Bonds and MN Probate
In some estate the law firm has worked on, the personal representative has been required to post a bond. This post explains (1) what a probate bond is and (2) why one might be required.
A Probate Bond
In some cases, the court may require the the personal representative (executor) of the estate post a bond equal to the amount of the estate assets. Therefore, if the estate is worth $500,000.00, then the court could require a $500,000.00 bond. Why? Because the court wants to ensure that the personal representative does the right thing, follows the law, and doesn’t lose or worse, steal the money from the estate.
A bond is surety posted by the personal representative against the estate assets. The personal representative will literally have to post collateral against the bond in case they make a mistake in the estate. This is a bid deal and something people should take very seriously.
Why Might a Probate Bond be Required?
In formal, supervised administration in Minnesota, a bond is almost always required. However, most estate are not formal and supervised by the court. In fact, I would guess that only around 10% of estates proceed in this fashion.
Therefore, the question becomes: why is a bond required in this minority of estates? One reason for a bond is that there may be family members or other parties that are “fighting” and the personal representative must post a bond to preserve assets. Many times, when heirs and other parties are fighting a professional personal representative will be appointed by the court. A professional must always be bonded and the estate will always be a formal, supervised estate.
Another instance when the law firm has seen bonds required is when the estate is insolvent. For instance, the estate may have a home, but there are debts worth more than the home. In essence, the court may require a bond so that the creditors of the estate are protected. It is easy to see why a party might not want to sell a home or other assets just to be the deceased person’s bills. After all, what fun is that? Yet, the court might require a bond in this case.
Finally, the last common instance when a bond is required is when the deceased person gave money to people under the age of 18. In this case, the court will likely want to ensure that the children receive the money they are owed. Courts treat children very carefully because they are not legally able to represent themselves.
Minnesota Bond Lawyers
The law firm has attorneys with years of experience dealing with probates of all kinds. If you have questions about the requirements of a bond or other probate issues, contact the law firm today at 612-424-0398.
