Utah 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 Utah 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 Utah: The district court of the county with jurisdiction over where the deceased individual resided or had property
Background
Utah Statute 75-3-103 requires all personal representatives of an estate to be appointed by a court before assuming their fiduciary duties. The Utah 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 personal representative may have to purchase a probate surety bond to be eligible for appointment.
What is the Purpose of the Utah Personal Representative Bond?
Utah 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 Utah Statute 75-3-606. 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 Utah Personal Representative Surety Bond?
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How is the Bond Amount Determined?
Utah Statute 75-3-604 dictates that the bond must be in the amount specified in the deceased individual’s will. If no amount was specified, the bond must equal the personal representative’s best estimate of the value of the estate’s personal property plus the estimated income the estate’s real 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 in a manner that prohibits 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 Utah Personal Representative Bond?
Most surety companies will examine the following factors when determining eligibility for the Utah 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 Utah 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 Utah 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 Utah Personal Representative Bond?
Utah only requires personal representatives to purchase a surety bond in the following situations:
- If they are a special administrator and notice of their appointment has not been given
- The will explicitly requires the bond
- When a person with an interest in the estate requests that a bond be required prior to appointment
- If, after the personal representative is appointed, and person with an interest of $5,000 or more in the estate requests that a bond be required
Personal representatives exempt under Title 7 of the Financial Institutions Act are not required to obtain a bond. Additionally, the court may waive the bond requirement at any time if it is determined to be unnecessary.
To paraphrase Utah Code 75-1-201, a personal representative is a court-appointed fiduciary responsible for administering a deceased individual’s estate. Personal representatives are called executors if the deceased individual nominated them in their will (testate), and administrators if they were not nominated if no will exists (intestate). Additionally, “special administrator” refers to personal representatives temporarily appointed in emergency situations until a general personal representative is appointed.
How do Personal Representatives Become Appointed in Utah?
Personal representatives in Utah must navigate several steps to become court-appointed fiduciaries. Below are the general guidelines, but applicants should refer to Utah’s probate code and the state’s probate page 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 21
- Deemed unsuitable by the court in formal proceedings
Step 2 – Determine Priority
Priority to serve as a personal representative is granted in the following order:
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- Executors nominated in the will or persons nominated by a power conferred in the will
- Surviving spouse, provided they are a devisee (entitled to real estate) of the estate
- Any other devisee
- The surviving spouse
- Any other heir
- 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 a formal proceeding, 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.
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
Utah has four distinct estate administration types, as outlined below:
-
- Informal Probate: The personal representative is appointed by the court without a hearing and is under minimal court supervision when administering the estate
- Formal Testacy: Litigation to determine the validity of the will and/or the appointment of a personal representative. Formal testacy occurs when an interested person petitions the court to commence it.
- Supervised Administration: The personal representative is under the direct supervision of the court when administering the estate. Supervised administration is initiated when any interested person, including the personal representative, petitions the court to commence it.
- Small Estate: A much simpler administration process where the estate is administered via an affidavit and no hearing or court supervision is required. Small estate administration is available to estates:
- That are worth less than $100,000
- That do not contain real estate
- Where the deceased individual has been dead for at least 30 days
- Where no application for appointment of a personal representative is pending
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.
Step 6 – Purchase a Surety Bond
Unless otherwise exempt, personal representatives must purchase and maintain a surety bond (limits outlined above).
How do Utah 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 will be filed
- Name of the deceased individual
- Legal name and address of the entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
What can Utah Personal Representatives do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, personal representatives in Utah must ensure that they:
- Do not engage in any acts of fraud
- Do not mismanage the estate’s assets
- Fulfill their fiduciary duties