Posting bond: another good reason why you need a Will.

Bond-posting4willsWhether you have a lot of assets or just a little, the people you are leaving behind will most likely have to obtain what used to be called “probate” but is now called an Appointment of an Estate Administrator In order to deal with your stuff. Anything over $10,000 in value will usually require a Court appointment, which authorizes someone (an Administrator) to deal with your assets. Often the court will require that the Administrator post a bond, which is like an insurance policy that ensures that debts of the estate are paid and that the right beneficiaries receive what they are entitled to. This is especially true if there is no will.

Even where there is a Will, a bond may be required if the named executor lives outside of the province of the deceased. (A good reason to choose someone nearby to be your Executo. The bond creates a guarantee that the Executor won’t leave the jurisdiction without paying bills or distributing the estate to the beneficiaries.

The reason the court requires a bond is that where there is no Will, any number of issues may arise as to who the proper beneficiaries may be and what assets or share of the assets they are entitled to. It may be difficult to determine what assets there are, whether in real estate, bank accounts, investments, etc. and whether there are any outstanding debts. So the courts typically require that a bond be obtained before they will grant someone authority as Estate Administrator without a Will.

A bond is a form of insurance policy that an executor buys and getting one a complicated and expensive business: it is hard to find an insurance company that will issue one; the application process is difficult; the premiums are expensive (typically three years of premiums must be paid in advance) and once the estate is settled, it is difficult to remove the bond, the Court must approve.

When applying for appointment as an Estate Administrator, you may request that the bond which would otherwise be needed should be waived. It is wholly up to the judge who looks at the file but your chances of being relieved of the trouble of getting a bond are better if the beneficiaries agree in writing to the bond being waived, and if you can show that the deceased’s debts have been paid in full.

Applying for “probate”, i.e. appointment as an Estate Administrator, is a complicated process generally and it’s a good idea to get professional help. Cost will generally be in the $2000 – $5000 range depending on the size and complexity of the estate and the number of beneficiaries.