When a decedent dies without a will, an administrator is appointed to administer an estate and the court requires that the administrator obtain an administration bond. An administrator bond guarantees that the estate will be properly distributed and that outstanding debts will be paid. New York State has specific intestacy laws that stipulate how an estate will be distributed should a person die without a will.
Through seeded distribution, an individual — usually a family member — can petition the court to apply to be administrator of the estate. The court will consider the value of the assets and liabilities of the estate, and how much the individual is receiving from the estate pursuant to the intestacy laws to determine the bond amount. It is suggested for estates with small amounts of equity to request a nominal bond to preserve the estate assets.
In addition, in order to obtain a bond, the bonding company will examine the applicant’s:
• Credit;
• Employment status;
• Current address (whether he is a NY resident and if he will remain as one); and
• Relationship with siblings and other distributees;
• The amount the applicant will receive pursuant to the intestacy laws.
Categories of Administrator Bonds
There are several different types of administrator bonds including:
• Administrator DBN Bond: The administrator or another family member can apply to the court to have an alternative individual appointed to act as administrator when the current administrator cannot administer the estate due to do death incapacity. The court generally requires an Administrator DBN Bond under this scenario.
• Administrator CTA Bond: In the event that the will did not name an executor or when the named executor cannot act as such, an alternative executor is appointed. Obtaining an administrator CTA allows the estate to be administered according to the Will without the named executor administering the estate.
In order to cancel an Administrator Bond, Administration DBN Bond, or an Administrator CTA Bond:
• The estate assets need to have been distributed properly.
• The debts of the estate have been paid.
• The distributees (individuals receiving the estate assets) need to sign releases stating they received the assets, and that they release the surety and the administrator from any liability.
• The Administrator needs to make an affidavit of their actions, which is a brief outline of who receives what asset and a list of estate expenses.
We suggest filing the releases and affidavits with the court. This paper trail will prove that the estate has been administered and that the rightful heirs or distributees of the estate have received their funds upon the closeout of the estate. Filing this paperwork also precludes the need for formal accounting — which could take years to be approved by the courts and is extremely costly. Lastly, if an unknown heir appears, the filing will make it more difficult for him or her to make a full claim on the bond since the administrator distributed the to the best of their ability at the time of distribution. It will also provide clarity as to how much equity was actually in the estate.
Contact us with your questions today.
Neil Pedersen
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY 10038
212-227-7277
800-720-7277
neil@courtbondnow.com
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