Learn more about trustee bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Trustee Bonds?
Trustee bonds are a type of court bond that is usually required when someone is appointed by a court to manage the affairs and finances of a minor or an incapacitated person whose assets are held in trust. The terminology varies from state to state. This type of bond is also referred to as a custodian bond or conservator bond. It may also be referred to as an executor or administrator bond when the appointment is to manage the estate of a deceased person who left no will.
Who Needs Them?
A trustee bond is only required when the court making the appointment says it is, but you can anticipate needing a surety bond if you are ever appointed by court order as a trustee. The court will let you know exactly what kind of bond you will need and what the required bond amount is.
In general, anyone given fiduciary authority over the assets of another that are being held in trust is likely to be required to post a surety bond. The bond serves as a guarantee of lawful and ethical behavior that abides by the rules of the court and the terms of the bond.
How Do They Work?
In effect, a trustee bond makes it easier to trust the trustee. The three parties in the bond arrangement are:
The court, acting as the obligee that is requiring the bond
The trustee purchasing the bond (the principal)
The surety company underwriting and issuing the bond
If the trustee misuses or embezzles funds from the minor or incapacitated person, or otherwise fails to live up to their fiduciary responsibility, a claim may be filed against the bond. The surety will make sure the claim is valid before paying it, but the principal (the trustee) is legally obligated to reimburse the surety for the amount paid out on the claim.
What Do They Cost?
The court will set the required bond amount based on the size of the trust. The surety will determine what percentage of that bond amount the principal will pay as the annual premium for the bond. The main factors in that decision are the trustee’s credit score and history of responsible financial management.
Use our convenient online application form to get a trustee bond today!
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