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Trustee Surety Bond

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A trustee bond is a type of fiduciary surety bond that guarantees a trustee will faithfully carry out their duties in managing a trust according to the terms set forth in the trust agreement and applicable laws.

Key Highlights

  • Trustee bonds guarantee the trustee will carry out the wishes of a deceased person as they are stated in the trust.
  • If the trustee fails to live up to the details of this agreement or acts fraudulently, the court is free to file a claim against the trustee bond
  • Bond amounts are generally established by the obligee in the trustee surety bond agreement, though the bond premium should be less than 5% for those with good credit.

How do I purchase a trustee bond?

NFP, the nation's largest and most reliable surety company, is authorized to issue trustee bonds in each of the 50 states. We can provide the best rates for your bond, as well as the fastest issuance, to get your business off and running.

Our short online application makes it easy. Click below to start the application process today.

Trustee Bond FAQs

Trustee bonds guarantee that the trustee will carry out the wishes of a deceased person as they are stated in the trust, and as repeated in the bond itself. If the trustee fails to live up to the details of this agreement or acts fraudulently while serving as trustee, the court is free to file a claim against the trustee bond, and the surety company must then pay this claim.

If the trustee fails to perform their duties in accordance with the terms of the trust and the bond, the court will make a claim against the trustee bond to ensure the beneficiaries receive the awards intended for them by the deceased person. Although the surety company must initially pay the full amount of any claim made against the bond, it will then attempt to recover the entire amount from the trustee, whose fraudulent or non-compliant actions led to the claim being filed.

Bond amounts are generally established by the obligee in the trustee surety bond agreement, which is the court presiding over asset distribution. The bond amount consists of the total amount of coverage provided for the deceased's assets, and it represents the maximum amount of money that a surety company would have to pay out if a claim were to be filed against the bond. The court might literally set almost any value as the bond amount, but it will always be in accordance with the level of assets to be distributed.

By contrast, the cost of the bond, which is also referred to as the bond premium, is set by the surety agency itself. The premium for the bond is the amount the principal will have to pay, generally on a monthly basis, to keep the trustee bond in effect. For trustees with good credit history, the cost of getting a bond is likely to be considerably less than 5% of the bond amount. However, for trustees with relatively poor credit history, it will generally cost much more, because trustees with bad credit represent a greater risk to the bonding company than do those with good credit.

A trustee bond is one type of bond from the general category of court bond types, all of which are required when specific individuals have been designated to act on behalf of other persons. Fiduciary bonds and probate bonds are two other kinds of court bonds in this grouping.

All of these bonds are very similar, and when the process begins for carrying out the distribution of assets according to a deceased person's wishes, this process is known as probate. When you hear the term fiduciary and probate bonds, it will generally indicate that a fiduciary has been appointed by some level of the court system to manage the finances of a deceased person via the probate process.

A bankruptcy trustee bond is another fairly common type of surety that falls in this category, and it is required of a bankruptcy trustee by virtually all courts in this country. Bankruptcy trustee bonds ensure that trustees in charge of presiding over an individual's bankruptcy proceeding will comply with all responsibilities according to the court's direction. This favors all the creditors who stand to realize some kind of financial gain when the deceased person's assets are distributed.

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