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Administration Bonds: Security For Beneficiaries

Administration Bonds: Security for Beneficiaries

As part of an estate executor’s responsibilities, they must act in the best interests of the beneficiaries so that they receive the largest possible inheritance they’re entitled to. Executors have a fiduciary duty to act to the best of their abilities, regardless of their relationship with the beneficiaries of the will. In some cases, the executor and beneficiaries don’t have a good relationship and beneficiaries are left worrying how the executor will handle the estate, perhaps taking minimal care and pride in the work as it has no impact on them. In situations like this, a beneficiary might be interested in applying for an administration bond.

If the estate administration is happening in BC, any interested person can apply for an administration bond to provide insurance/security for the administration process. With an administration bond, the executor must deposit money to the courts to ensure they act within their fiduciary responsibility as an estate executor. It is not dissimilar to putting money down for a safety deposit when renting an apartment, as it is meant to ensure that one acts with care while handling the property of others. If the executor doesn’t act appropriately, they risk losing the administration bond. Assuming the administration goes smoothly and there are no concerns, the executor will be given their deposit back.

When Administration Bonds are Allowed

While any interested party is able to apply for an administration bond, the courts have the final say in whether it will be allowed or not. In some cases, the will-writer includes a provision in the will outlining whether an administration bond is mandatory and the terms they wish to have. When the will requests for an administration bond to be created, it’s typically quite easy for the applicant to be successful with their claim. When the will is silent on the matter, it can become much more complex. It’s when the will is silent on that matter that it can be more complex.

There is no set value that the administration bond must be. It can vary depending on the case and the size of the estate.

When there is no clause relating to an administration bond in the will, the applicant must have evidence suggesting that the executor is not going to act reasonably. The courts don’t normally issue administration bonds in BC when the will doesn’t include a clause requesting one. An interested party should have strong evidence that shows the executor is likely going to act against their fiduciary duty. For example, evidence of the executor having a history of poor estate administration or previous conversations with the executor regarding their intentions. When there isn’t a strong case to have an administration bond provided, there are alternative measures that interested parties can take to ensure protection of their inheritance.

Alternative Options

Sometimes, an administration bond is not the most viable option in your scenario, however, you still feel concerned about the named executor handling the estate. There are other measures you can take to ensure that the estate is administered correctly. Before any beneficiary receives their inheritance, the executor must provide a detailed account of all of the estate assets. If you believe an asset has gone missing or is smaller than it should be, you can issue a request for a passing of accounts. This is a court hearing where the executor must prove the validity of the estate accounts. For more information, read our blog on passing of accounts.

As a last resort effort, interested parties are able to apply to have an executor completely removed from their duties. The courts will only allow this when they cannot see any other alternatives to fix the issue. Typically, this will only be allowed after the executor has made a significant mistake in the estate administration. Unlike an administration bond, executor removal is not a precautionary measure. For more information, read our blog on removing an executor and the legal grounds for doing so. In some less extreme scenarios, a co-executor can be appointed to help with the administration.

If you’re a beneficiary who feels uneasy about the executor of a loved one’s estate, contact an experienced estate lawyer today. We can ensure that the estate is handled appropriately whether that means applying for an administration bond, a passing of account or the executor being removed.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

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