When an individual is a minor or is designated by a court to be incapacitated with a mental illness or mental deficiency, the court’s responsibility is to look out for the best interest of that individual. Frequently, the court does this by appointing a guardian (also called a custodian or conservator depending on the jurisdiction) to watch over the minor or incapacitated individual’s personal and financial affairs.
Typically, when the guardian is managing the estate of an incapacitated person, the court will require a surety bond to insure the faithful performance of their duties as guardian. This court bond is frequently called a guardianship bond but can also be termed as a custodian bond, custodial bond, conservator bond, estate bond, fiduciary bond, or probate bond depending upon your jurisdiction.
What is a Guardian Bond?
A guardian bond is a type of probate bond that assures a court that a person designated to serve as a guardian will perform his or her duties as required by law. Similar to other surety bonds, it is a guarantee of performance. If the guardian does not do his or her job correctly, or loses or steals assets, the bond will operate as a financial guarantee and pays the person who lost the assets or income for the monetary damages up to the value of the guardian bond. The bonding company will then take legal action against the individual serving as the guardian to try to recover the monies paid out pursuant to the guardianship bond. Unlike an insurance policy, the surety carrier or insurance company’s insurance department does not suffer the whole loss unless the guardian who caused the loss is penniless or bankrupt.
How does a potential guardian obtain a Guardian Bond?
Generally, the guardian bond is taken out through a surety bonding company, similar to an insurance company. Just like you would pay an annual premium on a homeowner’s insurance policy, the guardian pays an annual premium on a guardianship bond. The surety bond company will look at the proposed guardian or conservator’s financial strength as evidenced by their credit history, personal assets, and personal debts as well as the bond amount when determining whether or not they will approve and provide the bond. The bond premium is typically considered to be an expense of the guardianship estate and the guardian is therefore entitled to be reimbursed for the bond premium out of the minor’s or incapacitated individual’s estate. In contrast to an insurance policy, the guardian must sign an indemnity agreement guaranteeing to repay the bonding company if there is a loss.
When you or your client requires a guardian bond, custodian bond, or conservator bond, you want to go to a specialized source that deals in these types of bonds every day. Let Unique Surety take care of getting the right steps in place to demonstrate a potential guardian’s or conservator’s credit worthiness, competency and financial aptitude. We know how important it is to get bonding in place so that you or your client can take care of a loved one’s needs. We do it all the time.
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