North Dakota 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 North Dakota residents or property owners
- Purpose: To ensure estate beneficiaries and creditors receive compensation if the personal representative fails to fulfill their fiduciary duties
- Who Regulates Personal Representatives in North Dakota: The district court with jurisdiction over where the deceased individual resided or had property
Background
North Dakota Statute 30.1-12-03 requires all personal representatives of an estate to be appointed by a court before assuming their fiduciary duties. The North Dakota 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 North Dakota Personal Representative Bond?
North Dakota 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 North Dakota Statute 30.1-17-06. Specifically, the bond protects beneficiaries and creditors if the personal representative commits fraud or fails to properly distribute 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 North Dakota Personal Representative Surety Bond?
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How is the Bond Amount Determined?
North Dakota Statute 30.1-17-04 dictates that the bond must be in the amount specified in the will. If no amount was specified in the will, then the bond must be equal to the personal representative’s best estimate of the value of the estate’s personal property plus the income the entire estate is expected to 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 their unauthorized disposition. The court may increase or reduce the bond amount as a result of a petition filed by any interested person, including the personal representative.
What are the Underwriting Requirements for the North Dakota Personal Representative Bond?
Most surety companies will examine the following factors when determining eligibility for the North Dakota 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 North Dakota 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 North Dakota Personal Representative bond:
$1,500,000 Personal Representative 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 North Dakota Personal Representative Bond?
Personal representatives in North Dakota may be required to purchase a bond at any point during formal testacy. Typically, courts will require a bond if one is deemed necessary to protect the interests of the estate’s beneficiaries and creditors. Personal representatives will not be required to purchase a bond during formal testacy if the will waives the bond requirement, the court determines that one is unnecessary, or the personal representative deposits cash or collateral with the court. However, the court may at any time require an exempt personal representative to purchase a bond if an interested person petitions the court to do so.
Personal representatives are not required to purchase a bond during informal probate, except in the following situations:
- They are a special administrator
- The will explicitly requires one
- If any person with an interest of at least $1,000 in the estate petitions the court to require one and their petition is determined to have merit
To paraphrase North Dakota Statute 30.1-01-06, 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 or if no will exists (intestate). Additionally, a special personal representative is someone temporarily appointed to administer an estate in an emergency situation or while a general personal representative is in the process of being appointed.
How do Personal Representatives Become Appointed in North Dakota?
Personal representatives in North Dakota must navigate several steps to become court-appointed fiduciaries. Below are the general guidelines, but applicants should refer to North Dakota’s uniform probate code and the state’s probate pages for details on the process.
Step 1 – Meet the Qualifications
Personal representatives are ineligible for appointment if they are:
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- Under the age of 18
- Found unsuitable by the court during formal proceedings
Step 2 – Determine Priority
Priority for appointment as a personal representative is granted in the following order:
-
- Executors nominated in the will or any person nominated by a power conferred in the will
- The surviving spouse, provided they are a devisee (entitled to real estate) of the estate
- Any other devisee
- The surviving spouse
- Any other heir
- The deceased individual’s guardian or conservator at the time of their death
- A trust company
- Any creditor, provided the deceased individual has been dead for at least 45 days
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 formal testacy, then the order of priority outlined above still stands, except in the following situations:
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- 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.
When two or more persons share priority, one (or more if more than two people share priority) must either renounce their right to administer the estate, or all must agree on someone to nominate.
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
North Dakota has four distinct estate administration types, as outlined below:
-
- Informal Probate: The personal representative can administer the estate without having to appear before the court.
- Formal Testacy: Litigation to determine the validity of a will and/or the appointment of a personal representative. Formal testacy is required if the deceased individual has been dead for more than three years, the will’s validity is disputed, or if an interested person objects to informal probate.
- Supervised: The personal representative is under the direct supervision of the court when administering the estate. Supervised administration can be requested by any interested person, including the personal representative.
- Small: A much simpler process where the estate’s property may be distributed via an affidavit. Small estate administration is available to estates that are worth less than $50,000 and meet the criteria outlined in North Dakota Statute 30.1-23-01.
Step 5 – Contact the Court
Personal representatives must contact the district court with jurisdiction over the deceased individual’s estate. An employee 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 North Dakota Personal Representatives File Their Bonds?
Personal representatives should submit their completed bond forms, including the power of attorney, to the county 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:
- County with jurisdiction over the estate
- Name of the deceased individual
- Legal name of the entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the fiduciary appointment was made
- Date the bond is signed
What can North Dakota Personal Representatives do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, personal representatives in North Dakota must ensure that they:
- Properly distribute the estate’s assets
- Do not commit fraud
- Fulfill their fiduciary duties