Executor Bonds: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Executor bonds
What is an Executor Bond?
Executor bonds, sometimes referred to as personal representative or fiduciary bonds, are government-required surety bonds that certain executors and administrators must purchase as a prerequisite to obtaining a fiduciary appointment over the assets of a deceased individual’s estate. Executor bonds are a type of probate bond that ensures estate beneficiaries and creditors will not suffer a financial loss if the executor or administrator violates their fiduciary duties. For example, if an executor is negligent in handling the estate’s assets, the beneficiaries and creditors can file a claim against the executor’s bond to recover any losses.
Most states only require executors and administrators to purchase a bond in specific situations (more on this in the next section). Executor bonds must remain active for the duration of the fiduciary appointment unless the court determines otherwise.
Unlike most insurance products, surety bonds protect a third party (the obligee) from acts that violate the law. When the surety company suffers a loss due to an executor or administrator’s actions, the executor/administrator must repay the surety company any losses and sometimes court costs and other fees.
Who is Required to Purchase an Executor Bond?
Each state has specific rules for when an Executor bond must be obtained. In general, Executor bonds will be required in the following situations:
- The will requires one or does not specify that a bond is not needed
- An interested person petitions the court to require one
- All estate beneficiaries do not agree to waive the bond requirement
- The executor/administrator is replacing another fiduciary
- The executor/administrator lives out of state
- The court determines one is necessary
An executor is any person nominated in a deceased individual’s will to administer their estate. Likewise, an administrator is responsible for administering the estate of a deceased individual who either did not nominate them in their will or died without one.
Who Regulates Executor Bonds?
Local probate courts regulate Executor bonds based on laws written by each state’s legislature and are generally afforded a considerable amount of discretion when doing so. For example, most state statutes contain provisions allowing probate courts to increase or decrease the bond amount or waive the requirement altogether if they see fit.
How Can an Insurance Agent Obtain an Executor Surety Bond?
BondExchange makes obtaining an Executor bond easy. Simply login to your account, select the state the bond is needed in, and use our keyword search to find the “Executor” bond in our database. Don’t have a login? Gain access 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.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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How are the Limits on Executor Bonds Determined?
Each state has specific statutes outlining how the limits on Executor bonds are determined. The bond amount will typically be equal to anywhere between 100% to 200% of the value of the estate’s personal property. As mentioned above, most states also grant probate courts the authority to increase or decrease the required bond amount as they see fit. Contact BondExchange for help determining the required limit on your customers’ executor bonds.
What are the Underwriting Requirements for Executor Bonds?
Most surety companies will examine the following factors when determining eligibility for Executor bonds:
- Fiduciary’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 executor/administrator is replacing a prior fiduciary
- If the fiduciary 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 an Executor Bond Cost?
Surety companies typically determine the premium rate for executor 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 an Executor bond:
$1,500,000 Executor Bond Cost
|Bond Amount||Premium Rate||Total Bond Cost|
|Total cost of $4,715|
What Information is Collected for an Executor Bond Application?
Surety company underwriters will collect and review the following information to determine eligibility and rate for an Executor bond:
- Phone number
- Marital status
- Social security number
- Net worth
- Relationship to the deceased
- Date of appointment
- Share of the estate
- Bond amount
- Court where the bond will be filed
- Deceased individual’s name and date of death
- Description of the estate’s assets and number of beneficiaries
- Contact information for the attorney assisting with the probate process (if applicable)
How Do Executors File Their Bonds?
Surety bond companies will provide the executor/administrator with a completed surety bond to be filed with the court overseeing the probate process. Surety companies should include the following information on most bond forms:
- Court requiring the bond
- Name of the deceased individual
- Fiduciary’s name, address, and phone number
- Surety company’s name, address and phone number
- Bond amount
- Signatures of the surety representative
- Date the bond is effective and issued
- Corporate seal of the surety company
- Power of Attorney
What Can Executors Do to Avoid Claims Against Their Bonds?
To avoid claims against their bonds, executors and administrators must follow all state regulations pertaining to their fiduciary appointment. Best practices for avoiding claims include:
- Give the court a complete inventory of the estate soon after their appointment
- Deliver periodic reports to the court on their administration activities
- Pay all taxes that may be required
- Distribute all property owed to estate beneficiaries and creditors
- Deliver their certificate of appointment to the probate court if a subsequent appointment is granted
- Do not mismanage the estate’s assets
Which States Require Executors and Administrators to Purchase a Bond?
All 50 states and the District of Columbia require certain executors and administrators to be bonded. Click on the name of any state in the below table for a comprehensive guide on their Executor bond requirements.