Your mother passed away intestate, or in other words, without leaving a will. Had she left one, she would have designated someone as executor of her estate. As it stands, someone had to stand up and take responsibility for seeing to it that her estate is distributed equitably among her apparent heirs. You didn't stand up, but somehow the family has decided you make the best administrator.
You have engaged a probate lawyer and are knee-deep in gathering bank statements, brokerage account information, safe deposit box keys, deeds of trust and determining just who is an heir. Now you come to a dead stop.
"I need a what?" you ask the lawyer. "What is a surety bond?"
What and Why?
In agreeing to take on the administrator role, you have become the estate's fiduciary agent, meaning you are acting in the interest of the estate and its beneficiaries, up to and including the time you oversee distribution of all assets.
Since you have sole responsibility for, and power over finances, real estate, debt payments and tax responsibilities, the probate judge requires a surety bond before she can appoint you as administrator. This is needed to insure that all your fellow heirs will be compensated should you decide to abscond with their inheritance or fall short of your duties.
Not every state requires a surety bond as long as the deceased has a legitimate will designating an executor stating that no bond will be needed. However, as in your case, when there is no will, a bond is more often needed than not. Mississippi is one state that poses an exception, allowing the bond to be waived if all heirs are adults, and willing to sign a document waving the need for a bond.
How Much Will It Cost?
Your bond premium will depend on the value of the estate, the amount of coverage needed and your own particular financial credentials. Most states require the bond cover only personal property, waiving real estate holdings since they are fixed. A few states, however, like Illinois where 150 percent coverage is required, ask for a bit of extra padding.
The bond company you choose will be checking your finances and credit history because it will be insuring you to carry out your financial responsibilities. Should you fall short or act illegally, they will be the ones covering the loss. Therefore, they will only issue the bond if you meet their underwriting requirements. Even when you do, the amount you pay will depend on the risk you pose in the underwriter's opinion.
How Do I Get a Surety Bond?
Once you establish the value of the estate, gather any court documents that outline the case, contact an independent insurance agent in your area that issues surety bonds and request a surety bond quote.
Your premium will be quoted at an annual cost. The longer it takes to settle the estate, the more it will cost. For this reason, fiduciary bond premiums are seen as a hidden cost of probate. However, most bond issuers will issue a pro-rated refund should you close the estate before a year is up.
Learn more today. Call McFarlin Insurance Agency at (410) 312-7800 for more information on Maryland surety bonds.