Everything That You Need To Know About Probate Bonds
A probate and fiduciary bond are one in the same and often required by Canadian provincial and territorial courts. Individuals that become responsible for taking care of someone else’s property and financial assets will become known as a fiduciary or principal. The individual that principal is acting on the behalf of is known as an obligee. In order to ensure the interests of the obligee, the probate court will summon the principal to obtain a fiduciary bond.
Surety Bond Company
Surety companies are responsible for providing consumers with various types of bonds. While the probate court is responsible for ensure that the principal complies with the terms and conditions of the bond, the surety will make sure that the principal can perform the task accordingly.
Filing a Claim
If at any time the obligee reports any dishonest practice or embezzlement to the probate court, a claim will be filed with the surety bond company. It is solely up to the surety to investigate the claim and make their decision based on evidence that proves the principal guilty or innocent. If the principal is found to be dishonest, the full penal sum of the bond will be paid out to the obligee and then it will be up to the principal to reimburse the surety company.
Do You Need A Probate Bond?
Once you become a court-appointed fiduciary, you will need to obtain a fiduciary bond. While this is not always necessary, it is in cases that involve someone being appointed as an overseer of someone’s financial assets, real estate properties, and personal affairs. As a beneficiary or heir of a large financial sum and estate, you will need to obtain a fiduciary bond.
More often than not probate courts request this type of bond to protect the deceased, incompetent, minor, or disabled person. Guardians and custodians do not often require a fiduciary bond, but if you are in question about this requirement, be sure to contact your local probate court.
Estate Bond VS Probate Bond
While each Canadian estate and probate court will have different practices involving the probate bond, the legislations are more similar than different. An estate, executor, probate, guardianship bond is listed under the same classification, as a fiduciary bond. The obvious difference will apply to the type of fiduciary, but that the extent of it.
Annual Fiduciary Bond Rate
The annual premium will be based on the full amount of the bond. This will include, but not limited to the total sum of the estate or financial assets, in which the principal is responsible for managing. The principal’s personal credit rating will also be factored into the equation. For those with a high credit score, you should expect to pay anywhere between 1-3% of the bond amount. Lower credit scores will drive the annual rate up, but this will not determine eligibility.
What Does Bad Credit Mean In This Case?
Bad credit history will not prevent you from getting approved for a fiduciary bond. In fact, there are various surety companies such as ConstructionBond in Canada that take pride in helping individuals with poor credit status. Whether you are labeled a minor or high risk applicant, you will find a surety company that will work with you.