In probate, a bond acts like an insurance policy in the event that a mistake is made by the estate’s representative that causes harm and requires the surety company to pay. A mistake made by the representative could be, for example, distributing assets to the heirs before settling debts owed to creditors. Or, more seriously, a bond covers the possibility of money being stolen from the estate by the representative. A bond is not necessary if a probate estate does not need to be opened or if the deceased left behind a Will that waives the bond requirement.
According to 755 ILCS 5/12-5, the size of the bond that is required for the representative to obtain depends on the following:
- If an individual issues the bond, it must be twice the value of the person estate (excluding real estate); or
If a surety company issues the bond, it needs to be at least 1.5 times the value of the personal estate. - If a personal injury suit is an asset of the estate, the value of the lawsuit is considered $500. If the money from the lawsuit comes into the possession of the representative, the bond must be 1.5or 2 times the amount awarded based on the information above.
How much does it cost?
In general, the representative should expect to pay a $500 annual premium on every $100,000, or 0.5% of the estate’s assets. However, there are factors that impact this price. The higher the risk and the payout are, the higher the premium will be. Some factors that are considered by surety companies are:
- If the representative has hired a lawyer;
- The size of the estate;
- The types of assets in the estate;
- The representatives profession and relationship to the deceased; and
- The nature of the relationships among the heirs.
Probate can be a complicated process especially when a bond is required. Consulting a lawyer is necessary to ensure you obtain the right type of bond that will protect you from harm caused by mistakes made during the administration of an estate. To schedule a free consultation, contact us.
