A person that is responsible for looking after the property of another person, as in an estate, is known as a fiduciary, and may be required to obtain a fiduciary bond (surety bond). A probate bond (also called an estate bond or executor bond) therefore, is a type of fiduciary or surety bond.
A personal representative, as a fiduciary, has ownership of the property of the estate until it is distributed to the beneficiaries. A bond is sometimes required to protect the estate until all the debts are paid and the estate's assets have been distributed.
(Note: the term “personal representative” is the current legal term used to refer to an executor/executrix, administrator/administratix, and judicial trustee.)
When Is a Probate Bond Required?
The Estate Administration Act states that a personal representative must have a probate bond. However, according to the Surrogate Rules, the requirement for a bond is generally waived if one or more personal representatives are Alberta residents. This applies whether the personal representative is an executor / executrix or administrator. In practice then, a bond is typically required only when none of the personal representatives are Alberta residents, or if the personal representative was not named in the will and a beneficiary applies for a bond requirement.
Non-resident personal representatives must apply to the court to have the bond requirement waived, or the amount of the bond reduced. The court may consider factors such as the amount of the estate's debt and the payment details, or the consent of a beneficiary.
The court may also require a bond, at its discretion, if any interested party applies to the court to request one. In such cases, a bond is required whether or not the personal representative is an Alberta resident.
The Amount of a Bond
Generally, the amount of the bond is the total value of the estate minus the personal representative's fees and expenses.
Surety Bond Companies
Bonds are usually provided by surety bond companies that ensure the personal representative complies with the terms and conditions of the bond. If any of the beneficiaries feel that the personal representative has acted to their detriment, such as by misappropriating funds, they can report this to the court and a claim will be filed with the surety bond company, which will investigate the claim. If the claim is found valid, the surety bond company will pay the full amount of the bond to the beneficiaries and the personal representative will be required to reimburse the surety company.
Insurers must be licensed to provide bonds under the Insurance Act.