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Corporate Surety Bond vs Personal Surety Bond for Probate: Which one is right for you?

Discover whether a corporate or personal surety bond for probate is right for your estate and beneficiaries.

Byron Ricardo Batres

Byron Ricardo Batres, @ByronBatres

General Manager, Probate, Trust & Will

Surety bonds are an important part of the probate process, providing a guarantee that an executor or administrator will fulfill their duties in accordance with the law. When an individual is appointed to manage the estate of a deceased person, they are required to obtain a probate bond to protect the interests of the estate and its beneficiaries. Keep reading to learn about: 

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What is a corporate surety bond?

There are two main types of surety bonds that can be used for probate: corporate surety bonds and personal surety bonds. Each has its own advantages and disadvantages, and the type of bond that is best for a particular situation will depend on the specific circumstances of the case.

A corporate surety bond is a type of bond that is issued by a surety company, which is a financial institution that specializes in providing surety bonds. A corporate surety bond provides a guarantee that the executor or administrator will fulfill their duties in accordance with the law, and in the event that they fail to do so, the surety company will provide financial compensation to the estate and its beneficiaries.

Benefits of corporate surety bonds

One advantage of a corporate surety bond is that it is relatively easy to obtain. Because the surety company has already done the necessary financial and legal research, the process of obtaining a corporate surety bond is typically much simpler and faster than obtaining a personal surety bond. Additionally, corporate surety bonds are often available for a lower cost than personal surety bonds, making them a more affordable option for some individuals.

Another advantage of corporate surety bonds is that they provide a greater level of protection for the estate and its beneficiaries. Because the surety company is a financial institution with significant resources, it is able to provide a more robust guarantee than an individual would be able to provide on their own. This means that in the event of a claim, the estate and its beneficiaries are more likely to receive the full amount of the bond.

Corporate surety bond cons

However, corporate surety bonds also have some disadvantages. One disadvantage is that they can be difficult to obtain if the executor or administrator has a poor credit score or a history of financial problems. In such cases, the surety company may require additional collateral or other security in order to issue the bond. Additionally, corporate surety bonds may not provide as much flexibility as personal surety bonds, as the terms of the bond are typically set by the surety company and cannot be easily modified.

What is a personal surety bond? 

A personal surety bond is a type of bond that is issued by an individual, rather than a surety company. In a personal surety bond, the individual who is issuing the bond acts as the surety and provides a guarantee that the executor or administrator will fulfill their duties in accordance with the law.

Benefits of personal surety bonds

One advantage of a personal surety bond is that it can be more flexible than a corporate surety bond. Because the terms of a personal surety bond are set by the individual who is issuing the bond, they can be tailored to the specific needs of the estate and its beneficiaries. This means that the executor or administrator can negotiate the terms of the bond with the individual who is issuing it, allowing for a greater degree of customization.

Another advantage of personal surety bonds is that they can be easier to obtain for individuals with poor credit or a history of financial problems. Because the individual who is issuing the bond is personally responsible for providing the guarantee, they may be more willing to take on the risk of issuing the bond, even if the executor or administrator has a poor credit score or a history of financial difficulties.

Personal surety bond cons

However, personal surety bonds also have some disadvantages. One disadvantage is that they can be more expensive than corporate surety bonds. Because the individual who is issuing the bond is taking on more risk, they may require a higher premium in order to cover that risk. This can make personal surety bonds less affordable for some individuals.

Another disadvantage of personal surety bonds is that they may not provide as much protection for the estate and its beneficiaries. Because the individual who is issuing the bond is typically not a financial institution with significant resources, they may not be able to provide as robust a guarantee as a surety company would be able to provide. This means that in the event of a claim, the estate and its beneficiaries may not receive the full amount of the bond.

In conclusion, both corporate surety bonds and personal surety bonds have their own advantages and disadvantages, and the type of bond that is best for a particular situation will depend on the specific circumstances of the case. Corporate surety bonds are typically easier and cheaper to obtain, but may not provide as much flexibility or protection. Personal surety bonds, on the other hand, may be more expensive and difficult to obtain, but can provide greater flexibility and customization. When deciding between corporate surety bonds and personal surety bonds for probate, it is important to carefully consider the specific needs and circumstances of the estate and its beneficiaries, in order to choose the type of bond that will best protect their interests.

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