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Fiduciary Bonds

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Fiduciary bonds, also known as probate bonds, are bonds that are ordered by a judge. The bonds guarantees that the person named as the fiduciary performs all the duties they are responsible for executing, in a legal and ethical manner.

The bond provides protection to those being serviced by the fiduciary. For example, in estate issues, probate bonds are common. The person who writes a will can make it mandatory that a probate bond be used in the execution of the will. The probate bond premium is paid for by the executor, administrator, guardian, etc. and guarantees that all aspects of the will be carried out exactly as written. However, if the beneficiaries (over the age of eighteen) are comfortable with the integrity of a named executor, they can nullify the fiduciary bond clause. It should be noted that it is in the best interest of the fiduciary to speed up the estate process to limit the amount of out-of-pocket premium payments he/she is required to pay. The purpose of the fiduciary is to eliminate the fear that beneficiaries will be cut, money will be embezzled, or property may disappear. If it is determined that the fiduciary is not carrying out his/her duties, the surety company which has guaranteed the bond, will reimburse the beneficiaries and/or estate, and the fiduciary will be responsible for paying back the surety company.

Due to the nature of the service for the public, anyone dispensing financial advice or handling retirement funds is also considered a fiduciary. However, the type of bond they are required to secure is a fidelity bond, which protects the financial aspect of the transaction. Additionally, fiduciaries must also carry fiduciary liability insurance to protect against any errors, misstatements, or omissions. If it is found that the fiduciary has not satisfactorily fulfilled his/her duties as detailed, he/she is responsible to supply the bond amount. If the fiduciary wishes to be released from his/her obligation, it is his/her responsibility to find a suitable replacement.

Fiduciary bonds are an important form of protection for those who may not have any other recourse. They offer financial protection for individuals in different situations where finances can be misappropriated.

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