On the Subject of Surety Bonds
Surety bonds are like an insurance policy for an estate and its beneficiaries. What are you insuring? That the executor or administrator isn't going to run off to Tahiti with the estate's assets.
Some facts about surety bonds in Illinois:
1. The executor doesn't have to obtain one if the decedent's Will waives the surety bond requirement. If the Will DOESN'T contain such a waiver, or if the decedent died without a Will, the executor will have to make surety arrangements.
2. Corporate fiduciaries acting as executor or administrator don't have to file a surety bond -- because corporations never cheat anyone out of money (haha). See ยง12-1 of the Probate Act.
3. If you need to obtain a surety bond, you can proceed in one of three ways -- this will also determine the amount of the bond:
a. You can contact a surety bond company. They'll get you the necessary forms, and will bill the executor or administrator. The bond is assessed at 1-1/2 times the value of the estate's personal property (so, if it's an estate with $1 million in personal property, the bond will be on $1.5 million).b. You can get two people acceptable to the court to act as sureties. They are essentially guaranteeing that they'll pay back the estate, and here the amount is 2 times the value of the estate's personal property (so, if it's an estate with $1 million in personal property, the two sureties are agreeing to pay back $2 million).
c. Section 12-7 of the Probate Act allows you to reduce or eliminate the need for a surety bond by "deposit[ing] for safe-keeping with a corporation qualified to accept and execute trusts in this State such portion or all of the personal estate as the court deems proper, subject to the further order of the court."
4. You'll note from the above that the bond is based on the value of personal property and doesn't include real estate. This is for one simple reason: you can't run off to Tahiti with real estate.
5. Things change over time, and you'll want to make sure you monitor the amount of the surety, so that it accurately reflects the value of the estate's personal property. If you have a large estate and make a big distribution to the beneficiaries, greatly reducing the amount of personal property in the estate, you can go into court and have the surety reduced accordingly. Or, if the estate sells a bunch of real estate, thereby increasing the amount of personal property, you'll want to increase the surety as well.
