Colorado Personal Representative Bond: A Comprehensive Guide
October 19, 2022
This guide provides information for insurance agents to help their customers obtain a Colorado Personal Representative bond.
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 personal representatives handling the estates of deceased Colorado residents or property owners
- Purpose: To ensure estate beneficiaries and creditors receive compensation if the personal representative mishandles the estate’s assets
- Who Regulates Personal Representatives in Colorado: The district court with jurisdiction over where the deceased individual resided or had property
Colorado Statute 15-12-103 requires all personal representatives of an estate to be appointed by a court before assuming their fiduciary duties. The Colorado legislature enacted the appointment requirement to ensure that personal representatives do not mismanage the estate’s assets. To provide financial security for the enforcement of this requirement, the court may require the personal representative to purchase a probate surety bond to be eligible for appointment.
What is the Purpose of the Colorado Personal Representative Bond?
Colorado requires personal representatives to purchase a surety bond as a prerequisite to being appointed as a fiduciary over an estate’s assets. The bond ensures that the estate’s beneficiaries and creditors will receive compensation for financial harm if the personal representative fails to abide by the regulations outlined in Colorado Statute 15-12-606. Specifically, the bond protects beneficiaries and creditors if the personal representative engages in acts of fraud or mismanages the estate’s assets. In short, the bond is a type of insurance that protects the estate’s beneficiaries and creditors if the personal representative violates their fiduciary duties.
How Can an Insurance Agent Obtain a Colorado Personal Representative Surety Bond?
BondExchange makes obtaining a Colorado Personal Representative bond easy. Simply login to your account and use our keyword search to find the “Probate” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
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How is the Bond Amount Determined?
Colorado Statute 15-12-604 dictates that the bond amount must be equal to the personal representative’s best estimate of the value of the estate’s personal assets plus the estimated income the estate will generate during the next year. The bond amount may be reduced by the value of the estate’s assets deposited with a domestic financial institution that prevents unauthorized disposition. Additionally, the court may increase or reduce the required amount for any reason they deem fit.
What are the Underwriting Requirements for the Colorado Personal Representative Bond?
Most surety companies will examine the following factors when determining eligibility for the Colorado Personal Representative bond:
- Personal representative’s credit history (not considered for bonds with limits less than $25,000)
- Whether or not the estate has an attorney (not considered for bonds with limits less than $25,000)
- How long the fiduciary appointment is for
- Whether or not the personal representative is replacing a prior fiduciary
- If the personal representative has ever committed a felony
- If there are disputes among the estate’s beneficiaries
- Whether or not there is any ongoing business in the estate
- If the bond is being required by a creditor
How Much Does the Colorado Personal Representative Bond Cost?
Surety companies typically determine the premium rate for personal representative 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 Colorado Personal Representative bond:
$1,500,000 Personal Representative Bond Cost
|Bond Amount||Premium Rate||Total Bond Cost|
|Total cost of $4,715|
Who is Required to Purchase the Colorado Personal Representative Bond?
Colorado requires personal representatives to purchase a surety bond in the following situations:
- Upon the appointment of a special administrator
- The will requests the personal representative be bonded
- Any person or creditor with at least a $5,000 interest in the estate requests the personal representative be bonded
- The estate is subject to a formal proceeding (unless the will waives the bond requirement and no interested person requested the personal representative be bonded)
To paraphrase Colorado Probate Code Section 15-10-201, a personal representative is a court-appointed fiduciary responsible for administering a deceased individual’s estate. Personal representatives are referred to as executors if the deceased individual nominated them in their will, or administrators if they were not nominated in the will or if no will exists. Additionally, personal representatives are considered special administrators if they are temporarily appointed to protect the estate before a general personal representative can be appointed.
How do Personal Representatives Become Appointed in Colorado?
Personal representatives in Colorado must navigate several steps to become court-appointed fiduciaries. Below are the general guidelines, but applicants should refer to Colorado’s probate statutes for details on the process.
Step 1 – Meet the Qualifications
Personal representatives are ineligible for appointment if they are:
- Under the age of 21
- Found to be unsuitable by the court during a formal proceeding
Step 2 – Determine Priority
Priority to serve as a personal representative is granted in the following order:
- Persons nominated in the will or nominated by persons the will grants nominating powers to
- The surviving spouse, provided to are entitled to some or all of the estate
- Persons entitled to some or all of the estate’s real property
- The surviving spouse
- Any other heir
- Any creditor, provided the deceased individual has been dead for at least 45 days
Step 3 – Hire an Attorney
Although not explicitly required, it is highly recommended that personal representatives hire an attorney to assist with the probate process.
Step 4 – Determine the Estate Administration Type
Colorado has three distinct estate administration types with varying levels of court involvement, as outlined below:
- Small Estate: Personal representatives may apply for an affidavit with the court and immediately distribute property to beneficiaries without having to notify creditors or participate in a hearing. Small estate administration is available to estates worth less than $60,000 that do not have real property.
- Informal Probate: Personal representatives are able to administer the estate with minimal court supervision. Most estates (except those that qualify for small estate administration) will be subject to informal probate.
- Formal Testacy: A formal court hearing and litigation is required to determine the validity of a will and/or the appointment of a personal representative. Any person with an interest in the estate may petition the court for formal testacy.
Step 5 – Contact the Court
Personal representatives must contact the district court with jurisdiction over the deceased individual’s estate. A representative of the court will walk the personal representative through the appointment process, provide them with all required forms, and answer any questions they may have.
If the estate is subject to formal testacy, then a hearing will be required to determine the validity of the will or whether the deceased individual dies intestate and to appoint a personal representative.
Any interested person may object to the personal representative’s appointment.
Step 6 – Purchase a Surety Bond
Unless otherwise exempt, personal representatives must purchase and maintain a surety bond (limits outlined above).
How do Colorado Personal Representatives File Their Bonds?
Personal representatives should submit their completed bond forms, including the power of attorney, to the district court with jurisdiction over the estate.
The surety bond requires signatures from the company that issues the bond and the personal representative. The surety company should include the following information on the bond form:
- Court where the bond is to be filed
- Name of deceased individual
- Legal name, address, email, and phone number of the entity/individual(s) buying the bond or that of their attorney
- Surety company’s name and address
- Bond amount
- Date the bond goes into effect
What can Colorado Personal Representatives do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, personal representatives in Colorado must ensure that they:
- Do not mismanage the estate’s assets
- Fulfill their fiduciary duties