San Diego Estate Planning Lawyer Blog
One issue that comes up when making a will is whether to require your designated personal representative (a/k/a executor) to post a bond. California law requires any personal representative to post bond as a condition of his or her appointment. The purpose of the bond is to protect the interested persons in your estate, i.e. the beneficiaries named in your will. The personal representative’s job, after all, is to ensure your beneficiaries receive their inheritance. The bond helps insure against an unscrupulous personal representative who misappropriates estate property for some other purpose.
Of course, you can choose to waive the state’s bond requirement in your will. In fact, many people do just that given that their chosen executor is usually someone they trust, such as a spouse or child. In cases where the deceased did not leave a will, the beneficiaries of the estate may also choose to waive the bond requirement by written notice to the probate court.
Requiring a Bond After Administrator Fails to Account for Funds
Even in cases where the will or beneficiaries waive a bond requirement, a court may still require one if circumstances warrant it. Here is a recent example. A resident of Modesto, California died in 2005, leaving three sons and no will. The probate court named one of the sons as administrator (which is the same thing as personal representative) of the estate.
The administrator filed an inventory with the court indicating an estate worth about $370,000, including a house and a truck. Under California intestacy law, each son was entitled to an equal share (one-third) of the estate. For some reason, one son agreed to waive his claim to the estate in exchange for $10,000. This left the administrator and his brother as the only remaining beneficiaries.
Six years elapsed and the administrator had yet to close the estate or even file an accounting with the court. The brother subsequently filed a petition seeking to remove the administrator and other relief. The brother specifically alleged the administrator “neglected and mismanaged the estate and failed to keep the beneficiaries informed.”
Indeed, the probate court found the administrator made two large cash withdrawals from the estate—one for $6,000 and the other for just over $47,000—without providing any “receipts or satisfactory explanation” for what happened to the money. The court did not remove the administrator, but it did order him to post a $10,000 bond and reimburse the estate for the unaccounted funds. The California Court of Appeal affirmed the probate court’s decision in an opinion issued earlier this year.
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The above case is an illustration and not a complete statement of California law, but it does highlight the important role a bond can play in ensuring a personal representative’s honest services. It should be noted the court above did not find the administrator guilty of fraud or criminal misconduct, only that he failed to properly account for estate funds. Still, that is precisely why a bond was deemed necessary.
If you have questions about whether you should require to post a bond as a condition of your will, you should speak with an experienced California estate planning attorney. Contact the Law Office of Scott C. Soady in San Diego if you would like to speak with someone today.