Bonds Are the Exception, Not the Rule
A bond is a financial guarantee that protects beneficiaries if a trustee mismanages trust property. Unlike personal representatives in probate, trustees in Arizona are not automatically required to post one. The court must first determine that a bond is necessary to protect the beneficiaries' interests.
A trustee shall give bond to secure performance of the trustee's duties only if the court finds that a bond is needed to protect the interests of the beneficiaries or is required by the terms of the trust and the court has not dispensed with the requirement.
A.R.S. § 14-10702(A)Even when a trust document includes a bond requirement, the court has discretion to waive it. The court also controls the bond amount, specifies what liabilities it covers, and decides whether sureties are needed. A bond can be modified or terminated at any time as circumstances change.
Institutional Trustees Are Exempt
The statute carves out a clear list of institutional trustees that never need to post a bond, regardless of what the trust document says. These include national banking associations, Arizona-licensed banks and savings institutions, title insurance companies, trust companies certified by the state superintendent of banks, and the public fiduciary.
Notwithstanding the terms of the trust, the following are not required to give a bond: 1. A national banking association. 2. A holder of a banking permit under the laws of this state. 3. A savings and loan association authorized to conduct trust business in this state.
A.R.S. § 14-10702(C)(1)-(3)The logic is straightforward. These institutions are already subject to regulatory oversight, capital requirements, and insurance protections that serve the same purpose as a bond. For families considering whether to name an individual or an institutional trustee, this exemption is one practical factor to weigh.
