What Is a Probate Bond, and Do You Need to Consider It When Estate Planning?

When you're putting together an estate plan, one of the most important decisions you'll make is who you trust to carry it out. That person — your executor or administrator — will be responsible for managing your estate during probate, following state laws, and honoring the probate court's orders. A probate bond helps make sure they do.

If the executor or administrator makes a mistake or does something wrong intentionally, a probate bond is a financial safety net for your heirs and creditors. People may also call it an administrator bond, executor bond, fiduciary bond, estate bond, or surety bond. Whatever you call it, the goal stays the same: to protect the people who rely on the estate.

Let’s find out more about probate bonds:

Understanding probate

When someone passes away, a probate court supervises the distribution of their estate. The court validates a Will or appoints an estate administrator if the person didn’t have a Will. The court oversees the process, but the executor or administrator handles the day-to-day responsibilities.

The probate process includes paying outstanding debts, such as medical bills,  and giving the remaining assets to beneficiaries. It also allows ownership transfers of assets that belonged only to the deceased.

Not every asset has to go through probate. In fact, some parts of estate planning can help your heirs avoid probate:

• Assets held in a living Trust
• Life insurance and other accounts with named beneficiaries
• Those designated as Payable or Transfer on Death
• Property held in joint tenancy with right of survivorship

Depending on the size and complexity of your estate, the probate process can take months to over a year. And the details usually become public record.

How a probate bond works

A probate bond is an agreement among three main parties:

• Principal: The estate’s administrator (appointed by the court when there’s no Will) or executor (named in the Will to manage the estate)
• Obligee: The probate court that requires the bond
• Surety: The company that issues the bond and guarantees payment if needed

A probate bond creates accountability. The probate court expects the executor to follow the rules and manage the estate’s money honestly. If the executor doesn’t do this, someone can file a claim against the bond. 

Here’s how the claims process works:

1. A creditor or beneficiary reports a problem to the probate court
2. The court reviews the claim and decides if the executor breached their duties
3. The surety company pays valid claims up to the bond amount
4. The executor has to pay the surety back for the full claim amount

The executor has a fiduciary duty to administer the estate in a way that follows the law and your wishes. A bond helps support that duty. The bond keeps beneficiaries and creditors from losing money if the executor does something wrong. 

The executor is personally responsible for repaying the surety company if a claim is paid out. That's one reason a bond creates real accountability — the executor has personal financial skin in the game.

When a bond is needed

A probate bond is most commonly required because the Will calls for it, state law mandates it, or a beneficiary or creditor requests one. The probate court then confirms the requirement and determines the bond amount based on state laws, the estate's details, and the people involved. The court can also require a bond on its own if it has concerns about the executor or the circumstances of the estate.

Courts commonly require probate bonds in these types of situations:

• The deceased died intestate (without a Will)
• The executor lives in a different state
• A beneficiary is a minor or an incapacitated person
• Beneficiaries or creditors request a bond
• There are conflicts among the beneficiaries
• The Will doesn’t waive a bond
• State laws require one
• There are concerns about executor misconduct

Even if a Will states that a bond isn’t needed, the judge can overrule that waiver if there’s a good reason.

How to get a probate bond

If a probate bond is required, the person you've named as executor will need to go through an approval process with a surety company. Here's what that typically involves:

1. Be appointed by the court as the estate’s executor or administrator.
2. Contact a licensed surety company that handles probate bonds
3. Complete the bond application
4. Go through the underwriting review process

In case you’re wondering, underwriting is a process that looks at the risk of issuing you a probate bond. The surety company checks the executor’s credit score and the estimated estate value. They might also decide whether you’re able to handle estate finances. If the estate is complex, they might see the bond as a high risk.

How much a probate bond costs

A probate bond’s cost is called a premium. The premium for a well-qualified applicant is typically a small percentage of the bond amount, but it varies.

That premium could increase if: 

• The estate is complex 
• The estate could take a long time to settle 
• The estate’s total value is very high
• The surety company considers the bond high risk
• The applicant has a lower credit score

In most cases, the estate pays the bond premium. The executor or administrator might have to pay it upfront and file for reimbursement.

The probate court usually decides the amount of a probate bond based on how much the estate is worth. They may also consider expected income and other financial factors.

Probate bond denials

Remember that the executor or administrator has to repay claims against a probate bond. Surety companies don't want to lose money. If the applicant has poor credit, a history of legal issues, or financial instability, it could look like they might not repay a bond claim. The company might deny the application. 

If a surety company doesn’t approve a bond application, there may be other options. An executor might be able to get a bond from a different company, but the costs may be higher. The probate court could appoint a different executor. Or, it could add a co-administrator with a better financial profile.

Probate bonds and estate planning

So, now you know that a probate bond may be required during probate.  That gives you the chance for smarter planning. An executor’s low credit score could lead to a bond denial, and that might mean the court would appoint someone of their choosing. 

You may want to choose an executor who has a strong financial profile. Or, you could select co-executors to allow someone with a lower credit score to still serve. 

You can state in your Will that your executor doesn’t need a probate bond. However, in some cases, it may not be up to you. The probate court can require one anyway, based on the circumstances of your estate, your beneficiaries, or your executor after your passing.

Use your LegalShield plan to get advice from a lawyer

Estate planning and probate have lots of moving parts, but you don’t have to navigate them alone. With an affordable LegalShield Membership, you can ask a provider lawyer in your state about all of your estate planning needs. Get the experienced legal guidance you need to protect your loved ones.

Common questions about probate bonds

What happens if my executor has bad credit?

An executor might qualify for a probate bond with bad credit if an executor can find a surety company that works with higher-risk applicants. The premium might be higher, though. If your executor cannot get a bond, , the court could appoint someone else to manage the estate For this reason, it is good to choose the right person, and his or her successor, to serve as executor.

How long does a probate bond stay in place?

A probate bond is usually active during the whole probate process. That can last several months or over a year. When the court closes the estate and releases the executor, the probate bond ends.

Can the family decide to skip a probate bond?

Families might want to waive the requirement of a probate bond, but the probate court has the final say.