What is a Surety Bond in a Estate Administration where there is no Will?
Why do I need to get one? A surety bond is an insurance policy that protects the beneficiaries and creditors of the estate. Administrators are required by law to obtain a surety bond in order to be appointed. Executors may not be required to obtain a surety bond if the will waives that requirement. Source http://www.co.middlesex.nj.us/surrogate/faq.asp
How do I get a Bond released? The administrator can be released from the surety bond in two ways:
▪ Filing the original refunding bond and release forms from all beneficiaries with the Surrogate Court and stamped copies with the Insurance Company
▪ With the approval of the Superior Court of a formal accounting of the estate
In cases where a decedent leaves no will a personal representative will have to provide a New Jersey administrator bond, also referred to as a New Jersey personal representative bond. The bond is required by the County Surrogate Court or “Will Clerk” and serves as a guarantee of certain fiduciary and legal duties.
Generally an appointed administrator or personal representative will protect a decedent’s assets, have them professionally appraised if necessary, pay valid debts and distribute the remaining property as the law directs. The New Jersey administrator bond is requested from the surviving spouse or domestic partner of the intestate deceased, if he or she will accept the administration, and if not or if there is no spouse or domestic partner, then from one oft the remaining heirs of the deceased. If none of these parties will accept letters of administration, then the court is free to appoint who it chooses.
The New Jersey personal representative bond is contemplated under NJ 3B:15-1. The court or surrogate appointing a fiduciary must ensure faithful performance of the administrator’s duties by requiring the fiduciary to furnish surety bond to the Superior Court in a sum and with proper conditions and surety, having due regard to the value of the estate to be administered and the extent of his authority. Where specific conditions as to a particular surety bond are prescribed by law, the New Jersey probate bond cannot be approved unless the prescribed conditions are included in the obligation.
The bond form must include certain elements. First, the surety bond guarantees that the administrator will make an accurate inventory of the real and personal property of the decedent which has or shall come to his possession or into the hands of any other person for him, have an appraisal made of the real and personal property, and file the inventory and appraisal in the office of the clerk of the Superior Court or of the surrogate within specific time frames.
Second, the New Jersey personal representative bond guarantees that the administrator will faithfully discharge all of the duties imposed upon him according to law, making an accurate account of his administration of the estate. The surety bond guarantees that the administrator will deliver and pay to the distributees entitled to the same, the surplus property of the decedent as may remain.
Finally, the New Jersey probate bond guarantees that the administrator will deliver his letters of administration to the proper court, when required so to do. An administrator (fiduciary) required by law or order of court to give a surety bond, may include as a part of the lawful expense of executing his duties a bond premium not exceeding one percent (1%) per annum on the amount of the bond and only to a corporate surety authorized under the laws of New Jersey to become surety on commercial bonds.
If at any time it becomes apparent that the New Jersey administrator bond given by a fiduciary at the time of his appointment was insufficient or has become insufficient or the surety appears to be insolvent or insufficient for the security of the estate, the court may order the fiduciary to give other or further security to the Superior Court, by bond in the same form using a different surety company.
The court will discharge a surety on the bond from liability for all acts and omissions occurring after the granting of the discharge if the administrator files a new New Jersey personal representative bond duly approved by the court. The surety may also be relieved by moving the court to do so at any time from three months after the entry of a final judgment of distribution made after the allowance of the final accounting.
Upon proof to the satisfaction of the court that the entire estate has been distributed according to law, and that no appeal from the judgment of distribution is pending, discharge the surety on its New Jersey probate bond for the principal from any and every liability. New Jersey surety leader - See more at: http://www.suretyone.org/blog/new-jersey-administrator-bond/#sthash.hOjK37MN.dpuf