Notify probate bond holders
If a probate bond was required by the probate court while administering the estate, it’s possible that some funds may be available for reimbursement from the bond holders.
As long as the executor or administrator did not act in a careless or fraudulent manner, causing the estate to have losses, the bond’s principal may be returned.
Usually, the probate bond is calculated as a percentage of the estate’s value (e.g., 0.5%).
While every bond is different based on the terms of the bond agreement, some surety companies who issue probate bonds may charge a nonrefundable fee.
The nonrefundable fee is often charged in addition to the bond’s principal.
If a nonrefundable fee is charged, that will typically not be reimbursed to the Executor, but the principal is reimbursable.
For example, Jane Doe is the executor of John Doe’s estate, worth $100,000. Jane had to pay a principal bond equal to 0.5% of the estate, or $500.
Jane was also charged a nonrefundable fee of $250.
As long as Jane performs her duties as executor in good faith, and pays all bills of John’s estate, the $500 bond will be reimbursed when John’s estate is finalized and closed.
However, the $250 nonrefundable fee will not be returned.
Typically, a copy of the Judgment of Final Distribution from probate court will be needed to release the bond.
For more information on obtaining a probate bond, see the "probate bond" section of the Guide.
Do you get the money back for a probate bond?
The probate bond is designed to protect the estate from incompetence, fraud, and other bad actions by the executor or administrator.
As long as the executor does not engage in any actions that cause losses to the estate, they will be entitled to receive the bond’s principal when the estate is closed and the legal probate process is concluded.
If the executor causes losses to the estate, through either fraud or mistakes, individuals, such as heirs of the estate, can make a claim against the estate’s bond.
For example, let’s say Jane Doe failed to pay the electric bill for a deceased person's real estate, and it caused several damages amounting to $10,000 in contractor fees.
An heir to the estate might file a claim against Jane Doe’s bond to collect the $10,000 in damages caused by Jane’s mistake.
If Jane paid a $25,000 bond, she will only receive $15,000 back when the estate is closed and the legal probate process is concluded.
If a claim is made against the probate bond, the surety company who issued the bond will typically investigate the claim to ensure it is valid.
If it is valid, either the executor will have to pay the claim, or the surety company will pay the claim, out of the principal issued.
If the surety company pays the claim, the reimbursable principal will be reduced by the amount paid toward the claim, as in the example above.