Monday, January 29, 2007

Another Hidden Cost of Dying - The Surety Bond

Category: Estate Planning, Probate and Estate Administration

A spot-on examination of the requirement for a surety bond in an estate administration from Joel Schoenmeyer, Esq. at Death and Taxes Blog.

On the Subject of Surety Bonds: "Surety bonds are like an insurance policy for an estate and its beneficiaries. What are you insuring? That the executor or administrator isn't going to run off to Tahiti with the estate's assets."

I also use Tahiti as an example of where the nefarious fiduciaries are going with you money.

Surety bonds can be expensive and fall into the category of "things to be avoided". How to avoid the expense to your estate - create as will. As Joel points out in his posting: "The executor doesn't have to obtain one if the decedent's Will waives the surety bond requirement. If the Will DOESN'T contain such a waiver, or if the decedent died without a Will, the executor will have to make surety arrangements."

Also, if you have a Will, but don't have a named Executor or Successor Executor, you will also need a surety bond in NJ. This means that if your Will from 15 years ago names your spouse and then your father, who has since died, a codicil is in order at a minimum to name appropriate successor executors to avoid the bonding requirement.

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13 Comments:

At 2:52 PM, Anonymous estate planning lawyer said...

Interesting scenarios. And good info. It's interesting to see how things differ from state to state.

 
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At 10:39 AM, Blogger Jason Strong said...

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At 10:57 AM, Blogger Jennifer Davies said...

Thanks for the information. I'd always heard the downsides of surety bonds, but I didn't realize they can be essential in case of a death without a will. Is it only in New Jersey that a surety bond is required in case of no executor? It seems like something all states should require.

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