What is a Fiduciary Bond?
A fiduciary bond, also known as a probate bond, is a type of court bond which guarantees that a person who has been appointed to act on behalf of another to secure their interests will do so in an honest and faithful way.
A fiduciary bond is usually required by probate courts when appointing an administrator, fiduciary or trustee to take care of the estate, affairs, or assets of a deceased, disabled or incompetent person, or of a minor. Fiduciaries may also be required to provide financial advice when needed, or ensure that taxes or debts are paid.
Depending on the nature of the fiduciary’s responsibilities, these bonds can therefore also be called executor bonds, guardianship bonds, administrator bonds, trustee bonds, and all of them fall within the category of fiduciary or probate bonds.
The three sides that make up a fiduciary bond agreement are the obligee (the party requesting the bond as a guarantee), the principal (the party obtaining the bond, the fiduciary) and the surety bond company, which issues the bond for the principal and serves as a guarantor.
If the principal engages in dishonest practices such as fraud or embezzlement, a claim can be filed against the fiduciary bond. Its backing is then used to make up for any damages or financial losses that have occurred, up to the full amount of the bond. Once the surety resolves any such issues, the fiduciary has to indemnify the surety for its backing. It is therefore best to avoid claims in the first place.
Fiduciary Bond Cost
Fiduciary bond cost depends on the value of the estate or assets that the fiduciary has to take care of. In the case of an estate, for example, the total bond amount typically depends on the total value of the estate, among other things.
To acquire a fiduciary or probate bond you have to pay a percentage, called a premium, of the total bond amount.
That premium is between 1% and 3% of the bond amount. For example, for an estate costing $100,000, your bond premium will be somewhere between $1000-$3000. This being said as the bond size increase there is a sliding scale that reduced the premium percentage. In fact it is not uncommon to see premiums below 1% for this bond.
Your choice of surety bond company also influences the amount of your fiduciary bond premium. By working only with A rated and T-listed surety bond companies, Bryant Surety Bonds is able to secure the lowest and most exclusive rates for its clients.
How to Get Your Fiduciary Bond
Obtaining your fiduciary bond is fairly simple. Follow the steps on our court bonds application page to get started. Fill in all the relevant details, to receive a free quote on your bond premium. You can then proceed with submitting any additional documents necessary to obtain your fiduciary bond.
Not sure what kind of fiduciary bond you need? If you have questions about fiduciary bonds, call us at (866)-450-3412. Our knowledgeable surety bond experts are there to assist you and respond to your questions.