Texas Conservatorship Bond/Guardian of the Estate Bond
What is a Texas Conservatorship Bond?
It is a three-party agreement that will ensure that the conservator/guardian of the estate will fulfill this or her fiduciary obligations to the ward (person who has been placed by the court under the legal care of a guardian of the estate) as required by the court. This surety bond will also serve as a means for the court to recuperate monetary losses due to the default of the conservator.
By having this bond in place, the court is transferring the risk of such default to the Surety.
The three parties to a conservatorship bond are the following:
Principal – The conservator/guardian of the estate who has been appointed by the court
Obligee – Judge or the judge’s successors in office
Surety – Surety bond provider
A Conservatorship Bond must be given before the 21st day after the date of the order granting letters of guardianship.
Who is required to get a Texas Conservatorship Bond?
Guardians of the estate who have been appointed by the Texas court and who have been asked by the court to obtain a bond.
Aside from purchasing a conservatorship bond, the guardian of the estate must do the following to be qualified:
- Take and file the oath required under Section 1105.051 of the Texas Estates Code
- File the bond with the clerk
- Obtain the judge’s approval of the bond.
How does a Texas Conservatorship Bond work?
A claim can be made against the bond by the Obligee if the Principal violates any of his or her fiduciary duties.
The Surety will not immediately pay a claim. It will first perform an independent investigation to check if the claim is valid or not and if the claim is covered by the bond.
The Surety will interview the claimant and the Principal. Both have to present evidence that will rebuke and/or support the claim.
If the claim is valid, the Surety will pay the Obligee. Under the indemnity agreement, the Principal is required to repay the Surety after.
How much does a Texas Conservatorship Bond cost?
The bond cost that the conservator (Principal) must pay the Surety will depend on the bond amount set by the court. For those who have excellent credit scores, the bond cost/bond premium will only be 1% of the bond amount.
As stated in Sec. 1105.153 and Sec. 1105.154 of the Texas Estates Code, the court will request a specific bond amount or hold an evidentiary hearing of the bond amount first.
For specific bond amount, the judge shall set the bond amount of a guardian of an estate in an amount equal to the sum of:
- The estimated value of all personal property belonging to the ward
- An additional amount to cover revenue anticipated to be derived during the succeeding 12 months from the following:
- Interest and dividends
- Collectible claims
- The aggregate amount of any installments or periodic payments, excluding income, derived or to be derived from federal social security payments
- Rentals for the use of property
For an evidentiary hearing of the bond amount, the court will hear evidence regarding the following:
- Amount of cash on hand and where that cash is deposited
- Amount of cash estimated to be needed for administrative purposes, including the operation of a business, factory, farm, or ranch owned by the guardianship estate, and administrative expenses for 1 year
- The revenue anticipated to be received in the succeeding 12 months from dividends, interest, rentals, or use of property belonging to the guardianship estate and the aggregate amount of any installments or periodic payments to be collected
- The estimated value of certificates of stock, bonds, notes, or other securities of the ward, and the name of the depository in which the stocks, bonds, notes, or other securities are deposited
- The face value of life insurance or other policies payable to the ward or the ward’s estate
- The estimated value of other personal property that is owned by the guardianship, or by a person with a disability
- The estimated amount of debts due and owing by the ward.
How to get a Texas Conservatorship Bond
STEP 1: Apply for this surety bond HERE.
STEP 2: Submit the necessary requirements such as, but not limited to, the following:
- Copy of the judge’s written order for a conservatorship/guardian of the estate bond
- Credit score
- Financial statements
STEP 3: Sign the indemnity agreement and receive the bond
Who is/are exempted to file a Texas Conservatorship Bond?
- If the guardian is a corporate fiduciary
- If the guardian is a guardianship program operated by a county.
The court may not waive the requirement of a bond for the guardian of the estate regardless of whether a surviving parent’s will or written declaration directs the court to waive the bond.