All About Personal Representative Bonds

Video

Hi folks, it’s Andy Stautz at Stautz Law. I’m back with another talk about probate. Today’s topic is personal representative bonds. So as you may know, in Indiana we call the person who administers a decedent’s estate the “personal representative.” That’s like an “executor,” same thing, just a modern name for it.  

And some counties in Indiana will require a personal representative to post a bond.  

What is a Personal Representative Bond?

Basically, the bond is a security that is held to ensure that the personal representative carries out his or her duties. So, you know, gathers the estate property correctly, distributes it to the right people. You know, just another type of surety bond.  

History of Personal Representative Bonds in Indianapolis Probate

And the county that does this the most is Marion County, Indiana, so Indianapolis, and this probate court here is the most likely to require a personal representative to post a bond. 

And if you want a little bit of history, that goes way back, it’s been a reputation of this court for about 50 years. And back in the day, the Rules Committee was talking about “OK, well, we want to require bonds” and someone said, “well, how much bond does $100 buy?” And the answer is about $17,000. So that’s why you’ll often see the Marion County probate court ordering a $17,000 bond — because that was kind of the minimum. (I just applied for one of these the other day for one of my personal representative clients and now it’s $122 with the surety company I use.) 

So if you’re wondering about that, that’s kind of where that came from.

What to Do when the Court Orders a Personal Representative Bond

Now, you can get a bond from all sorts of places. You know. I’ve got my insurance company and you know it’ll be called a “casualty and insurance” company or a “surety [company].” You know, I’ve got an insurance company I work with to apply for those bonds. So it’s fairly routine.  

If you get an order from the probate court requiring that you post a bond before letters are issued, don’t worry about it, it happens, and it’s just one more step in the probate process. 

[By the way,] that is where the court will order the bond. It’ll be, you know… you’ll petition to be appointed personal representative. And then the Court’s order will say “this petition is granted.” And you know, “letters will issue… letters of administration, letters testamentary will issue once you post a bond of ________.” Whatever amount.  

How to Prevent Having to Get a Bond

Can you avoid having to post a bond?  

That’s a question I get, and the answer is yes. Sometimes.  

The best thing you can do is have a will that says. “I authorize my personal representative to serve without bond.” So that’s a clause on the estate planning side ahead of time that I like to put in wills for my clients, because it makes life easier… because the court is more likely to look at that and say. “OK, great. No bond? no bond.”  

You can also try in your initial petition to say “we request that the Court orders administration without bond.” And a lot of this, as I said, varies by county. So Marion County, Indiana. You’re more likely to be ordered to post a bond. Down in Johnson County, you’re more likely to get away without it. 

Having authorization in the will is best. Having consents from all the beneficiaries or all the intestate heirs is second best. And then from there it kind of depends.  

[It depends] on the court. And you know, one factor in the amount of bond is going to be how big and complex the estate is and whether it’s supervised or not and whether there’s a risk of conflict. So if there’s a big complicated supervised estate, you’re more likely to have the court order some bond, even a big bond, versus if it’s unsupervised, you know, fewer beneficiaries, no conflict, you’re more likely to have no bond or minimum bond. So that kind of is what goes into that.  

But like I said, you know, $122 dollars was my most recent minimum bond. It’s an easy process, just one more step to go through. Your attorney will help you with that. I can help you with that if you’re one of my clients.  

Who Pays for a Surety Bond?

And that’s an expense chargeable to the estate, so you know, I usually front that cost and it’s billed to the estate, or you could pay for it right away and it gets reimbursed later. Just another expense of administration, we like to avoid it when we can, but if it’s been ordered, it’s no big deal. Give me a call if you want to talk about this or any other issues. I do these things all the time. Especially here in Marion County. So look forward to hearing from you. That’s all for today. Thanks. Bye.