A 2024 issue brief from Justice in Aging points out that reliable nationwide data on guardianship is still lacking. Even so, estimates show that guardians manage more than $50 billion in assets for over 1.3 million adults across the U.S. With that much money at stake and people depending on it, there has to be some kind of safety net. A fiduciary bond serves as one of those safeguards.
If you’re taking on this responsibility, or you’re just trying to make sense of how fiduciary bonds work, this guide will provide all the details you need.
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What Is a Fiduciary Bond?
A fiduciary bond is a financial promise backed by a bond company. Courts often require it when someone will manage someone else’s money, property, or legal affairs.
If you become a fiduciary, you take on the role of an executor, trustee, or guardian. You will follow the court’s orders, stay honest, and act in the best interest of others.
If something goes wrong, such as mishandling funds, making risky choices, or ignoring court rules, the bond can help cover any losses. This bond protects the people who depend on you, including heirs, minors, or those with disabilities.
You’ll often see these bonds required in probate, estate, and trust cases. Courts use them to lower the risk of problems and to keep the fiduciary responsible from the start.
Example of a Fiduciary Bond
Courts require fiduciary bonds when someone takes on the legal responsibility of managing money or property for someone else.
For example, when someone passes away, the executor of their estate may need a bond before they can distribute assets. This helps make sure everything is according to the will.
Meanwhile, a court-appointed guardian who’s responsible for a child may also need a bond. The court often requires this bond before the person can manage any money or make decisions about care.
In trust cases, a trustee might be in charge of managing money over many years. The bond helps protect the funds by making sure the trustee handles them honestly.
Sometimes, if there’s a disagreement about estate management, a judge may order a bond to prevent any financial harm while the court sorts things out.
Who Needs a Fiduciary Bond?
Courts don’t always require a fiduciary bond. They decide based on the specific situation. If they do require one, they’ll send an official notice to let you know.
Even when the court doesn’t ask for a bond upfront, someone involved in the estate or trust can still request it. For example, a beneficiary or creditor can ask the court to require a bond if they have concerns about how the fiduciary is managing the money. This usually happens when family members don’t get along or someone questions whether the fiduciary is acting fairly.
Courts usually waive the bond when a bank, trust company, or other corporate fiduciary takes the role. These organizations already follow strict rules, carry insurance, and go through regular audits. Because of that, courts see them as less likely to mishandle funds.
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Types of Fiduciary Bonds
Fiduciary bonds vary depending on the role and responsibilities of the court-appointed individual. Below are the most common types.
Personal Representative
A personal representative is the person the court puts in charge of handling someone’s estate after they pass away. If the estate goes through probate, the court usually makes the appointment. Some states use different titles, like executor or administrator, but the responsibilities are usually the same.
This person takes care of things like debt management, mortgage,, and making sure everything ends up with the right people. If there’s a will, they follow what it says. If there isn’t one, they follow the law in that state.
In some cases, the court requires a bond to add extra protection for the heirs, especially if the personal representative doesn’t qualify for an exemption. This helps prevent fraud or mistakes that could harm the people set to inherit assets.
To make this easier to picture, think about signing a roommate agreement. You and your roommate agree on how to split bills and take care of the place.
Now, say your roommate moves out and asks you to manage their money while they’re away. You’d probably want some written rules or a backup plan to make sure everything stays fair. A fiduciary bond works the same way because it’s there to protect people if the person in charge doesn’t follow through.
Executor Bond
An executor is a person named in a will to carry out someone’s final wishes. In an executor bond, this includes paying off debts, handling paperwork, and making sure assets go to the right people.
Even if the will names you, the court might still require a bond. This usually happens when the will doesn’t mention skipping the bond, or if someone challenges the executor’s ability to do the job.
The bond acts like a promise backed by money. It protects the people set to inherit assets by covering losses if the executor misses payments, causes delays, or makes dishonest decisions.
The bond amount depends on local court rules and how much the estate is worth. The more valuable the estate, the higher the bond might be.
For example, say you were recently divorced or separated, and you’ve been named the executor of your former in-laws’ estate. Even if you still have a good relationship with the family, others might raise concerns or ask the court for extra protection. In a case like that, the court could require a fiduciary bond to make sure everything stays fair and transparent.
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Guardianship Bond
The court sets up a guardianship when it appoints someone to take care of a minor or an adult who can’t make decisions on their own. This can involve making medical choices, handling money, or managing day-to-day needs.
When a guardian is put in charge of someone’s assets, the court often asks for a bond. This helps protect the person’s money and property in case the guardian makes mistakes or misuses funds. The bond amount usually depends on how much the guardian will manage.
The court may review the bond regularly, especially if the situation changes. For example, if the person being cared for starts earning money or inherits something, the bond might need to be adjusted.
Let’s say you and your partner were in a civil union and your partner passes away, leaving behind a minor child from a previous relationship. If the court appoints you as the guardian, you may need a bond before you can manage the child’s inheritance. Even if you have good intentions, the bond adds protection for the child and shows the court that you’re willing to follow the legal process.
Trustee Bond
A trustee is someone who manages money or property that’s placed in a trust. Their job is to follow the rules written in the trust and make decisions that benefit the people the trust is meant to support.
If the trust includes large amounts of money, property, or long-term investments, the court may require the trustee to get a bond. This protects the beneficiaries if the trustee makes a mistake or doesn’t follow the terms of the trust.
The bond helps make sure the trustee handles everything responsibly, like making smart investments, paying taxes, and differentiating assets and liabilities. In some cases, this is especially important when the trust involves several family members or business partners.
Suppose you’ll manage a trust for your cousin’s children. The trust includes rental income and stock investments. You agree, but you’re unfamiliar with all the different types of trust.
Since there’s a lot of money involved and more than one beneficiary, the court may ask you to post a bond for extra protection while you learn the rules and work through your responsibilities.
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Administrator Bond
An administrator takes care of an estate when someone dies without a will or when the named executor in the letter of testamentary can’t take the role. The court picks this person to manage the process from start to finish.
Since there’s no will to follow, the court usually asks the administrator to post a bond. The bond helps ensure the administrator pays debts, files taxes, and follows the law while handling everything.
Administrator bonds are more common than executor bonds. The court has no written wishes to go by, so it needs more assurance that the estate will be handled correctly.
For instance, you and your spouse are empty nesters, and your older neighbor passes away without any close family. The court asks you to serve as the administrator of their estate since you’ve helped with their care.
Even if you’re familiar with their situation, the court may still require a bond to protect their heirs and creditors. Although it’s an added step, it helps keep the process transparent and fair for everyone involved.
Conservatorship Bond
A conservatorship is set up when an adult can’t manage their own finances due to illness, injury, or disability. The court appoints a conservator to take care of money, property, or both.
This role often involves helping older adults or people with memory loss. The conservator may need to pay bills, track income, and protect savings.
Because conservatorships involve ongoing legal checks, the person in this role has to follow strict rules. They may need to file regular reports and keep detailed records of how money is spent or saved.
Now let’s say you and your partner are a DINK couple and you’ve built a strong financial life together. You decide to name each other in legal documents in case something happens. If one of you ever needs help managing money after an accident or illness, the other might become the court-appointed conservator.
In that case, the court could ask for a bond, especially if there’s no trust in place. This gives added protection for both of you and helps ensure everything stays on track.
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How Much Does a Fiduciary Bond Cost?
The cost of a fiduciary bond usually depends on how much the bond is worth and who’s applying. Most people pay between 0.5% and 1% of the total bond amount each year. So, if the court sets the bond at $100,000, the yearly cost could be around $500 to $1,000.
Several things affect how much you’ll pay. The bigger the estate or trust, the higher the bond amount might be. Your role also matters—someone managing a simple estate may pay less than someone handling a complex trust.
Credit score plays a big part, too. If your credit is strong, you’ll probably pay less. If your credit needs work, the premium might be higher. The bond company looks at this to figure out how much risk they’re taking on.
In some states, the estate can cover the cost of the bond. That helps ease the financial burden on the person applying, especially when the bond amount is high.
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How Can I Get a Fiduciary Bond?
Getting a fiduciary bond starts with the court. You’ll need a letter from the probate court that names you as the personal representative, executor, trustee, or other approved role.
Next, choose a licensed surety bond company or insurance provider. Many offer online applications, but you can also work with an agent if you prefer talking things through.
You’ll be asked to share documents, like the court order, and you’ll go through a credit check. Some companies may also ask about your background or experience, depending on the size of the estate or trust.
Once the company reviews your information, it will send you a quote. If you accept it and pay the premium, the bond becomes active.
Finally, submit proof of the bond to the court. This confirms you’re ready to take on the role and gives the court confidence that you’re financially backed in case anything goes wrong.
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The Bottom Line
Fiduciary bonds help keep things on track when someone takes charge of another person’s money. They hold that person accountable and help protect everyone involved by making sure the job gets done right.
If you take on a role like executor or trustee, it’s a good idea to learn how these bonds work ahead of time. That way, you know what to expect from the court and what steps you’ll need to follow.
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