Probate Attorneys Proceed with Caution: Minimums…Bigger isn’t always better.

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Attorneys often request specific bond amounts based on what they incorrectly believe to be the minimum.  “Just give us a 40k bond” or “give us the minimum” or some other arbitrary amount or statement is thrown out without full knowledge of probate bond minimums or requirements.  There are many different minimums in regards to probate court bonds, guardianship bonds, estate bonds.

Minimum Premium

Let’s start with minimum initial cost.  Our most aggressive insurance carriers have a Minimum Premium of $100 per year.  That means no matter how low the bond penalty is, one-hundred dollars is the lowest cost.  Whether you need a bond penalty of 1k or 40k the initial price is the same.

Minimum Flat Rate Bond

However, there is a distinction from minimum ongoing cost with flat rate bonds.  Flat rate bonds are another type of “minimum”.  Executor Bonds or Administrator Bonds issued for penalty of $20k or less only need to pay $100 once, there are no renewal fees. Flat rate bonds are useful for probate cases that might be expected to continue for more than one year:

  • Probate action started to prosecute wrongful death matter, personal injury claim, or insurance claim.
  • Or perhaps there is complicated real estate involved, which is often excluded from bond requirements, but might take a few years to sell.
  • Have real estate but need to find heirs.

There are many good situations when a flat rate bond could be used to save expense and provide greater convenience for the client.

Minimum Penalty

Minimum penalty is something different. Most bonds have a Minimum Penalty of $10k.  Even though you can request a lower bond amount, ten-thousand dollars is the minimum the carrier will issue a bond.

To complicate matters more, probate bond applicant qualifications and experience required is different, based on penalty amount.  Each carrier is different, and rates and qualifications can vary widely based on insurance carrier, state of issuance, court, bond penalty amount.  While someone with a bankruptcy or not the best credit history might qualify for a $10k bond penalty, maybe they wouldn’t for a $25k, $40k or higher bond penalty.

Court Minimum

Individual Magistrates or Judges in some jurisdictions set their own ‘minimum bonds’.  It’s unfortunate, since their minimum might be 40k, and perhaps the case only needs a 10k bond according to State rules. An unnecessarily high bond amount could disqualify some applicants, even if the cost is the same.

In Ohio, for example, court rules say a bond must be 2x the value of non-real estate assets. Due to the non-liquid nature of the asset, real estate is excluded from bonding requirements.  But just because a 40k penalty bond has same cost as a 10k penalty bond does not mean it’s better to request the higher bond amount.  Requesting a bond too high could mean renewals have to be paid, or maybe applicant that could have qualified for a lower bond amount will not qualify for a higher amount.

Bonding Experience Matters

I see many insurance agents whimsically provide exactly what the attorney is requesting.  They do so with good intent, with a desire to accommodate client requests and help things roll smoothly.  But an agent with experience issuing probate bonds will be most helpful in evaluating your needs.  We explain all the nuances involved with each probate bond request.