Why You Need a Probate Bond
When a person files for probate in California, the court will name a person to represent the estate. This person will manage the estate during the probate process, and the job comes with certain duties and responsibilities. The probate process usually takes between nine and twelve months, but can take longer if there are unexpected issues. During this period someone will need to pay the bills, sell assets when appropriate, and protect the property from theft. Usually, the personal representative handles this.
As you can imagine, that type of responsibility comes with the temptation to abuse it. Imagine an estate’s executor or personal representative selling off a valuable painting and pocketing the returns! That type of mismanagement represents a devastating potential threat. Furthermore, the personal representative could make a mistake that costs the estate serious money. For example, if this person fails to pay the mortgage on a home in the estate, the bank might foreclose. Even if the estate representative meant no harm, the financial damage to the estate remains. You need a probate bond to protect against deliberate or unintentional mismanagement and negligence.
What is a Probate Bond?
A probate bond operates similarly to bail in a criminal court. The bond is a sum of money that serves as the estate’s insurance policy against mismanagement by the person the court appoints to handle the estate. The named personal representative, executor, or estate administrator has a fiduciary duty to act in the estate’s best interest. If they fail in this duty, the bond goes to the estate to reimburse the estate for executor mismanagement.
Requirements for a Bond in Probate
In California, the courts will require a probate bond as a matter of course. However, many people use a waiver in their wills to waive the bond requirement. If the decedent did not leave such a provision in the will, the beneficiaries of the estate might also agree to waive the requirement. In this latter case, however, every beneficiary must agree to waive the requirement. It should be mentioned, however, that if a personal representative lives out of state, the court will likely require a bond, even with a bond waiver by all beneficiaries.
If you wish to waive the requirement in your probate case, you must attach a waiver to the petition for probate. A great deal of detail goes into this waiver and petition. For example, you must disclose unsecured creditors to the estate and the amounts owed them. The documents should also estimate the estate’s tax liabilities, indicate solvency of the estate, and include a statement of due diligence.
These documents require a great deal of effort to assemble. If you do not have the right information included, that waiver will likely remain unapproved. A People’s Choice can assist you in getting a probate bond waiver or, on the other hand, getting a probate bond if necessary.
How Probate Bonds Work
Just applying to waive the bond requirement does not automatically mean the court will grant your request. As mentioned above, if the executor lives outside California, the court will likely require a bond. Another interested party could also petition the court to keep the bond if they can show a valid reason for doing so. Then, the court will likely keep the bond requirement in place.
If you find you need a probate bond, the size of that bond relies on the size of the estate. In some cases, the named executor in a will may not have enough money to put up the bond. Fortunately, some companies will help with this. Contact a surety company for assistance if you cannot afford to put up a probate bond. However, be aware: The surety company will run a credit check on the person requesting bond since they are responsible for reimbursing the surety company in the event the bond is surrendered. Don’t worry, though. If the estate is managed properly then the executor gets the bond back. If you pay fees to the surety company, however, those will be non-refundable. A People’s Choice can refer you to several bonding companies willing to work with self-represented estate representatives.
Handle This Process Right
Dealing with the issue of whether you need a probate bond can be complicated. Getting the court to not require a bond can also be complicated. Sometimes executors want to waive the bond but beneficiaries do not. It can be stressful knowing that much money is riding on your proper handling of the probate process. Remember, time is money. The court will require a personal representative to renew the bond every year the probate case remains open. Because of this, many people end up paying for bond renewal simply because of delays in completing the probate case. This often happens when someone is trying to complete probate without professional help. A People’s Choice completes most of our probate cases in less than 12 months, saving our clients thousands of dollars in unnecessary bond renewal fees.
A People’s Choice can help everyone involved in the probate bond equation. If you are wondering if you need a probate bond, we can help you find out. Want to waive the probate bond requirement? We will help in that process as well. Don’t want to waste money on unnecessary bond renewal fees? We will make every effort to complete your probate case in the fastest amount of time. Contact us for more information on probate bonds and the probate process so you can finish this potentially difficult experience and complete your California probate. Call us today at 805-648-5540.
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