to be generated by the estate over the next year. The bond amount may be reduced by the value of any securities deposited that cannot be withdrawn without a court order, any land that the conservator can not sell without authorization from the court, or any regular fixed expenses for the protected person. Fiduciaries that do not wish to purchase a bond may request to submit other assets such as a pledge of securities or a mortgage of land.
What are the Underwriting Requirements for the Arizona Conservator Bond?
Most surety companies will examine the following factors when determining eligibility for the Arizona Conservator bond:
- Conservator’s credit history
- Whether or not the estate has an attorney
- Whether or not the conservator is a family member
- The conservator’s occupation
- Whether or not the conservator is replacing a prior fiduciary
- If the conservator has ever committed a felony
- Whether or not there is any ongoing business in the estate
- If a creditor is requiring the bond
- If the bond amount is greater than or equal to the estate’s value
How Much Does the Arizona Conservator Bond Cost?
Surety companies typically determine the premium rate for conservator bonds based on a tiered structure. As a result, larger bond amounts will be charged a lower premium rate than smaller bonds.
The following table illustrates the pricing structure for the Arizona Conservator bond:
$1,500,000 Conservator Bond Cost
| Bond Amount | Premium Rate | Total Bond Cost |
|---|---|---|
| First $20,000 | 0.75% | $150 |
| Next $40,000 | 0.60% | $240 |
| Next $140,000 | 0.50% | $700 |
| Next $300,000 | 0.375% | $1,125 |
| Next $1,000,000 | 0.25% | $2,500 |
| Total cost of $4,715 |
Who is Required to Purchase the Bond?
Arizona requires most conservators to purchase a surety bond as a prerequisite to becoming a court-appointed fiduciary. To paraphrase Arizona Revised Statute 14-5101, a conservator is a person who is appointed by a court to manage the estate and business affairs of a protected person. Additionally, a “protected person” is defined as either a minor or incapacitated person for whom a conservator has been appointed that is incapable of making sound decisions concerning their estate and/or business affairs.
Conservators are not required to purchase a bond if they are a:
- National banking association
- Holder of an Arizona banking permit
- Savings and loan association authorized to conduct trust business in Arizona
- Title insurance company authorized to do business in Arizona
- Certified trust company
How do Arizona Conservators Become Appointed as Fiduciaries?
Conservators in Arizona must navigate several steps to become appointed as fiduciaries. Below are the general guidelines, but appointees should refer to the appointment statutes for details on the process.
Step 1 – Determine Priority
Priority to serve as a conservator is granted in the following order:
-
- Persons already appointed as a fiduciary over the protected person in another jurisdiction
- An individual or corporation nominated by the protected person if they are at least 14 years old and have sufficient mental capacity
- Persons nominated in the protected person’s most recent durable power of attorney
- The spouse of the protected person
- An adult child of the protected person
- A parent or their nominee by the will if they are deceased
- Any relative of the protected person who has resided with the person for at least six months before the filing of the petition
- Persons nominated by anyone caring for or paying benefits to the protected person
- The Arizona Department of Veterans’ Services if the protected person is a veteran or is a spouse/child of a veteran
- A fiduciary licensed under Arizona Revised Statute 14-5651
- A public fiduciary licensed under Arizona Revised Statute 14-5651
Step 2 – Hire an Attorney
Although not explicitly required, it is highly recommended that conservators hire an attorney to assist with the conservatorship process.
Step 3 – File a Petition
Persons seeking conservatorship over a protected person must file a petition for appointment with the superior court of the county where the person to be protected resides. Conservators can obtain the petition online here or from the court, and must include the following information:
-
- Personal information of the person to be protected
- Personal information about the person seeking conservatorship
- General statement and evaluation of the person’s estate and property
- The reason for the petition for appointment
Step 4 – Attend a Hearing
Conservators must attend a hearing conducted by the superior court of the county where the person to be protected resides and present evidence as to why the person is in need of conservatorship. The court will examine the evidence presented by the conservator as well as that presented by the person being evaluated and make a determination as to whether or not conservatorship is necessary.
Any interested person can apply to the court to participate in the hearing. If the court finds a basis for appointment, it will issue a letter of conservatorship to the conservator.
Step 5 – Purchase a Surety Bond
Unless otherwise exempt, conservators handling a protected person’s estate must purchase and maintain a surety bond (limits outlined above).
How do Arizona Conservators File Their Bonds?
Conservators should submit their completed bond forms, including the power of attorney, to the superior court of the county where the protected person resides.
The surety bond requires signatures from both the surety company that issues the bond and the applicant. The surety company should include the following information on the bond form:
- Legal name and county of the protected person
- Legal name of the entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Date the conservator is appointed
- Type of fiduciary relationship
- Court number
- Bond amount
- Date the bond is signed
What can Arizona Conservators do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, conservators in Arizona must ensure that they:
- Perform all of their fiduciary duties
- Obey all court orders
- Do not mismanage the protected person’s assets
- Submit an accurate account of the estate to the court