What Is A Probate Surety Bond?

by Sudarsan

A probate bond is a form of financial insurance that protects a dead person’s estate against the executor. It safeguards the estate from losses incurred by the executor’s bad judgments or other activities that can potentially reduce its worth. An estate bond or fiduciary bond is another name for a probate bond.

A probate surety bond is a formal agreement that guarantees compliance, payment, or completion of an act in its most basic form. Since it includes a three-party deal, this bond is unique insurance.

A surety agreement entails three parties:

  1. Principal – The principal is the party who acquires the bond and agrees to complete the act as promised.
  2. Surety – An insurance or surety firm that ensures that the commitment will be met. The surety is legally accountable for losses incurred if the principal fails to complete the act as promised.
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  3. Obligee– the person who needs the surety bond and often benefits from it. The obligee for most surety bonds is a local, state, or governmental body.

What are the Different Types of Probate Bonds?
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A probate bond is a broad category that includes a variety of segments. Each one protects the estate against any loss. Depending on your involvement in the estate and probate procedure, you will need a different bond.

  • Administrator – It protects someone who has been assigned by the court to manage the estate. If there is no will, individuals are appointed.
  • Personal Administrator – This one is for a person specified in a will to act on behalf of the estate.
  • Conservatorship – This is for somebody responsible for a person’s finances and who cannot manage them independently.
  • Trustee – In this sort of agreement, the bonded individual operates on account of a deceased individual’s trust.

What are the Characteristics of Probate Bonds?

The term “probate surety bond” refers to various bonds used in multiple contexts. Most of them have these below-mentioned characteristics.

  • Bonding capacity: A principal’s bonding capacity is the most significant amount of money they may borrow. The contractor’s cash flow, working capital, and relevant experience play a role.
  • Working capital: Sureties often require principals to have a certain level of working capital, which is defined as current assets minus current liabilities. The requirement depends upon the size of the principle, but it is usually between 5% and 10% of the entire bonded amount.
  • Bond premium: A cost imposed by the surety that ranges from 1% to 15% of the bonded amount and is generally paid by the principal in advance for the whole duration.
  • Bond term: It typically lasts one to four years and could be revised if necessary.

How Does a Surety Bond Work?

Surety bonds assist principals and small contractors in competing for contracts by ensuring that consumers get the goods or services provided. If a principal fails to fulfill a contractual duty, a surety bond obligates the surety to make a payment to the obligee. Commercial and professional parties can also use these since government entities widely use them.

The principal’s responsibility is to pay the premium to the surety, usually an insurance company, to secure a surety bond. The principal must sign an indemnification agreement pledging company and personal assets to compensate the surety in the event of a claim. If these assets are inadequate or uncollectible, the surety must pay the claim with its own money.


People seeking to work on high-value government projects are frequently asked to post surety bonds. Surety bonds make more sense when a contract demands performance, even though they are not mandatory because they help recompense obligations when principals fail to satisfy their contractual commitments.

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