What is the Probate Bond?
Often when we represent clients as personal representatives (executors or administrators) in the probate of an estate, they are shocked to learn that they need to post a bond in order to administer an estate. This requirement can create serious issues if the proposed personal representative is not qualified to receive a bond. It is important to understand the bond requirement before initiating probate in California.
California law requires that personal representatives post bond during the time they administer a decedent’s estate. A bond is a promise from a third-party company to pay the heirs, beneficiaries, or creditors of an estate if the personal representative fails to perform their duties. The bond protects the beneficiaries of the estate from malfeasance on the part of a personal representative.
California Probate code §8480 lays out the requirement that the personal representative of the estate post bond during probate. The Court has discretion to fix the amount of the bond, which is generally equal to the value of the estate. The Court will not appoint a personal representative unless a bond is posted, so obtaining bond is one of the most important steps in the initial probate.
During the course of probate, if additional assets are discovered, and the current bond is no longer sufficient, the personal representative must obtain an additional or supplemental bond. Alternatively, if the size of the estate decreases, the personal representative may request that the court decrease the size of the bond required.
When Bond Not Required
Under Probate Code §8481, bond is waived in the following two circumstances:
- The probated Will specifically waives bond
- All beneficiaries waive in writing the requirement of bond.
However, even if these conditions are met bond still may be required. An interested person may still request that the Court require bond for good cause. The Court can also require a bond on its own motion, regardless of waivers. For example, if the estate has numerous unsecured creditors, the court may still require the personal representative to post a bond. Different counties also have different rules on the matter. San Diego local rules require any out of state personal representative to post a minimum bond of $20,000, even if bond is waived. Bond waivers are not guaranteed.
Bond Factors
Bonding companies will consider numerous factors when determining whether a bond application will be approved. Some of these factors include:
- Whether the personal representative will be represented by an attorney
- The applicant’s creditworthiness
- Tax obligations
- Net Worth
- Steady income
- Criminal history
A proposed personal representative who is not bondable can create a major issue during the initial stages of probate. If a proposed personal representative is not bondable, it may be necessary to select a different personal representative or to place assets in a blocked account during the period of administration. Personal representatives should closely consider whether they are bondable before seeking appointment in the probate court.
The probate bond is intended to protect beneficiaries of an estate from the bad acts of a personal representative. However, the bond requirement can cause difficulties if the personal representative is not bondable. It is important to consider these factors closely when initiating probate. Contact an experienced probate attorney at Naimish & Lewis to assist with probate.
