Among many of the tasks that may need to be completed when administering an estate in New Jersey is purchasing a surety bond. When a person is given the responsibility of representing an estate and distributing the deceased’s assets, normally there must be something in place to secure the faithful performance of the representative’s duties. That is where surety bonds come in.
Anyone appointed to represent an estate, whether it be an administrator, executor, or other representative, may be required to purchase a surety bond. A surety bond is a written agreement akin to an insurance policy for the estate to protect against losses caused by the administrator or executor. If the representative fails to fulfill any of their duties, the bond may be used to replace the lost assets.
Administering an estate is a complex and demanding responsibility. Therefore, an executor or representative might not be appointed until they purchase a surety bond. However, most Wills waive the requirement for posting a bond, and that waiver is typically accepted by the Surrogate Court. If the bond is not expressly waived in the Will, the Surrogate will require a bond to be posted. Many people will waive the bond requirement in their Will if they trust the named executor to perform their duties faithfully.
The cost of the bond premium is an expense of the Estate and must be paid every year in which the estate is still being administered. Therefore, if you trust your named executor and want to save on costs of administration, you could waive the bond requirement in your Will. If you have any questions whatsoever about the competence of the person who will be the executor of your estate, you might not choose to waive the bond requirement.
If you have any questions regarding the drafting of a Will and/or estate administration, please contact the Ward, Shindle & Hall.