When people have to enter into conservatorship arrangements, they often have some concerns. These fears are very valid because, unfortunately, there have been quite a few instances of the conservatee falling victim to conservatorship mismanagement and fraud. The bad experiences have, however, given rise to solutions, including a conservatorship bond.
What is a conservatorship bond? How can they make conservatorships more secure, and how much are these bonds? We cover all this and more in this article.
Basic Definitions of “Conservatorship” and “Bond”
When defining a conservatorship, two things have to be taken into consideration. First is the definition of conservatorship, and the second is the definition of a bond. Let us define these two first to help explain what a conservatorship bond is.
A conservatorship is a court proceeding in which a judge appoints a responsible individual or organization to take care of an incapacitated person or disabled adult. The court does this in response to a conservatorship petition on behalf of the person who cannot care for themselves or their finances due to old age, or disability. The incapacitated person who is the subject of a conservatorship arrangement is called a conservatee and the court-appointed caretaker is called a conservator.
The conservator may be responsible for taking care of the elderly person or disabled person subject to the conservatorship arrangement. They may also be appointed to manage the person’s financial affairs or personal property.
There are lots of different kinds of bonds, from investment bonds to chemical bonds. However, a bond as used in court is essentially a form of insurance that someone will do what’s required of them.
The most famous example of this is a bail bond, which a defendant pays as a promise that they’ll come back to stand trial. This bond is then returned to them when they show up to court, thus keeping their end of the bargain. There are other separate bonds used in the legal system as well, although not all of them are returned to the person after the obligations are met.
What Is a Conservatorship Bond?
With these two definitions in mind, you now likely have an idea of what conservatorship bonds are. Also called a conservator bond, a conservatorship bond is a form of surety bond meant to hold the conservator accountable for their duties. It serves as a method of protection from the loss of real property and financial assets of the conservatee.
This bond, like all kinds of surety bonds, exists in a bid to hold the bonded party (the conservator in this case) accountable. It is required by the court before a conservator can start taking charge of the conservatee’s affairs.
Think of a conservatorship bond as insurance for conservatorships. Just like you need car insurance and health insurance, you need a conservatorship bond. Unlike a bail bond, a conservatorship bond is normally purchased from a surety bond company for a fee, much like insurance. You don’t get the fee back, but if something goes wrong, the surety bond company steps in.
The Purpose of a Conservatorship Bond
Conservatorship bonds provide assurance that the person subject to the conservatorship arrangement won’t suffer any loss should the conservator fail to deliver their legal duty. They also exist as a guarantee that the conservator will be accountable if the conservatee ever falls victim to:
- Mismanagement of estate funds, estate property, or estate accounts
- Failure to perform conservatorship duties.
Furthermore, if the conservator fails to pay for whatever loss the conservatee suffers under their care, the surety company that’s standing in for them can step in and make the reparations for the claims. Thanks to conservatorship bonds, the conservatee will get their recompense.
Guardianship Bonds vs. Conservatorship Bonds
There are guardianship bonds and there are conservatorship bonds. These bonds are similar and often used interchangeably in some states. However, because the role of guardians is slightly different from the role of conservators in California, you should not make the mistake of confusing them to mean the same thing. Therefore, guardianship bonds cannot be used in this context.
Parties Involved in a Conservatorship Bond
A conservatorship bond typically involves three parties: the principal, the obligee, and the surety. Here’s an explanation of each.
Principal: The principal is the one purchasing the bond. In this case, that’s the conservator. The principal is also responsible for the annual premium of the bond and the settlement of any claim against the bond. But if you’re going to be a conservator, don’t worry; the bond payment normally comes out of the estate of the conservatee (more on that later).
Obligee: The bond obligee is the party that is requiring the bond. In California, the obligee is the court. The court requires the bond, with the conservatee being the beneficiary. By doing this, the court is giving the conservatee the right to make claims and request recompense for the loss or theft of any financial asset, which is in the care of the conservator.
Surety: The surety is the issuer of the bond. The surety bond company is the surety in this context. By issuing the bond to the principal, they sign up to pay recompense for claims should the principal be unable to. The surety will then go after the principal via legal action for reimbursement.
Why Does California Require a Conservatorship Bond?
The requirement of a conservatorship bond is to serve four purposes which are trust, responsibility, accountability, and enforceability. Let’s break down each of these areas.
Trust: Since the role of a conservator is a delicate one, there has to be an extensive level of trust between the conservator and the conservatee. A conservatorship bond, just like every other surety bond, is a bond of trust and extra protection.
With the presence of a conservatorship bond, the conservatee is assured of good conduct from the conservator and due recompense should the conservator act otherwise. Even if the conservator is a family member, this can be helpful. For example, if one sibling is acting as conservator, a mistrustful second sibling may need the conservatorship bond to feel at ease.
Responsibility: The conservatorship bond ensures that only a person with financial responsibility can be appointed as a conservator. Why? The requirements for surety bonds are stringent. It’s hard for a person with a low level of responsibility to get one. For example, someone with a bad credit score, bad credit history, or bad financial records is often unable to fulfill the proof of bonding document requirement.
Accountability: Conservatorship bonds are a guarantee of protection from any loss incurred as a result of the conservator’s irresponsibility. The bond assures the conservatee and their concerned relatives that the conservator will be accountable for any misconduct.
Enforceability: If the conservatee or a third party makes claims of theft, mismanagement of funds, or other misconduct, conservatorship bonds ensure that accountability is enforced. Even if the conservator is unwilling or unable to make reparations, the surety company has the ethical responsibility to step in. They will make the payment for any loss the conservatee has suffered as a result of the conservator’s misdeeds.
Protections Offered by Conservatorship Bonds
As pointed out above, conservatorship bonds are important in the protection of the conservatee’s financial assets. Here are some specific areas where an active bond can make all the difference for a conservatee.
Protection from Theft: A conservatorship bond protects the conservatee from losing their financial or real estate properties to theft. The conservator is bound by the law and can be held responsible for the theft of any of the conservatee’s financial properties in their care.
Protection from Fraud: Should the conservator defraud the conservatorship estate or the conservatee during the conservatorship arrangement, the bond ensures that the conservatee is reimbursed for the loss.
Protection from Mismanagement of Estate Funds or Assets: A conservatorship bond also protects the ward’s finances and assets from being mismanaged by the conservator. Knowing that a surety bond exists as a protection of the conservatee, the conservator is bound to play by the rules. Failure to do that results in the conservatee receiving a payout.
Protection from the Conservator’s Failure to Perform Fiduciary Duties: Knowing that a conservatorship bond exists discourages a conservator from disregarding and abandoning their duties. Failure to perform their duties as conservator results in the conservatee and their family being compensated.
How Is a Conservatorship Bond Amount Calculated?
According to Section 8482 of the California Probate Code, the court determines the conservator bond cost based on the following criteria:
- The estimated value of the conservatee’s personal property
- The annual gross income of the conservatee’s estate
Furthermore, the conservatorship surety bond amount may be determined by the court based on the premium required by the surety.
Usually, the annual payment for a conservator bond premium cost is based on a particular percentage of the entire bond amount (0.5%). However, premiums for bond amounts larger than $250,000 are calculated based on lesser percentages.
How to Obtain a Conservatorship Bond
If you’re going to apply to be a conservator, you need a conservatorship bond. In some states, it is left to the court to require a conservatorship bond as the judge deems fit. In California, you have to submit the conservatorship bond to the court before the court clerk issues the letters of conservatorship.
Basically, any individual applying to be a conservator must partner with a reputable surety company and have the bond in place to file the petition for conservatorship. Once it’s active, the conservatorship bond is effective throughout the duration of the conservatorship arrangement.
Need help navigating this process? At A People’s Choice, we help our clients with comprehensive and up-to-date legal documents. Our team of experts is available to ensure that you are provided with the legal document you may need for a conservatorship at very affordable costs. You can save thousands of dollars in attorney fees and a lot of energy with our assistance. Reach out to us today!
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