In California you need to understand the basics of surety bonds if you’re going to be involved as trustee in charge of a trust for someone who has either:
- Passed away; or
- Become unable to take care of herself anymore.
Also you need to understand the basics of surety bonds if you’re going to be acting as:
- Executor or administrator in charge of the probate decedent’s estate court proceeding of someone who has passed away;
- Conservator in charge of the conservatorship court proceeding for an adult who can’t take care of herself anymore; or
- Guardian in charge of the guardianship court proceeding for a minor who needs someone to manage her affairs.
Our prior post has more information about bonds in these contexts. It’s called “What Is a Bond in a California Probate, Conservatorship, or Guardianship?” Check it out.
What Is a Bond?
A surety bond, often referred to simply as a bond, is like an insurance policy. It’s a contract that makes one party liable for the debt, default, or failure of another party.
For example, it’s probably better to hire a plumber who is bonded than one who is not. The bond will provide funds to pay for the damages if, while fixing a dripping faucet, he accidentally floods your house.
Why Would You Need a Bond for a Trust?
There are two ways that bonds are an issue regarding trusts:
- Someone creating a trust should consider whether to require the trustee in charge of administering the trust to have a bond; and
- The court may require the trustee to file a bond if the trust is subject to court supervision.
Waiver of Bond in the Trust Document
It’s very common for a trust to discuss whether the trustee needs a bond. Trusts most often waive any such bond requirement.
That’s consistent with the intent of most people who create a trust. Their intent is to make the trust administration process simple and relatively inexpensive.
If the person who created the trust (i.e., the settlor or trustor) nominated a trustworthy trustee, then it’s normally fine to waive the bond requirement. The attorney drafting the trust should provide the settlor with advice in that regard.
Trust Subject to Court Supervision
A trust may become subject to court supervision. When that happens the trustee needs to administer the trust almost as if it’s a conservatorship. Courts normally require a bond in conservatorships of the estate. Accordingly, courts normally require bonds for trusts subject to court supervision.
We will publish a post soon regarding how a trust can be subject to court supervision. Stay tuned for that!
How Do You Get a Bond?
Various companies are in the business of providing bonds to trustees of trusts.
They charge an annual premium for providing bonds. The greater the assets and income at issue, the larger the bond amount, and the higher the annual bond premium.
Normally the trustees of trusts don’t need to pay the annual bond premium from their personal assets. They normally can pay it from the assets of the trust.
Get Help from an Experienced Trust Attorney
There are many more details and intricacies of trust bonds.
If you don’t fully understand those details and intricacies, then you may not be able to qualify for a bond. That may prevent you from becoming trustee of a trust.
Or you may obtain a bond in an amount that is larger than required. This would create unnecessarily high annual bond premium payments.
Hiring an attorney experienced with trusts can help you avoid this. The guidance of an attorney experienced with probate court cases is also invaluable for attaining your goals in these cases.
At Meinzer Law Firm, P.C., we have over 20 years of experience helping clients achieve their goals in trust cases in and out of court. Contact Meinzer Law Firm, P.C., in Torrance to assist you with your California trust or Los Angeles County probate court case.