No Will? Let the Administrative Bond Do the Work for You
It is advised to write a will to ensure that all your assets go to the proper beneficiaries. However, many forget or delay this and end up dying without one. When this happens, the first thing that comes to people’s minds is that the government will take care of the deceased person’s assets, and nothing will end up to the rightful beneficiaries, but that is not the case.
Anyone from the family or even close friends can apply as the deceased’s administrator. Doing so would give them the power to manage the deceased person’s properties.
What Is an Administrative Bond?
Here is what happens when someone dies without a will: an administrator is appointed to take care of the person’s estate. When there is another party involved to manage other people’s assets, there are always risks. Before they can proceed with the process, the court will require them to get an administration bond first.
Simply put, the administrative bond serves as protection for the beneficiaries, creditors, and so on. It is a court bond that ensures the following:
- The person’s estate would be distributed appropriately (The distribution depends on the state laws where they reside.)
- All the deceased person’s outstanding debts are taken care of
- The assigned person is responsible for administering the estate and managing any negligence that occurs
What to Know About the Administrative Bond
Any individual can apply as an administrator of another person’s estate. Still, before getting the approval, the court would need to consider many factors, such as the total value of the person’s estate and how much the administrator would receive. The court will perform a background check on the applicant, which may entail looking into their credit score, employment history, and relationship with their siblings (if the applicant is a family member of the person).
The applicant will be required to sign an indemnity agreement with the surety company. Should the applicant become appointed as the executor and fail to perform their duties or be guilty of any fraudulent activity, the administrative bond could serve as the “insurance policy” of the assigned beneficiaries. Therefore, these beneficiaries could file a claim against the executor. This agreement with the surety company can allow the company to sue the administrator should the beneficiaries and creditors complain about their performance.
Here are the other vital details to take note of:
- The bond’s total value is more likely to be double the estate value, but the estate itself can cover the annual premiums. If you think this is too much, the Estate Acts allow the judge to reduce the bond value or remove it altogether, depending on many factors.
- The details of the bond may vary depending on the perceived risk for the applicant and the complexity level of the left estate.
- The bond is in the hands of the court until it gets cancelled.
- The bond will get cancelled as soon as the court is satisfied with the administrator’s proper administration of the estate. Once all the debts have been paid, and all the beneficiaries are considered capable adults, the bond can get dispensed.
The administrative bond allows people concerned about the deceased person’s estate. It can ensure that the deceased’s belongings go to the proper beneficiaries. At the same time, it protects the beneficiaries and guarantees accountability should the administrator fail to proceed with their duties.
To learn more about estate planning, talk to your attorney. Ontario Wills & Estate Plans will guide you through creating your professionally structured comprehensive estate plan that meets your needs. Contact us today to learn more about how we can help.