Though it is rare, there are cases where an estate is closed without the surety bond premium being paid. This can lead to potential liability for the legal counsel handling the estate because it is their responsibility to ensure the inventory filed is correct.
If an estate is closed without the surety bond premium paid in full, the inventory filed will be invalid. A bond cannot close until the original premium payment has been made and will remain open until it is paid. If legal counsel closes the estate without the surety bond premium payment, they are the party in error and hence could be liable.
In most cases the client simply pays the premium to close the bond as it is a simple oversight. However, in a case where the client refuses to or is unable to pay the premium, legal counsel may be liable due to their error of closing the estate without all expenses being closed.
In a worse case scenario, a claim would be made by the surety company for lack of premium payment. If the representative still refuses to pay the premium, then it will be up to the lawyer to pay the premium.
To avoid this issue, legal counsel needs to have full communication with the client about how the surety bond is a separate product required by the court in order to carry out the obligations of an estate, and ensure the bond premium is paid as soon as possible to avoid any complications.
If you have any questions about this issue, please contact us.
Disclaimer: This information is intended to help individuals understand surety bonds, but it should not be construed as legal advice. As with any public policy, there are a number of issues that the law and rules do not address, and law is always subject to change and interpretation. Madden & Bergstrom cannot offer legal advice or offer advisory opinions.
