Massachusetts Personal Representative 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: Certain personal representatives handling the estates of deceased Massachusetts 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 Massachusetts: The probate and family court of the county where the deceased individual resided or had property
Massachusetts Statute 3-103 requires all personal representatives of an estate to be appointed by a court before assuming their fiduciary duties. The Massachusetts 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 Massachusetts Personal Representative Bond?
Massachusetts 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 Massachusetts Statute 3-606. Specifically, the bond protects beneficiaries and creditors if the personal representative engages in any 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 Massachusetts Personal Representative Surety Bond?
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How is the Bond Amount Determined?
Massachusetts Statute 3-604 dictates that the bond must be in the amount specified in the deceased individual’s will. If no amount was specified, the bond amount must be equal to the personal representative’s best estimate of the value of the estate’s personal property. The bond amount may be reduced by the value of any of the estate’s property that is deposited with a domestic financial institution that prevents their unauthorized disposition.
Any interested person, including the personal representative, may petition the court to increase or reduce the required bond amount.
What are the Underwriting Requirements for the Massachusetts Personal Representative Bond?
Most surety companies will examine the following factors when determining eligibility for the Massachusetts 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 Massachusetts 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 Massachusetts 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 Massachusetts Personal Representative Bond?
Massachusetts requires personal representatives to purchase a surety bond as a prerequisite to obtaining a fiduciary appointment. To paraphrase Massachusetts Statute 1-201, 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 (testate), and administrators if they were not nominated if no will exists (intestate).
Personal representatives are not required to purchase a bond if:
- The will explicitly waives the bond requirement
- All heirs file a written waiver of sureties with the court
- They are a bank or trust company qualified to do trust business in Massachusetts
- The court decides that a bond is not needed to protect the interests of the estate’s beneficiaries and creditors
Any person, including a creditor, with an interest of $5,000 or more in the estate may petition the court to require an otherwise exempt personal representative to purchase a bond.
How do Personal Representatives Become Appointed in Massachusetts?
Personal representatives in Massachusetts must navigate several steps to become court-appointed fiduciaries. Below are the general guidelines, but applicants should refer to Massachusett’s probate code as well as the state’s probate of wills and estates page for details on the process.
Step 1 – Meet the Qualifications
Personal representatives are ineligible for appointment if:
- They are under the age of 18
- The court, during formal proceedings, determines their appointment to be against the interests of the estate
Step 2 – Determine Priority
Priority to for appointment as a personal representative is granted in the following order:
- Persons nominated in the will or persons nominated by an individual given the power to do so in the will
- The surviving spouse, provided that they are a devisee (entitled to property) of the will
- Any other devisee
- The surviving spouse
- Any other heir
- If no known spouse or next of kin, a public administrator
Any person with priority may nominate another qualified person to serve in their place. If an objection to the appointment of a specific personal representative is made in a formal proceeding, then the order of priority outlined above still stands, except in the following situations:
- The court may appoint any qualified person if the estate seems capable of meeting exemptions and costs of administration but incapable of discharging unsecured claims and any creditor petitions them to do so
- If any estate beneficiary objects to an appointment (other than for a person nominated in the will) the court may appoint a person that is acceptable to all devisees and is entitled to more than half the distributable value of the estate, or in the absence of such a person, any qualified person.
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
Massachusetts has four distinct estate administration types, as outlined below:
- Small Estate: Allows the personal representative to settle the estate by filing an affidavit with the court and distribute the estate’s property without court supervision. Small estate administration is available to estates worth less than $25,000 (not including the value of a car).
- Informal Probate: An administrative proceeding processed by a magistrate as opposed to a judge. No hearings are required for informal probate proceedings.
- Formal Probate: Litigation to determine the validity of the will or the appointment of the personal representative. The court is highly involved in the administration of the estate. Formal testacy occurs when an interested person petitions the court to start it.
- Supervised Administration: The personal representative is closely monitored by the court when administering the estate.
Step 5 – Contact the Court
Personal representatives must contact the probate and family court of the county 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.
Step 6 – Purchase a Surety Bond
Unless otherwise exempt, personal representatives must purchase and maintain a surety bond (limits outlined above).
How do Massachusetts Personal Representatives File Their Bonds?
Personal representatives should submit their completed bond forms, including the power of attorney, to the probate and family court of the county 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 the deceased individual
- Value of the estate
- Legal name, state, and phone number of the entity/individual(s) buying the bond
- Bond amount
- Surety company’s name and address
- Date the bond is signed
What can Massachusetts Personal Representatives do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, personal representatives in Massachusetts must ensure that they:
- Do not engage in any acts of fraud
- Do not mismanage the estate’s assets
- Fulfill their fiduciary duties