Surety Bond Quarterly - Summer 2015 - 25

While each surety may treat red
flags differently, the following is a
list of typical red flags:
1. The nominated fiduciary is not
represented by an attorney.
2. The applicant is not qualified to
serve as bond principal.
3. The surety is being asked to issue
a bond in an estate that is in the
midst of being administered.
4. There are disputes between family members and heirs (especially
those that are being litigated).
5. The fiduciary is running an ongoing business within the estate.
6. There is a substantial lapse of time
between the date of death and the
appointment of the fiduciary to
administer the estate.
7. There is a high penal sum without appropriate controls of
estate assets in place. (Each
surety has its own threshold for
a large bond.)
8. The fiduciary has long-term financial obligations.

5. Finally, a ward can bring a claim
against the principal if he or
she reaches the age of majority
and learns that the estate has
been mishandled or if an adult
is restored to competency and
learns that the principal breached
his or her fiduciary duties.
Types of claims and damages
When a nominated fiduciary eventually qualifies as the estate's fiduciary/
surety's principal, he or she will have
to file an Inventory with the court.
An Inventory is a document that sets
forth the items in the estate and the
value of those items. Principals must
also file an Annual Accounting with
the court, which itemizes all income
and expenses of the estate, as well
as the balance remaining, at the end
of each accounting period. Often,
the failure to file an Inventory or
Accounting or the failure of a court
to allow an Accounting can lead to a
surcharge against the surety.
A surcharge against a surety is,
essentially, a judgment against the

surety based on the inappropriate action of the principal and the
principal's obligation to pay the
estate or  trust. A successor fiduciary or other interested party can
file a Petition to Surcharge against
the principal and surety (discussed
later). This is similar to a surety being
required to satisfy a payment bond
claim because the principal has a
payment obligation that he or she
has failed to fulfill and the surety
has no applicable surety defenses
to assert.
There are a number of other situations that can lead to a surcharge as
well. Those situations include, but are
not limited to, the following:
1. The principal's failure to properly marshal assets (collect the
estate's assets).
2. Inappropriate expenditures by
the principal (often not for the
benefit of the ward).
3. A decrease in value of assets
held by the estate, often securities, when they should have
been sold.

Claimants on a bond
After the underwriting process is
completed, the surety will issue a
bond naming the fiduciary as principal. From this point forward, this
article will refer to the fiduciary as
the principal.
There are generally five types of
The Creativity, Flexibility,
potential claimants on probate bonds:
and Service You Deserve
1. First, a successor fiduciary who
takes over an estate after the
From a Surety Partner
principal has resigned, been suspended, been removed, or has
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died can bring a claim against the
principal and its surety.
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2. A devisee/beneficiary/heir can
bring a claim, especially in situations where his or her interest in692336_Granite.indd 1
the estate is affected by the acts
of the principal.
3. A creditor (to whom the estate
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especially when estate funds have
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4. An outside third party can bring
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a claim against a principal based
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ASSOCIATION OF SURETY BOND PRODUCERS | WWW.NASBP.ORG
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Table of Contents for the Digital Edition of Surety Bond Quarterly - Summer 2015

NASBP Upcoming Meetings & Events
2015-2016 NASBP Executive Committee
From the CEO - There is Poetry in Surety Claims, Surely
Practical Insights: What You Need to Know - Hiding in Plain Sight: Specifications as a Source of Risk
Profile: President Susan Hecker
Developing Your Leadership Vision
Liability Issues - Can Public Owners be Held Liable to Subcontractors and Suppliers for Failure to Require General Contractors to Obtain Required Payment Bond?
An Introduction to Probate Bonds
Class Act - Surety Team’s Cooperative Efforts Enable School to Open on Time
NASBP’s Attorney Advisory Council - Participants Opine on Current Risk Management Challenges and Business Opportunities
The AIA Describes Updated and Expanded Design-Build Documents Family
Contractor Practices That may Result in Construction Claims to Recover for Delays and increased Costs
NASBP Annual Meeting Speakers - Veterans can benefit private sector, but need help finding jobs
Index to Advertisers
Surety Bond Quarterly - Summer 2015 - cover1
Surety Bond Quarterly - Summer 2015 - cover2
Surety Bond Quarterly - Summer 2015 - 3
Surety Bond Quarterly - Summer 2015 - 4
Surety Bond Quarterly - Summer 2015 - 5
Surety Bond Quarterly - Summer 2015 - 6
Surety Bond Quarterly - Summer 2015 - 2015-2016 NASBP Executive Committee
Surety Bond Quarterly - Summer 2015 - From the CEO - There is Poetry in Surety Claims, Surely
Surety Bond Quarterly - Summer 2015 - 9
Surety Bond Quarterly - Summer 2015 - Practical Insights: What You Need to Know - Hiding in Plain Sight: Specifications as a Source of Risk
Surety Bond Quarterly - Summer 2015 - 11
Surety Bond Quarterly - Summer 2015 - Profile: President Susan Hecker
Surety Bond Quarterly - Summer 2015 - 13
Surety Bond Quarterly - Summer 2015 - Developing Your Leadership Vision
Surety Bond Quarterly - Summer 2015 - 15
Surety Bond Quarterly - Summer 2015 - Liability Issues - Can Public Owners be Held Liable to Subcontractors and Suppliers for Failure to Require General Contractors to Obtain Required Payment Bond?
Surety Bond Quarterly - Summer 2015 - 17
Surety Bond Quarterly - Summer 2015 - 18
Surety Bond Quarterly - Summer 2015 - 19
Surety Bond Quarterly - Summer 2015 - 20
Surety Bond Quarterly - Summer 2015 - 21
Surety Bond Quarterly - Summer 2015 - An Introduction to Probate Bonds
Surety Bond Quarterly - Summer 2015 - 23
Surety Bond Quarterly - Summer 2015 - 24
Surety Bond Quarterly - Summer 2015 - 25
Surety Bond Quarterly - Summer 2015 - 26
Surety Bond Quarterly - Summer 2015 - Class Act - Surety Team’s Cooperative Efforts Enable School to Open on Time
Surety Bond Quarterly - Summer 2015 - 28
Surety Bond Quarterly - Summer 2015 - 29
Surety Bond Quarterly - Summer 2015 - NASBP’s Attorney Advisory Council - Participants Opine on Current Risk Management Challenges and Business Opportunities
Surety Bond Quarterly - Summer 2015 - 31
Surety Bond Quarterly - Summer 2015 - The AIA Describes Updated and Expanded Design-Build Documents Family
Surety Bond Quarterly - Summer 2015 - 33
Surety Bond Quarterly - Summer 2015 - Contractor Practices That may Result in Construction Claims to Recover for Delays and increased Costs
Surety Bond Quarterly - Summer 2015 - 35
Surety Bond Quarterly - Summer 2015 - NASBP Annual Meeting Speakers - Veterans can benefit private sector, but need help finding jobs
Surety Bond Quarterly - Summer 2015 - 37
Surety Bond Quarterly - Summer 2015 - Index to Advertisers
Surety Bond Quarterly - Summer 2015 - cover3
Surety Bond Quarterly - Summer 2015 - cover4
Surety Bond Quarterly - Summer 2015 - outsert1
Surety Bond Quarterly - Summer 2015 - outsert2
Surety Bond Quarterly - Summer 2015 - 43
Surety Bond Quarterly - Summer 2015 - 44
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