What is a Trustee Bond?

Trustee bond signed to protect the trust

Before we answer questions about trustee bonds – one particular kind of surety bond – we should explain some of the terms and concepts involved. First, a trust is a financial vehicle set up during a person’s lifetime or after it as part of their will. Trusts contain funds which are distributed to particular persons or organizations based on terms dictated by whoever established and funded the trust. With a few exceptions, trusts can operate however someone intends.


Second, a trustee is an individual responsible for administering a trust. They must follow all applicable laws along with the exact terms and conditions outlined for the trust. That may involve distributing money on a set schedule or investing funds according to fiduciary principles. The trustee does not benefit from the trust (though they may receive some compensation) but they do have control over the funds and responsibility for the outcomes.


Third, a trustee bond is a financial guarantee that a trustee will pay for any damages resulting from illegal or irresponsible activities related to the trust – eg. stealing funds or investing recklessly. The courts and often the terms of the trust itself require most trustees to have a trustee bond.

How Does a Trustee Bond Work?

If the beneficiaries of a trust have reason to believe the trustee has broken their fiduciary responsibility, committed criminal acts, or violated the terms of the trust, the beneficiaries may file a claim against the surety bond seeking damages equal to the amount lost from the trust. As part of the bond agreement, the surety company that backs the bond agrees to settle all valid claims in full up to the amount of the surety bond. When that happens, however, the bond holder (the trustee) must pay the surety company back the amount of the settlement plus interest and fees. With this and all types of surety bonds, the bond holder (called the principal) always has the final financial responsibility for any claims.

What does the Trustee Bond guarantee?

It guarantees two things. First, that trustees will be held personally accountable for their actions. Trustee bonds ensure they can’t escape responsibility. Second, that victims can seek financial compensation to recover their losses. It’s neither impossible nor uncommon for a trustee to fail in their responsibilities. Bonds help to discourage that kind of behavior while guaranteeing that when something goes wrong, there’s a way to make it right.

How Much Does a Trustee Bond Cost?

The surety bond requirements – set by either the courts or the trust – dictate how large the bond must be. Usually, it must be large enough to cover the full-value of the trust. The cost is then a small percentage of the total value of the surety bond. For example, a $100,000 surety bond may cost around $5,000 to obtain. How much a trustee pays depends on their credit score and financial history. Applicants with bad credit pay more, but not significantly more, and they’re not excluded from surety bonds either. For help getting a quality surety bond at an affordable price in minimal time no matter what your credit is like, rely on Viking Bond Service.

Who Needs a Trustee Bond?

Given the important and sensitive nature of the work that trustees perform, the beneficiaries of the surety bond place tremendous trust in whoever fills that role. Surety bonds help establish that trust by holding trustees accountable for misconduct. Therefore, basically all trustees require a surety bond to meet the requirements for the role. Seek one out as soon as possible so that you don’t create unnecessary obstacles for yourself and the beneficiaries of the trust.

How to Obtain a Trustee Bond

The surety that backs the bond will quote you a price for the premium based on the documentation you supply upfront. That documentation includes a standard surety bond application, a copy of the surety bond requirement, and a copy of the trust agreement. Underwriters at the surety will use those documents to estimate your credit risk, which will determine the price they quote. Once you pay the premium, you receive a document proving you have an active surety bond that meets the conditions required. Since trustees usually serve for years and surety bonds expire after a set period, the trustee must renew the bond regularly, usually every 12 months. That involves going through the application process again and paying another premium based on the trustee’s updated credit standing.

Viking Bond Service – Trustee Bonds in 50 States

We strive to make the bonding process easy, accessible, and affordable for anyone who needs a trustee bond. You can get a quote in under 48 hours once you submit a copy of this online bond application. You can also get more information and answers before you apply. Simply complete the contact form on this page, or reach us directly at 1-888-278-7389.

Author: Lynn Macci

In my role as Sr. Commercial/Court Specialist, I have been in the industry for 30 years in multiple Surety capacities. I have worked with many Sureties and have experience in a vast variety of Commercial and Court/Probate cases. I've entertained these types of bonds nationwide. I have a significant background and involvement in business development and Surety knowledge.