Common Questions Relating to Estate Administration Bonds in Canada
How Much Does an Estate Administration Bond Cost?
The number one question I’m always asked about Estate Administration Bonds is: how much will the bond cost? From an executor’s point of view, this is understandable.
The answer depends on the size of the estate. In Ontario, for example, the cost of the bond is calculated based on twice the size of the estate. To arrange the bond, at Estatesure, we take 1% of the bond’s value.
This sum is usually paid upfront to cover the first two years. Year one is fully earned, which means it is not refunded if the estate is closed during that time. For year two, reimbursement is on a pro-rata basis if the estate is closed before the two years are up.
The executor’s lawyer can often arrange for the cost of the bond to be claimed against the estate and the executor reimbursed.
How Do I Qualify for an Estate Administration Bond?
More often than not, this is usually the second question I am asked. Qualifying for a bond requires the appropriate paperwork and application forms to be completed, and I talk executors through this on a daily basis.
The executor will need to provide documentation including a list of estate assets, the probate application form and the death certificate. In addition, the executor will need to show a personal financial statement to prove they have sufficient assets to cover the bond in the event of a claim.
Will an Estate Administration Bond Put a Freeze on My Assets?
Understandably, executors also often ask if the bond process will result in a freeze on personal assets, including their home.
The answer is no. The financial statement is simply a snapshot of what assets the executor has on that day.
What If I Don't Have Enough Assets to Cover the Bond?
This is a common question, and executors really have two options.
Firstly, if they would like to remain an executor of the estate, a second individual can provide proof of their own personal net worth to make up the difference and secure the bond.
The other option is for the individual to recuse themselves as an executor, so someone else can take over the duties of the estate administration.
How Long Does It Take to Secure an Estate Administration Bond?
Finally, another question I’m usually asked is: how long does it take to secure an Estate Administration Bond?
The answer really depends on the executor and how much time it takes them to complete the forms, provide the snapshot of their own personal wealth and confirm the size of the estate.
Then, once we receive all the necessary information, it normally takes around two weeks to submit the documentation to the underwriter, gain approval, invoice and mail hard copies either to the executor or the legal firm dealing with the estate administration matter.
What Questions Will I Be Asked When Applying for a Bond?
We will also have questions for the executor.
In order to secure the bond, we will ask for details about the size of the estate. We will also need to find out why the executor needs the bond, which can often include where they are located, for example, or if a legal firm has been unable to waive the bond requirement.
At Estatesure, we support a quick and easy application process to simplify legal requirements. For information, please contact inquiries@www.estatesure.ca
