How the Bond Amount Is Calculated
A bond protects the protected person's estate from potential mismanagement or misuse of funds. The court requires the bond before the conservator begins managing assets. The amount is not arbitrary.
The court shall require a conservator to furnish a bond conditioned on faithful discharge of all duties according to law, with sureties as it shall specify. Unless otherwise directed, the bond shall be in the amount of the aggregate capital value of the property of the estate in the conservator's control plus one year's estimated income minus the value of securities deposited under arrangements requiring an order of the court for their removal and the value of any land that the fiduciary, by express limitation of power, lacks power to sell or convey without court authorization.
A.R.S. § 14-5411(A)The formula starts with the total capital value of the estate. It adds one year of projected income. Then it subtracts securities locked down by court order and any real estate the conservator cannot sell without court approval. The court can also reduce or eliminate the bond if regular fixed expenses are being paid for the protected person. In place of traditional sureties, the court may accept a pledge of securities or a mortgage on land.
Who Is Exempt from the Bond Requirement
Not every conservator has to post a bond. Several types of institutional fiduciaries are exempt. These include national banking associations, state-chartered banks, and savings and loan associations qualified to conduct trust business in this state. A title insurance company qualified under state law is also exempt. Trust companies holding a certificate from the deputy director of the financial institutions division and the public fiduciary round out the list.
A bond is not required of a conservator that is a national banking association, a holder of a banking permit under the laws of this state, a savings and loan association authorized to conduct trust business in this state, a title insurance company qualified to do business under the laws of this state, a trust company holding a certificate to engage in trust business from the deputy director of the financial institutions division of the department of insurance and financial institutions or the public fiduciary.
A.R.S. § 14-5411(B)The rationale is straightforward. These institutions are already regulated and carry their own financial safeguards. Individual conservators, including family members, do not have those built-in protections. That is why the court requires a bond for them.