• October 5, 2020

The Challenges of Being Appointed as Fiduciary and Acquiring a Bond

The Challenges of Being Appointed as Fiduciary and Acquiring a Bond

The Challenges of Being Appointed as Fiduciary and Acquiring a Bond 1024 683 Patrick J. Thomas Agency

Underwriting is a required part of the surety bond process. Sureties need to understand the risks associated with providing a bond for a particular person, organization, etc., so they will look for certain criteria and red flags that are known to cause risks. This also plays into the price paid for the bond, but it’s not the only determinant. If you have been appointed be a fiduciary for a trust, estate, etc., you will likely need to obtain a fiduciary surety bond in order to assume your duties. 

When it comes to applying for a fiduciary surety bond, you can help speed the approval process along by avoiding these underwriting risks. 

Risks Surety Bond Underwriters Look For

When underwriting a bond for a surety company, underwriters tend to look for common red flags. This is especially true for larger estates. While these red flags won’t always disqualify you from becoming a fiduciary, they can tie up the process and increase your costs. 

Many of the common red flags fiduciaries will look out for include: 

  • Nominated fiduciaries who are not represented by an attorney 
  • Applicant who do not meet the qualifications to serve as the bond principal 
  • Bonds that are being asked to be issued while an estate is being administered 
  • Disputes between heirs and other family members (this is especially the case for those disputes that have entered litigation) 
  • Fiduciaries who are running an ongoing business within the estate that is to be administered 
  • Substantial gaps of time between the date of death and the appointment of the fiduciary/application for the bond 
  • Fiduciaries who have long-standing financial obligations or past/present financial troubles (bankruptcy, excessive debt, etc.) 
  • Excessively high penal sums (how much the surety will pay out) without the appropriate levels of control on the estate’s assets 

If you are looking to avoid any trouble during the underwriting stage of the surety bond application process, work with your attorney and the surety bond agency who assists you with the bond to eliminate as many of these red flags as possible before you apply for a fiduciary surety bond. 

After the underwriting process, the surety will issue a bond with the fiduciary as the principal, which will generally allow the fiduciary to assume his or her role (per the court’s order) in the process of administering the estate, trust, etc. 


Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.

Have questions about surety bonds and fiduciaries? The experts at The Patrick J. Thomas Agency are here to help! Get in touch with us today for all your surety bond needs.