What is a trustee bond?
A trustee bond is a type of court bond that protects a trust’s beneficiaries if a trustee fails to administer the trust properly. Trustees must post a trustee bond before the court grants them permission to administer a trust.
What is a trust?
A trust is a legal contract between a grantor (the party that sets up the trust) and a trustee (the party that manages the trust). A trust may be set up to ensure that a grantor’s wealth is managed and distributed as they desire, either during their lifetime or after they die. In other words, a grantor can transfer the management of their trust over to a reliable third party – the trustee charged with holding the title to property/assets and following the trust document’s instructions for beneficiaries. Trusts can be handled however the grantor intends (with a few exceptions).What is a trustee?
A trustee is someone charged with administering a trust according to the law and the trust document’s instructions. This person gains control over how the funds are managed. A trustee bond acts as protection for beneficiaries – in case the trustee mismanages funds or property. A trustee’s responsibilities may include the following:- Fulfilling the terms of the trust
- Protecting the trust
- Keeping beneficiaries informed
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Quick Takeaways
- A trustee is someone charged with administering a trust according to the law and the trust document’s instructions.
- A trustee bond protects a trust’s beneficiaries if a trustee fails to administer the trust properly.
- Typically, a bond must cover the trust’s total value.
- You will need this bond for the entire duration of your role as trustee, which means you’ll need to renew your bond annually until your job is done.
How does a trustee bond work?
A trustee bond is a three-party agreement between a principal, an obligee, and a surety.
- Principal: The trustee that must post the bond and abide by its terms
- Obligee: The court that requires the trustee to obtain a bond
- Surety: The company that issues and backs the surety bond
What do trustee bonds guarantee?
These bonds guarantee that trustees fulfill their roles legally and ethically. They also guarantee payment to beneficiaries should they suffer losses due to unethical or illegal behavior on behalf of the trustee.
How much does a trustee bond cost?
Either the judge on your case or the trust document will inform you of the bond size you need. Typically, it must cover the trust’s total value. To obtain your trustee bond from a surety provider, you’ll pay a small percentage of the bond, known as a premium. For example, if you need a $250,000 bond and your premium rate is 2%, you will pay $5,000. Your credit score and financial history will affect your premium rate. You will need this bond for the entire duration of your role as trustee, which means you’ll need to renew your bond annually until your role is fulfilled.
Other Frequently Asked Questions
Who needs a trustee bond?
Any party seeking a trustee role will need a surety bond. If you need this bond, contact ZipBonds as quickly as possible to avoid delays in the case.
How do I apply for a trustee bond?
To successfully apply for your bond, you may need to provide credit and financial information, a copy of the trust and will, a copy of the surety bond requirement, information on your attorney (if applicable), and other information.
Apply for Your Trustee Bond Today
To apply for your trustee bond, you can complete our application online or over the phone (888-435-4191). We may ask for financial documentation, court documents related to the case, and other information. Don’t hesitate to give us a call if you have any questions!
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.