Estate bonds play a crucial role in safeguarding the interests of beneficiaries, creditors, and other involved parties in estate management and guardianship situations.
Mandated by the probate court, or public guardians office - estate bonds ensure the responsible and lawful execution of duties by estate trustees and guardians.
For Executors:
An executor is required to secure an estate bond when:
- There is no valid Will in place.
- The appointed trustee resides outside of Canada.
- The estate encompasses an active business.
- Some beneficiaries are underage.
These scenarios present complexities and vulnerabilities, prompting the court to enforce the need for an estate bond.
It serves as a protective measure, guaranteeing that the estate trustee adheres to their responsibilities with utmost honesty and diligence.
Key duties include cataloging the estate assets, settling debts, acquiring a Final Clearance of Income Tax, and rightfully distributing the property in accordance with legal standards.
For Legal Guardians:
Similarly, individuals assuming the role of a legal guardian for property may also be necessitated to provide a surety bond.
This requirement is subject to the decision of the Public Guardian and Trustee and varies depending on the guardianship relations.
By understanding the crucial role of estate bonds and the specific conditions under which they are required, individuals assuming the responsibilities of estate trustees or legal guardians can better prepare and ensure compliance with legal obligations. This not only protects the vulnerable parties involved but also upholds the integrity of the estate administration and guardianship processes.
A bond can be waived, or reduced
Just as a bond is obtained, it can be waived or reduced by either factors:
Stipulations in the will: If the will explicitly states that the executor does not need to post a bond, the court typically honours this request, given there aren't overriding concerns.
Beneficiary consent: If all beneficiaries are legally competent adults and they provide written consent indicating they don’t want the executor to post a bond, the court may waive the bond requirement.This is especially persuasive if the estate is not complicated and there's little risk to the beneficiaries.