Conservator Surety Bond (Guardianship Bond)
According to data from the Pew Research Center, there are more than 40 million Americans serving as unpaid caregivers for adults over the age of 65. There are also millions more caregivers watching out for a minor who is not their child or an adult with disabilities. In some cases, those caregivers may also become conservators, which requires a bond. If you're in this situation, this guide will help you answer all your questions.
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. Someone must prove they have the required bond – by showing proof-of-bonding documentation – before they can begin serving as a conservator.
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. A complaint can be made against the conservator which could result in a claim being made against the bond, seeking compensation for the same amount that was stolen.
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 tight bond of trust, which is exactly what surety bonds – conservatorship bonds and all others – are designed to create. Surety bonds build trust between separate parties in two ways.
First, they hold the conservator financially liable for misconduct that causes financial damages for the conservatee. By making it harder to escape responsibility for misconduct, surety bonds discourage anyone who might consider exploiting someone else. The presence of surety bond requirements keep 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?
You will need to get a conservator bond if you are chosen to be the guardian of a minor, disabled or elderly person, or placed in charge of their estate or financial affairs, and a judge decides that a bond is necessary. Some states require all guardians to secure bonds, others leave it to the discretion of the courts, and some states do not require guardianship surety bonds at all.
The guardianship bond remains in effect for as long as the conservatorship, with an annual premium charged for the bond. Typically, you will learn whether you need a bond as soon as you're considered for a conservator position. You don't gain anything by waiting to get a bond, so you will want to find a surety company like Viking Bond Service to partner with as soon as possible. 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 on an annual basis. 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?
Before a claim is ever filed, conservatees who feel they have been wronged will usually seek compensation directly from the conservator. If the conservator is unable or unwilling to pay, the conservatee can exercise their rights as the bond obligee, meaning they can file a claim with the surety bond company. Upon receiving the claim, the surety will encourage the principal to settle it outright. If the principal refuses once again, the surety will launch an investigation into the validity of the claim.
Given the nature of financial mismanagement, these kinds of investigations can be a lengthy process involving expensive legal professionals. When a claim is invalid, the process ends there. When one is valid, the principal is once again asked to pay. Failing that, the surety steps in to pay, ending the claims process. Afterwards, however, 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 the conservatorship agreement continues. It's vital not to let bond coverage lapse due to a missed renewal deadline.
The surety will help to 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 1-888-278-7389 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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