Bond Underwriting FAQ’s

Do you charge an annual renewal premium for administrator or executor bonds that are $25,000 or less?

No. These types of bonds are a one-time premium provided the bond amount stays at $25,000 or below.

If the bond is canceled within the first year, will you return any unearned premium?

No, the first year’s premium on ALL bond types is fully earned and there is no refund.

If the court enters an order fully restricting all the assets in a probate estate so that funds cannot be released without a court order, do you continue to charge a renewal premium for that bond?

No, not on a bank account. If the bank provides a verification of restricted account for the full amount of the assets in the estate AND the Bond amount is reduced to $2,000 or less, no further premium will be charged as long as the full amount stays restricted and the reduction of the bond penalty remains in place. The principal may also receive a pro-rated return on the premium already paid depending on the date the funds were restricted and the bond amount reduced.

If I pay the renewal premium and the estate closes shortly after the renewal date, will I get any of that premium back?

Yes, to the extent the amount of premium attributable to that portion of the year that the bond is not needed exceeds the minimum premium of $100.

e.g.: If an estate closes 3 months after the bond renews and the bond renewal premium is $250, to calculate the “unearned premium” you multiply the bond renewal premium by the percentage of the year the bond is not needed. ($250x.75). The unearned premium amount in this example is 187.50. The total bond amount less the unearned premium is the “earned premium”. 250-187.50=62.50. Since the “earned” amount is less than the $100 minimum, $100 will be retained and the difference( $150), will be returned to the principal.

Do we require joint control/restriction? (This means that someone in addition to the fiduciary must approve the release of funds from the estate bank account.)

We DO require joint control/restriction in Conservator estates AND for Trustee’s bonds.

Joint Control Procedures: Two bank accounts are established: one that is subject to the two-signature withdrawal requirement; and a working account under the sole control of the fiduciary. The working account is initially funded with enough money to cover the reasonable and anticipated expenses of the ward for a one-year period. All other assets are placed in the joint control account and/or in a safe deposit box subject to the joint control agreement. If the working account is properly funded, the attorney should only need to be involved once per year in authorizing the annual funding of the working account.

Restriction Procedures: The fiduciary petitions the court to restrict all assets of the estate. Upon receiving the court order, the fiduciary must have a Verification of Restriction form executed by the financial institution (bank or brokerage firm) holding the assets confirming that all assets are restricted and cannot be withdrawn without a court order. The executed form must be filed with the probate court and a copy sent to the surety company.

Note: There are some exceptions to the joint control/restriction requirement.

Do you require collateral on bonds?

Yes, on the following types of bonds.

Court bonds other than probate;
Lost Instrument Bonds
License and Permit Bonds
Miscellaneous Type Bonds

Our office must receive collateral BEFORE a bond can be issued. Sometimes it can take up to two weeks to get a letter of credit from the bank so we always encourage the attorney/agent to get the principal to start the process immediately upon receiving our application.

Do we check the credit history of the principal?

Yes.

What information do you need besides the application to make an underwriting decision?

It depends on the type of bond being written. Each application lists the additional documents that are needed in order to underwrite the bond. Generally, probate court bonds require a fully executed bond application and a copy of the application for letters. On Small Estate Bonds, we require the bond application and the Affidavit for Small Estate. The court bonds other than probate require the bond application, a current financial statement, a copy of the relevant pleadings, and in most cases collateral.

Why do you require joint control or collateral, aren’t we buying an insurance policy?

No. A surety bond is not an insurance policy. A policy of insurance is designed to protect the insured against an unexpected loss. A surety bond, on the other hand, is designed to protect the obligee, which is the person or persons to whom the principal (the person being bonded) owes some duty or obligation. A person buys a bond because they have an agreement with a third party who requires a guarantee that the obligation will be fulfilled.

Bond Claim FAQs

Is there anyone I can talk to if I have a question about the claims process?

Our Bond Claims Department will be happy to speak with you to answer any questions you may have regarding the claims process. Please contact Teresa Niederwimmer at 314-965-3333 x107 or 800-843-2277, or via e-mail.

Should I notify The Bar Plan if the estate brings a claim against my client?

If the estate brings a claim against your client, you should contact our Bond Claims Department immediately. The Bar Plan typically receives notice of claims from the Court; however, it is best to contact us directly. Once The Bar Plan learns of a claim, we can assist you in reducing or eliminating your client’s liability to the estate.

How do I make a claim on an appeal bond filed for the benefit of my client?

Contact our Bond Claims Department at 314-965-3333 or 800-843-2277, or via e-mail.  In most cases, if the appellate process has fully concluded, payment will be made directly into the registry of the court that heard the underlying matter.  Typically, payment cannot be released directly to you or your client, nor can The Bar Plan assign a letter of credit or other collateral to you or your client.

What resources does The Bar Plan provide if the estate brings a claim against my client?

If the estate brings a claim against your client, contact the Bond Claims Department at 314-965-3333 or 800-843-2277, or via e-mail.  The Bar Plan can assist in the defense to help reduce or eliminate your client’s liability to the estate.  It is in The Bar Plan’s best interest to reduce your client’s liability.  No liability against your client means no liability for The Bar Plan.  Please be aware that The Bar Plan’s interests may ultimately become adverse to your client’s interests if your client is found liable to the estate.

Does The Bar Plan offer any risk management services for principals or their attorneys?

The Bar Plan periodically offers CLE in probate procedures and attorney malpractice as it relates to probate, trust and estate practice. We also provide guidelines for your clients on their duties as a fiduciary. Our Bond Claims Department will be happy to speak with you about any aspect of the bonding process.  Please check back periodically for upcoming events.