Taking on the role of the executor during the probating of a loved one’s Will can be a big job. As the executor, you are responsible for putting the deceased’s affairs in order and distributing property and assets to the rightful inheritors. In last week’s post, I talked about fiduciary duty – the requirement for being an executor that states that you will be fair and honest in your role as executor. Unfortunately, sometimes executors make mistakes or even purposefully tamper with the distribution of property and assets. For this reason, executors generally have to pay a probate bond in order to protect both creditors and heirs from accidental or purposeful negligence on the part of the executor.
We all know what a regular bail bond is. If someone is arrested for a crime, depending on the severity of this crime, they can post bail and be released from jail until their court date. A bond is paid when the accused gives money to the court as a condition of his or her return. For example, if bail is set at 10,000, the accused will have to give the court $10,000 in order to be released. If he or she does not return for trial, he or she forfeits the money given as the bond. The concept behind a probate bond is similar. In order to ensure that the executor does not take money that was supposed to be given to heirs or creditors for him or herself, a Judge will oftentimes order a probate bond to be paid by the executor as an act of good faith. If the executor is in charge of a $20,000 estate, he or she will have to pay a bond of $20,000. The executor will get this money back if and when the property and assets are distributed properly. If they are not, the heirs and creditors get to keep the probate bond.
Problems with Probate Bonds
While protecting the creditors and heirs and ensuring that they get what they are entitled to is a good thing, sometimes obtaining money for a probate bond can be difficult. An executor raising money for a probate bond will in many cases have to essentially take out a loan to pay for the bond. This is tricky because the executor can be denied the loan, the loan can take a long time to obtain, and the executor oftentimes has to add more money to the bond if years go by and the estate is not settled. This can put a lot of pressure on the executor.
Waiving the Probate Bond
Because there are so many potential problems with probate bonds, many attorneys will waive the bond requirement when they draft Wills. Another way that the bond can be waived is if all of the heirs agree to have this done. For example, if “Ben”, the executor of his mother’s Will is an heir to the Will along with his two brothers, all three brothers can agree to trust that Ben will fulfill his duties as executor and they can waive the probate bond.
In theory, probate bonds are useful, as they protect the interests of the heirs and creditors while a Will is probated. However, in practice, the money for probate bonds can be difficult to raise, and if the executor is a loved one, the bond is oftentimes unnecessary. For more information about probate bonds, contact me here.