Bond Requirements For A Personal Representative
According to Florida’s probate law, when a loved one passes away, a probate “estate” is created as the interim legal owner of the decedent’s assets and debts until the estate can be administrated in accordance with the wishes set forth in the decedent’s Last Will And Testament (if there is no will, the estate is distributed under Florida’s intestacy law).
The party who is responsible for the actual oversight and distribution of the estate is called the Personal Representative. This can be a person named in the Last Will and Testament and appointed by the Court, if there is a Will (and if that Will names a qualified, living P.R.), or the Court can appoint any qualified person upon a petition by an interested party, as is the case with intestate estates (when there is no Will). Alternatively, the Court can appoint a Curator (usually an attorney) to carry out the duties until a qualified P.R. is appointed. Regardless of who is appointed or how they secure the appointment, the P.R. represents the estate and is tasked with notifying creditors, gathering assets, and eventually distributing those assets to the people or entities who stand to inherit them.
Upon their appointment, the Personal Representative may act with great power over the property — sometimes, in ways that the beneficiaries or heirs don’t like or find suspicious or wrong.
So, what protects the beneficiaries from the bad acts or mistakes of a Personal Representative? Financially, that protection can come via a personal representative’s bond.
What is a Bond?
A bond is essentially an insurance policy. It is provided by a “surety company” to cover a set amount. The bond is a guarantee provided by the surety company that certain tasks will be completed by their client, the “principal” who is purchasing the bond from the surety company. The bond acts an insurance policy protecting those who might be hurt if the principal fails in some way.
Those being protected are the “obligees” on the bond. If there is harm, the obligees make a claim on the bond. The insurance company, or surety, pays their claim. Then the surety seeks reimbursement from the principal for the claims paid.
Personal Representative Bond Under Florida Statute 733.402
Florida law requires that a personal representative post a bond as a general rule. This is true whether the person died leaving a Last Will and Testament or not. Even if the Will has a provision that waives the bond requirement for the personal representative, Florida Statute 733.402 mandates that a bond may still be required if the probate judge decides one is needed.
The exception? If the personal representative is a bank or trust company, the financial institution is specifically exempt from a bond requirement under Florida Statute 733.402(3).
However, bonds are not always required from a Florida personal representative. The judge may decide a bond isn’t required for some reason. The beneficiaries may file a motion arguing that the bond requirement be waived, and the judge may agree. The decedent may also provide in the Last Will and Testament that there should be no bond required of the Personal Representative named in the will.
How Much Is A Bond?
If a bond is required of the Personal Representative, the next question is how much should the bond amount be — what should the insurance policy cover? Usually, a personal representative’s bond will be in the amount that covers both the cash held by the estate as well as its liquid assets. The total amount of the bond, as a general rule, will not include the fair market value of real estate.
It is up to the probate judge to figure out what the proper bond amount should be. There is no statute that demands a set procedure here. Some Florida probate judges, for example, will handle bond amounts over the phone without any hearing.
Is There An Alternative To A Personal Representative’s Bond?
Recognizing that these bonds can be costly for the personal representative (those premiums aren’t cheap!), the probate judge may opt for a different route. Under Florida Statute 69.031, the judge can decide to protect the estate assets by ordering the intangible assets deposited with a bank, trust company, or other financial institution for safekeeping.
The personal representative can still make decisions about those assets, but removing them from safekeeping will require not only the personal representative’s direction but the court’s okay.
This procedure can sometimes protect the estate’s assets while also protecting the personal representative from the expense of the bond. This is important in situations where the Personal Representative is trustworthy but not with great financial recourse, and someone that the decedent wished to handle the distribution of his or her estate.
To keep track of those assets, the judge will require a report (called an “accounting”) from the personal representative at “reasonably frequent intervals” per Florida Statute 69.031. As for any interest that accumulates on these assets while they are held in the financial institution, they are to be included in the reports as an estate asset, too.
What Happens If You Suspect Mistake or Bad Acts by Personal Representative?
If you or a loved one are a beneficiary to an estate that is in the process of being probated, then you are subject to the actions of the Personal Representative who has been appointed to oversee the administration and distribution of that estate.
What if you think that the Personal Representative is making mistakes that is harming your inheritance — or even worse, doing bad things like keeping things for himself or selling stuff unnecessarily?
The Personal Representative owes you the utmost duty under the law, that of a fiduciary.
You must, however, voice your concerns formally to the probate judge in order for anything to be investigated. This means having an experienced Florida probate lawyer to help you voice your concerns and protect your inheritance.
If negligence or bad acts like fraud are found, then the losses that have resulted can be covered by the surety company who issued the bond for the Personal Representative. If there is no bond, then the personal assets of the Personal Representative can be made the subject of a judgment in your favor.
What Should You Do?
If you believe you have an issue with a personal representative, a good piece of advice is to at least talk with a Florida probate lawyer to learn about your rights. Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation to answer your questions.
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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.
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