In instances where someone is appointed as the guardian of a minor or a person that is unable to care for themselves, a guardianship bond is required to protect the interest of the person who is being cared for.
If you have found yourself in a situation where a guardianship bond is being required and are unsure of what the details are, these are the need-to-know aspects of a guardianship bond and how it may affect you.
Guardianship Bonds: What Are They?
Guardianship bonds are customarily filed in a probate court and guarantee faithful performance and honest accounting by the legally-appointed guardian in managing the finances and assets of the minor or otherwise incompetent person.
Legal guardians can be named in a will and appointed by the court. Guardians shall execute and file a bond to be approved by the court “in an amount not less than the estimated value of the personal estate and anticipated income of the ward during the ensuing two years” unless the requirement is waived by the court.
Bonds must cover the liquid assets of the estate (everything other than real estate) plus any income anticipated for the year because these are the assets that the guardian could potentially steal or lose.
For further insight into how a guardianship bond works, please see the attached example below:
John B. is 90 years old and has just been placed under guardianship. His son, Michael, has been appointed as John’s guardian. John’s house is valued at $140,000 and his bank account valued at $183,000. John’s annual income from social security and his pension are a total of $27,000.
In this example, Michael the guardian would be required to post a bond covering the $183,000 bank account and the $27,000 in annual income, which totals a bond amount of $210,000.
Often, clients are concerned that they will have to cover the cost of the bond amount or put up collateral to secure the bond. This is generally not the case, as bonds are taken out via a bonding company. The guardian will then pay a yearly premium on the bond.
How Is Funding Delegated?
The bond process is essentially a function of someone’s credit. A bond company will look at a guardians credit history, personal assets, etc. when making a decision on whether or not to insure the guardian.
Surety Bond Authority offers fast and efficient surety bonds for all of California. If you have any questions on surety bonds, contact us at 800-333-7800.