“But my Dad’s Will says the Personal Representative doesn’t have to post a bond!”
I hear that quite often when a family member meets with me to discuss the first steps of the probate process. Many folks are shocked to discover that, in addition to the initial probate court filing fees, they’ll need to pay a probate bond premium, too. In Florida, that provision in Dad’s Will merely means that your Dad is waiving his right to require the Personal Representative to post a bond; it doesn’t mean the probate judge can’t require it.
What is a probate bond?
A probate bond (also known as a Personal Representative’s bond, fiduciary bond, or estate bond) is a type of insurance that is used to protect a portion of the deceased person’s assets from the Personal Representative’s misdeeds – including the misappropriation of funds. You’ve heard construction contractors and cleaning services say they’re “bonded;” this is essentially the same idea.
When would a probate bond be needed?
A probate bond may be required by a Florida probate judge even if the decedent’s Will declares that the Personal Representative isn’t required to post bond. Some judges require bonds all the time, some require them only when the Personal Representative lives out of state, and some may require them only when the decedent’s assets are over a certain dollar amount.
How much does a probate bond cost?
The probate judge determines the amount of the bond the Personal Representative must purchase. Again, he or she considers several factors, such as the size of the probate estate, the relationship of the Personal Representative to the decedent and the other beneficiaries, and whether the Personal Representative lives locally. The annual premium for a $50,000 bond is currently about $275-$350.
What else do I need to know about probate bonds?
Generally, a probate bond will only be issued if the Personal Representative lives in the U.S. So, while Florida law technically allows the appointment of a non-resident Personal Representative, in real life it rarely happens. Also, the insurance companies usually require a Personal Representative’s personal financial information and credit report when bond amounts over $50,000 are ordered by the court.
The bond renews perpetually without interruption and may only be cancelled by Court order. So an estate that is involved in a probate proceeding that drags on for years will pay premiums every year until the probate is finally closed by the court. However, most Florida probate proceedings are closed within one year.
How does the probate bond work?
When a claim is made against the insurance company, the proceeds of the bond are paid directly to the State of Florida through the court system. The Court then oversees the distribution of the proceeds to the creditors and beneficiaries. The primary difference between a bond and an insurance policy is that the insurance company collects the total proceeds it paid to the court from the Personal Representative who absconded with the decedent’s assets.
Who pays the probate bond premium?
The probate bond premium is considered an expense of estate administration and is paid out of the estate’s assets. If the Personal Representative pays the premium out of her own pocket while she’s awaiting access to the estate’s liquid assets, she’s eligible to be reimbursed later by the estate.
Probate can be a confusing, time-consuming process. If you need help or guidance, give the Law Offices of Cynthia M. Clark a call at 941-444-5958.
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