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What is a probate bond? Should your will require one?

On Behalf of | Jul 4, 2024 | Probate |

In many states, the executor or personal representative of someone’s estate is generally required to have a probate bond. 

Minnesota isn’t one of them – although you can require your executor to have one under your will. Should you? Here’s the information you need to make an informed decision:

A probate bond guards your beneficiaries from losses

A probate bond is also called a “fiduciary bond.” It’s essentially an insurance policy that protects the estate during the probate process against any unexpected losses the executor may cause through either negligence or deliberate misconduct including:

  • Mismanagement of assets: Executors dealing with complicated assets can end up devaluing the estate through failures to maintain the deceased’s real estate or mishandling investments.
  • Failure to pay debts or taxes: If an executor fails to pay debts and taxes in a timely fashion, that can lead to financial penalties that hurt the estate’s bottom line.
  • Inappropriate distributions: Sometimes an executor gets pressured into passing out inheritances early – and they fail to keep enough funds in the estate to cover its liabilities.
  • Improper valuation of assets: An estate can suffer significant losses, for example, if an executor just puts everything in a storage unit up for auction without recognizing that some of those assets have significant value.
  • Fraud or theft: Sometimes executors violate their fiduciary duty to the estate and its beneficiaries by engaging in self-dealing, embezzling funds or selling assets to friends, relatives or business associates at below-market value.

It’s important to recognize that an estate can suffer losses and beneficiaries can be harmed by even well-meaning executors. Purposeful malfeasance doesn’t have to be involved. With that in mind, you may want to think carefully about waiving the bond requirement in your will.

 

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