How Trustees Can Avoid Posting a Probate Bond

Avoid Posting Probate Bond

In many instances, executors and trustees are required to obtain an executor bond or trustee bond before they can begin performing their duties. These bonds are known as probate bonds or surety bonds.

These bonds essentially act as an insurance policy. If the executor or trustee doesn’t act in the best interests of beneficiaries—they’re neglectful, embezzle funds, etc.—then the beneficiaries can make a claim against the bond, much as the victim of a car accident can make a claim against the guilty party’s insurance policy.

The amount of a probate bond is determined by the court, based upon the details of will and/or trust.

Generally, the amount of bond coverage needed depends upon the size of the estate in question. When it comes to a bond, there are two options: pay the entirety of the bond, or go through a professional bond issue.

If you are one of the rare few with the necessary funds to do the former—a trustee bond can be hundreds of thousands of dollars—then these funds are essentially held in escrow until the completion of probate, and then they will be returned in full (unless a successful claim has been made against the bond).

Otherwise, you’ll have to work with a bond issuer. As with insurance, to obtain a bond this way, you pay a non-refundable premium that is a percentage of the total value of the bond. The cost of the premium depends on the size of the bond, your background and stability, whether an attorney is involved, whether you’ve served as a trustee/executor before, and so on.

Regardless of which route you take, obtaining bond can be an annoying and costly process.

This is why it’s wise to see whether it’s possible to obtain a probate bond waiver.

For starters, many wills and trusts written by an attorney actually waive the bond requirement. After all, an executor or trustee is typically chosen based upon the decedent’s trust in their abilities. So why impose a hardship? In California, a probate court will usually (but not always) waive a bond requirement if the will or trust requests that it be waived.

But if there is no will, or the will/trust does not waive bond, there are means of obtaining a waiver. For instance, if all of the heirs agree to waive the bond (and there are no secured debts), a judge will likely waive bond. However, this is not a guarantee. Some counties are known for being very apt to waive bond, while others are strongly disinclined to do so.

If the estate has unsecured debts, then securing a bond waiver is unlikely.

In the unlikely instance that you can get all creditors involved to agree to waiving bond, then you may still be successful in getting a judge to issue a waiver.

If the will or trust does not explicitly waive bond, and the heirs will not agree to waiving bond, then it’s very likely that you will have to post a probate bond.

In the absence of alternatives, you may wish to explore the use of a blocked account. A blocked account is an account that requires the issuing of a court order to make a withdrawal from. In some circumstances, depositing funds or other forms of securities may be accepted as an alternative to posting a probate bond, or may reduce the amount of the bond.

In any case, the advice of a probate attorney is strongly recommended. If you are an executor or trustee who needs assistance securing a bond waiver, you can reach us at our office by calling 916-400-4516, or by sending us a message using our contact form.