What is a Custodian Bond?
A custodian bond is very similar to a guardianship bond. A custodian bond is a fiduciary bond that covers a person who is named custodian or guardian of a minor or a disabled person and their assets. It is likely that the court will require a potential custodian to obtain a custodian bond before they are appointed as the custodian of the individual.
What is the role of a custodian?
A custodian is a person or institution chosen to manage and protect the funds or real estate assets of their clients (beneficiary or ward). Custodians may be granted the right to assert possession over the funds and investments if required (which is often in conjunction with a power of attorney). This process enables the custodian to perform actions on the client's behalf, such as making payments and investment decisions.
For minor account beneficiaries, a custodian is usually required in compliance with the state rules and regulations limiting the activities of minors. This requirement results in creating a custodial account, where the custodian is authorized to make financial contributions and purchase decisions regarding the assets in the account. However, all the funds are eventually intended for use in the beneficiary's name. And to protect the beneficiary's assets, the custodian will need to post a surety bond.
What documents do I need to obtain a custodian bond?
- Completed Application
- All court documents that reference the bond.
- Additional documents may be required based on the complexity of the finances.
How do I qualify for a custodian bond?
As a general rule, the underwriter will run a credit report to determine your credit score. Those with higher credit score are typically deemed more favorable. Additionally, based on the amount of the bond, the underwriting will want to determine your experience handling similar types of finances.
Are guardianship and custody the same thing?
Similar in obligations, but not the same. Although both court-ordered arrangements required a surety bond and settled in probate courts, there is a difference.
Custody is a court mandate requested by the parents or relatives to provide care for a minor or a disabled person. The court may appoint a third-party custodian if it deems necessary to perform the obligations that would ordinarily be managed by the parents. Custody is decided depending on the beneficiary's best interests, where parents and relatives have a say on who will have custody over the beneficiary, whether a person or a financial entity.
Guardianship is also a court order where an individual is appointed by the court to care for a minor, elderly or a disabled person whose circumstances require it and to make decisions on their behalf regarding education, residence, financial investments and other critical decisions that may affect the beneficiary.
The courts may appoint a guardian to take care and manage assets of the beneficiary, even though custody will be granted to the parents or relatives. A person appointed as guardian must be qualified, someone who is usually trusted by the family, and must be willing to serve.
Both custodians and guardians often act in the best interest of the beneficiary and make accounting reports to the court.
What does the Custodian Bond Guarantee?
Only a court is authorized to grant custody over the beneficiary, although parents may make recommendations. However, the final order and appointment will be in the hands of the judge.
Custodian Bonds guarantee that custodians will act and adhere to the rules and regulations mandated by the courts. This type of court surety bond helps to ensure that the custodian will remain ethical in his or her dealings with the assets of the person with whom they have been entrusted.
How much is a Custodian Bond?
The court will set the bond amount. This amount will be based on the annual income and any assets that belong to the person requiring a custodian. Often, this amount is as much as double the amount of that income and assets.
The surety bond agency will determine the cost of the custodian bond according to the state’s guidelines. You can get a free quote today and receive your bond in a short amount of time. An agent will be able to guide you through the custodian bond process and help you get the answers you need.
How long does a Custodian Bond remain valid?
Custodian Bonds are subject to modification. These bonds serve to be flexible and will continue to be valid unless there has been an actual change of conditions and events in the current custody arrangement (with court intervention, of course). Also, custodian bonds will cease to provide coverage if the custodian fails to fulfill his or her obligations and is considered not fit to act in the best interests of the beneficiary.
How do I get a Custodian Bond?
A knowledgeable bond agency can quickly and easily process these types of bonds.
The process for getting a custodian bond is quick and straightforward. You can be confident that you are getting what you need as soon as possible. Complete and submit the bond application and provide the necessary court documents. You will receive your quote shortly from a licensed surety bond agent. Next, make the payment for your custodian bond. We offer several convenient payment methods. Finally, your bond will be sent as quickly as possible. Call us today!