Many individuals when faced with probating an estate are required to post a bond but few really understand what this means or what is involved. Let me explain the process to you in this blog.
As a general rule a court or surrogate will require that a fiduciary post a bond to protect against theft, embezzlement, fraud etc. and to ensure him or her diligently performs of his/her statutory responsibility to the estate or trust. This law also sets forth other circumstances when posting a bond is warranted. These circumstances include:
- When any written instrument creates a fiduciary relationship (i.e. Will, Trust, Power of Attorney).
- When someone is appointed in place of (substituted in) another person named as the fiduciary in a will or other instrument because an alternate back-up representative is not named;
- When the fiduciary position was created in a document before death, generally in cases involving holographic will or other cases involving legal documents which are upheld as legal by the court even though they are unsigned by the decedent or an incapacitated person.
- When the fiduciary position involves the guardianship of a minor or mentally incapacitated person, unless the decedent’s will or trust provides that no bond is required or, unless the court relieves the guardian of the obligation to a post bond);
- When letters are granted to a nonresident executor, unless the will provides that no bond is required;
- When an additional fiduciary is appointed for some reason unique to the case;
- When a fiduciary physically moves from the state and becomes a resident of another state;
Other miscellaneous situations when a surety bond can be ordered include if a court determines that property is presently at risk in the hands of a fiduciary who previously did not have to post a bond. In such a situation he/she may be required to post a bond.
Let me give you some further examples of the above circumstances:
The court concludes that property is considered unsafe or in danger of damage, destruction or loss of value. In such a situation and at the request of any interested person(s), including creditors, a bond can be compelled. Where trust funds are liable to be jeopardized, a court can require the trustee to post a bond.
When a fiduciary files an accounting and it shows that the amount of the current bond is greater than is necessary for the proper protection of estate or trust assets the court can reduce the bond to a lower amount that the court deems sufficient. At the conclusion of the estate/trust administration the court may also discharge the surety of all liability effective as of the date of the order.
To discuss your NJ Estate & Probate matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.