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Conservator Surety Bond (Guardianship Bond)

Conservator Bond

Conservatorships can differ depending on state laws, but they are always established by court orders. Most often, conservators are created by parents of developmentally disabled adults or by guardians of elderly people. For example, those with dementia may be at greater risk of financial abuse and can benefit from a conservatorship's protection. If you find yourself in a situation where you might need a conservatorship surety bond, here are the basics of what you'll need to know.

What is a Conservator Surety Bond?

A Conservator Bond, otherwise known as a guardianship bond, is a type of court-required fiduciary surety bond. In the event that a conservator is appointed to handle the affairs of a minor or an incapacitated adult (the conservatee), the conservator may be required to obtain a conservator bond in order to protect the interests and affairs of the conservatee. Guardianship bonds are often required when there are assets purposed for the care and well-being of the conservatee, to be managed by the conservator. Before serving as a conservator, a person must prove they have the required bond, which they can do by showing proof-of-bonding documentation.

How Does a Conservator Bond Work?

Like all kinds of surety bonds, a conservator bond or guardianship bond exists to hold the bonded party financially accountable. Imagine a conservator steals money from a trust that's meant to cover the finances of a disabled adult. The conservatee or someone else acting on their behalf can then file a complaint against the conservator, potentially resulting in a claim against the bond. The compensation would be requested for the same amount that was stolen or resulted in losses.

The bonded party has the legal and ethical responsibility to pay for any valid claims, but if they do not, the surety company that issues the bond agrees to step in and pay – meaning that valid claims are guaranteed to be paid and conservatees know they have a way of seeking restitution. If the surety company settles the claim, that company has the right to collect the same amount from the bonded party, possibly with interest and legal fees added. In all cases, the bonded party bears the final financial responsibility.

Why Are Conservatorship Bonds Required?

The relationship between a conservator and the person in their care is a sensitive one. There needs to be a certain level of trust, and a conservatorship bond is a tool that provides that trust from a legal standpoint. Surety bonds build trust between parties in two ways.

First, they hold the conservator financially liable for any misconduct that causes financial damages to the conservatee. Surety bonds make it harder to escape responsibility for misconduct or neglect, discouraging anyone who might consider exploiting someone else. The presence of surety bond requirements keeps less-reputable people from becoming official guardians. They also incentivize upstanding behavior because they enforce accountability.

Second, guardianship bonds build trust by giving the conservatee a path to justice in the event that the conservator steals their money. Since the injured party knows they are guaranteed a settlement by the bond company for valid claims, they know that if something goes wrong they can recoup their losses. That makes relying on a conservator less risky for the conservatee in a vulnerable position.

Who Should Get a Conservator Surety Bond?

Suppose you are a designated legal guardian of a minor, disabled, or elderly person, or placed in charge of their estate or financial affairs. In these cases, a judge might request a conservator surety bond. Depending on the state you're in, a guardianship bond can be a necessary requirement, or it can be up to the judge. On the other hand, some states do not require a conservatorship bond at all.

The guardianship bond stays in effect for as long as the conservatorship is in place. Typically, as soon as you're considered for a conservator position, you will know if a conservatorship bond is required of you. You would want to get that handled as soon as possible, as the pause in this regard will stall the entire estate planning procedure. It is wise to find a surety company like Viking Bond Service to partner with. If you have questions at any point, feel free to contact us for answers.

Who Are the Parties Involved in a Conservator Surety Bond?

These bonds involve three parties.

  • The principal is the party purchasing the bond to guarantee that they will properly manage the assets of the conservatee. You are typically the principal, and in addition to obtaining the bond, you will need to pay the annual renewal fees and settle any valid claims filed against the bond.
  • The obligee is the beneficiary party who requires the bond. In this case, a judge will require a bond that benefits the conservatee, giving them the right to file claims and seek compensation equal to what was stolen/lost by the principal.
  • The surety underwrites and issues the bond. The surety also agrees to pay for any valid claims the principal does not, and the surety has the right to collect unpaid debts from the principal using whatever legal means available.

How Much Are Conservator Surety Bonds Written For?

Requirements for the amount of a guardianship bond vary greatly from state to state. Some states outline minimum bonding amounts, others have a formula for calculating the amount, and some states leave it to the discretion of the court, or offer no guidance at all. Many times conservator bonds are written for the value of the conservatee's assets, plus one year of the conservatee's income.

If you have any questions about the amount your bond needs to be written for or any other aspect of the bonding process, Viking Bond Service will provide you with accurate information tailored to your situation.

How Much Does a Conservator Surety Bond Cost?

Generally, conservator surety bonds cost a percentage of the total assets being protected and are paid annually. With good credit, the conservator bond premium cost is generally in the range of 1% to 4% of the total surety bond amount. In many conservatorship cases, there are additional upfront costs such as attorney's fees, filing costs, and medical examinations to prove the need for guardianship and appoint a guardian.

If you're wondering who pays for a guardianship bond, conservatorship costs (including the annual bond premium) are usually paid from the assets of the conservatee. In some cases, the conservator can cut down the guardianship bond cost by only insuring a portion of the conservatee's assets, thus lowering the amount of the guardianship surety bond.

How Are Claims Handled for Conservator Surety Bonds?

Typically, before filing a claim, a conservatee who believes that they have been wronged will seek compensation directly from the conservator. If the conservator refuses to compensate – or is unable to – the conservatee can take things further and exercise their rights by filing a claim with the surety bond company. Once the surety receives the claim, they start by giving the principal a chance to settle it outright. If the principal still doesn't cover the losses, the surety will start the process by investigating the claim's validity.

Sometimes, a claim can be easily decided upon. In others, a surety might have to involve a legal team, including investigators and specialists, to determine who's at fault. When a claim is invalid, the process ends there. When one is valid, the principal is once again asked to pay. If they don't, the surety will compensate the obligee, thus ending the claims process. Afterwards, the surety company collects however much it settled for from the principal, including fees associated with the investigation.

How Does Conservatorship Bond Renewal Work?

A conservator must have an active bond in good standing for as long as they care for someone else. Since guardianship bonds have a one-year coverage term, they will need to be renewed every year as long as the conservatorship agreement continues. It's vital not to let bond coverage lapse due to a missed renewal deadline.

The surety will help prevent that by providing renewal notifications as the date approaches. Once someone opts to renew, the surety will review any credit changes since the previous check. Improvement in credit may lead to lower premium costs. Alternatively, declining credit standing could mean higher premiums than before.

How to Apply for a Conservator Surety Bond

Here are the usual requirements to process a conservator bond:

  • Application for conservatorship: Sometimes referred to as a petition, the application documents will vary from court to court.
  • Court order for the conservatorship
  • Financial statement
  • Credit history
  • Information about the case

Some cases will require additional documents. Generally, conservators need to have reasonably good credit to be approved for a guardianship bond. Viking Bond Service will use all of our resources to get you approved at the best rates available.

Three Easy Ways to Request a Conservator Surety Bond Quote Today

Viking Bond Service's team of expert bonding professionals is here to help make the process of securing your guardianship bond as smooth and fast as possible. Contact us today to secure your guardianship bond. You can do that by calling us at 1-888-2-SURETY (1-888-278-7389) or by filling out the contact form on this page. If you have all the info you need and want to get a bond as quickly as possible, fill out our online application. Remember, bonding doesn't have to be stressful or confusing as long as you work with the right team – one like Viking Bond Service.

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