What is an Administrator?
An Administrator is a person appointed by a probate court when an individual dies leaving an estate but no will. An Administrator is appointed to oversee the deceased’s assets. This includes paying off the deceased’s creditors and taxes, as well as distributing the estate in the way the deceased would have liked to those who are entitled under law
Sometimes an Administrator is chosen via the probate process. Not sure how probate works? Check out this post on how the probate process works.
What is an Administrator Bond?
Whenever a second party is held responsible for another person’s assets, there is an element of risk involved. There is no guarantee that this person will use the funds in the estate appropriately. To help ensure funds are not misused, the court may require the Administrator to get an Administrator Bond.
An Administrator Bond is a type of court bond that promises that the Administrator will properly use and disburse the estate according to law. If the Administrator uses/disburses the estate for personal gain instead of how the deceased would have wished, someone can make a make a claim on the Administrator Bond.
In this sense, the purpose of an Administrator Bond is not protection for the Administrator, but rather for the beneficiaries, creditors, etc.
When is an Administrator Bond Needed?
Ultimately, it is the court’s decision whether an Administrator Bond is needed or not. There are some circumstances where an Administrator Bond is not needed.
Times when an Administrator Bond is not needed:
- If there is a legal will in place that specifically notes that a bond is not needed
- If a financial institution is made the acting Administrator
A general rule of thumb is that anytime there is no valid will at the time of death, it is very likely the court will require an Administrator Bond.
How Much Does an Administrator Bond Cost?
The Administrator Bond amount is based on the value of the estate. In some states, the Administrator Bond amount might need to be greater than the value of the estate.
The actual price (or premium) paid for the Administrator Bond is dependent on the Administrator’s credit score and financial stability. You can learn more about how the rate is determined here.