Today, we’re going to talk about issues that come up when you are dealing with Administration Bonds, specifically when minor children are involved. Typically, what happens is that an Administrator is appointed, and if someone has died intestate or without a Will, the Court will require a bond for the Estate.
Suppose an Administrator gets appointed, and minor children are among the beneficiaries. Since minors can’t execute agreements, they cannot provide a bond release for their share once they receive it. If a bond is not released, it and its premium continue to renew.
There are a couple of ways to handle this situation:
- You may elect to wait until the minor turns 18 to give them their share and then obtain a release of the bond. This means paying the annual bond premium until the minor is 18.
- If allowed, you may try depositing the funds into the Court. You should check with the Court to see if they will allow for this procedure.
- You may also bring a guardianship proceeding to the Court and have the minor release the bond.
When you bring a guardianship proceeding, you may run into an issue where the Court requires that the guardian get bonded for the minor’s share. I try to educate my clients about this before they petition the Court because if a bond is required and the child is young, the bond may renew for several years. For example, if the child is nine, the bond may go on for nine years, resulting in nine years of bond premium. This is something your clients need to be aware of.
Another thing that some clients may do is try to have the Court set up a bond just for the minor’s share. The advantage here is that the bond premium will be smaller than the one covering the entire estate. If you do have to pay for nine years, the bond premium, which is based on the total bond amount, would be smaller if the bond is smaller.
I’m Neil Pedersen, Pedersen & Sons Bonding. Give me a call to discuss any bonding situation you might be facing. We educate our clients about everything that might be required for a bond.
Sign up for Our Newsletters