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Minnesota court bonds can be broadly categorized as either judiciary bonds or fiduciary bonds:
Minnesota Judiciary Bonds
Judiciary bonds are required of plaintiffs and defendants for a variety of purposes in cases under appear or civil cases involving contested property or injunctions. One of the most common judiciary bonds is a supersedeas bond, which stays the execution of a trial court’s judgment until an appellate court renders a decision.
A supersedeas bond (like most other judiciary bonds) must be fully collateralized. This ensures that the judgment will be satisfied if the appeal is unsuccessful and the winning party incurs no financial loss as a result of the appeal. Supersedeas bonds serve a larger purpose of deterring losing parties from filing frivolous appeals to delay the execution of a judgment.
Minnesota Fiduciary (Probate) Bonds
Probate courts have jurisdiction over matters related to trusts, guardianship, custodianship, and the execution of decedents’ wills. Fiduciary bonds, commonly referred to as probate bonds, ensure that those appointed as trustees, guardians, or custodians carry out the fiduciary duties associated with managing or distributing the assets of others.A probate bond is a fiduciary’s pledge to carry out those duties in a lawful and ethical manner.
Who Needs Them?
You will be informed of any judiciary bond you will need to obtain as the plaintiff, defendant, or appellant in a civil matter. You will also be informed of any probate bond you’ll need to purchase in order to serve in a fiduciary capacity.
How Do They Work?
Different Minnesota court bonds work in somewhat different ways, the biggest difference being whether or not the bond is fully collateralized. When a bond is fully collateralized, the collateral can be forfeited to the court to pay a claim against the bond.
When there is no collateral, the surety bond company (the “surety” for short) will pay any valid claim against the bond and then be reimbursed by the bonded individual (the “principal”). The surety bond agreement—a legally binding contract between the court (the “obligee”), the principal, and the surety—makes the principal legally responsible for paying valid claims. Consequently, the surety can take legal action against the principal to recover the amount paid out on the claim if necessary.
What Do They Cost?
The premium for any Minnesota court bond is a small percentage of the required bond amount (the bond’s “penal sum”). Because there is little risk to the surety in issuing a fully collateralized bond, that percentage, the premium rate, is usually about 1% of the bond’s penal sum, which is enough to cover any unanticipated court costs or fees. The premium rate for an uncollateralized bond is based primarily on the principal’s personal credit score. A principal with great credit typically pays a premium rate in the range of 1% to 3%.
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