By Dean D. Stein, CMA
In Alabama, if you die without a Will (Intestate), then to be the Personal Representative (PR) or Administrator of the Estate, you must post a bond. The bond is usually set at 110% of the value of the liquid assets of the Estate. You pay a premium to buy the bond, and it is posted with the Court. If you mishandle the funds of the Estate, the bonding company has to pay up for your misdeeds, and then they go after you. Of course, you as the PR must have good enough credit to qualify for the bond. A Will can relieve the PR of the posting of a bond and people making Wills routinely relieve or waive any bond. Sadly, we have seen our share of family members, who certainly seemed like good people, sons, daughters, spouses, suddenly become unfair, selfish or even darn near criminal when it becomes time to divide the decedent's assets. And consider that this was someone the decedent trusted, and waived this family member from the requirements of posting bond! In one case that comes to mind, a father provided in his Will that his son and daughter should “share in the estate fifty-fifty”. Unfortunately, the decedent chose the wrong one of the two adult children to serve as Personal Representative, and they argued in court, at great expense to themselves, over what “50/50” was!
Should we really waive the requirement of bond in our Wills? I am sure in many, many situations you should, but give this the careful consideration it deserves.
This article is generally based on Alabama law, the law of your state can
vary widely. This is not intended to constitute, nor should be taken by you as
legal advice and is not intended and does not create an attorney/client
Dean Stein, CMA,
is an attorney who has a Masters degree in business and is a Certified
Management Accountant (CMA).