Surety Bond

Arizona courts may require a bond in several situations:

• The will does not waive the bond
• An interested party asks the court to impose one
• The personal representative does not live in Arizona
• The court has concerns about the fiduciary's ability

Under A.R.S. 14-10702, the court may also require a trustee to post a bond. This applies if the trust is silent or if the court finds one is needed.

The cost depends on estate size and the fiduciary's credit. Typical premiums run between 0.5% and 1% of the bond amount per year. For a $500,000 estate, that means $2,500 to $5,000 each year. The estate pays this cost, which reduces amounts available for beneficiaries.

The simplest way to avoid a bond is to include a waiver in the will or trust. Most well-drafted estate plans include this language. If the document is silent, beneficiaries can consent to waive it. The fiduciary can also petition the court.

A properly drafted estate plan addresses the bond question upfront. This saves money and avoids delays during probate.

If a bonded fiduciary mismanages funds, beneficiaries file a claim against the bond. The surety company investigates and pays valid losses up to the bond amount. Then the surety company seeks repayment from the fiduciary.