Did you know that guardians are required to get bonded? It is called a guardianship bond, also known as a custodian bond in some jurisdictions.
This type of court bond is a guarantee of performance. It assures the court that the person designated to act as a guardian will perform his or her obligations as required by law.

What is a guardian?

Guardians are appointed for minors or people who can no longer care for themselves anymore, such as elderly persons or people with disabilities. We are talking about legal guardians appointed by the courts to manage the finances or real estate properties of individuals who are unable to make clear-headed, rational decisions about finances.  A guardianship bond protects the finances or assets of that person who is the subject of the custody. If a court delegates a guardian to someone, the law may require the guardian to provide a guardianship bond.

Why do you need a guardianship bond, anyway?

As with most surety bonds, they are required by the law. When you are appointed as a guardian to protect a minor, elderly or disabled person, you need to obtain a surety bond.

In this case, here are the three parties involved in a guardianship bond:

  • The obligee is the person(s) that is being protected.
  • The principal is the guardian who needs to obtain a guardianship bond required by the law.
  • The surety company provides the surety bond guarantee of the principal that promises to fulfill his or her duties as a guardian.

The person selected as a guardian is required to provide reports to the court regarding the guardianship. The report must contain an accounting statement of how he or she spends resources. Plus, it is also likely for the guardian to request the court to waive the bond requirement. This depends on each jurisdiction’s laws and their particular situation, so it is important to check your state’s court bond requirements.

How do you get a guardianship bond?

In securing a guardianship bond, you will need to work with a surety bond company that can issue your bond, send any related court documents, sign an indemnity agreement, and pay the bond fee. The surety company’s underwriter will want to learn as much as they can about the case to make sure you (as the guardian) can perform your duties appropriately.

Depending on the bond amount, you may undergo a credit check. As the principal, your credit score or financial standing is not the only thing that is taken into high consideration but your personal integrity as well.

If you are not deemed to be ‘bondable,’ then the court will proceed to select someone else to serve as a guardian. What makes a person bondable is if a surety bond company is willing to issue a bond to that person. The surety will issue a bond if it is confident it can recover its money in the event of loss or damage.

How much will Guardianship Bonds cost?

The amount of the guardianship bond will also depend on the law of each state. The law may entail the bond amount to match the income and value assets of the person (ward) subject to guardianship. Otherwise, the court may establish a formula to calculate the proper amount of the guardianship bond.

A guardianship bond costs vary from state to state. Most people with good credit near or over 700 can get bond approval between 0.5% and 1.5% of the amount established by the court for the surety bond. However, costs vary based on the specifics of the case. Usually, guardianship bonds do not need collateral and can be acquired with your indemnification alone.

Why does a guardianship bond matter?

That said, guardianship bonds protect the obligee against losses, theft or misrepresentations should you (the guardian) perform inappropriately. A claim can be made against your bond if you happen to steal money from the person you are caring for.

Guardianship bonds ensure that you will not abuse, neglect, or mistreat the person you are caring for. And once you do, your ward is protected by the bond.

For instance, Mrs. Porter is a close family relative that is a court-appointed guardian of an elderly ward who was declared suffering from mental deterioration causing dementia. Mrs. Porter seeking guardianship will be required to put up a fiduciary bond to cover any liability expenses arising from caring for her elderly ward.

When a surety company provides the bond to Mrs. Porter, the court then transfers the responsibility for managing finances and living arrangements to her as a legal guardian.  If she happens to mismanage or steal assets, then the bond will serve as an insurance policy and pay her ward who has lost his or her assets or income. The surety company will take legal action against her to try to recover whatever money it paid out under the bond. The bond functions to protect the obligee, in this case, the elderly ward.

In summary, it is always a good idea to have discussions with potential guardians to make sure they understand the rights and limits of their responsibilities. Guardianship bonds ensure that legal guardians are equally committed to keeping their wards’ best interests and decisions.

Surety Bond Authority Inc. has extensive experience in all aspects of court bonds – delivering fast and efficient solutions at the lowest possible rates. We help our clients understand their guardianship bonds rights and responsibilities. Talk to us now at 800-333-7800!

Greg Rynerson, CPCU

Greg Rynerson, CPCU

Backed by 30 years of experience, I spent my career in the surety bond and insurance industries. Throughout the course of my professional life, I've been proud to execute bonds at the state and federal level for various clients.

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