The state of New York requires an estate be created whenever a person dies and does not leave a will, or they have assets not addressed in the will. The estate would hold all the deceased’s undefined assets until they can be settled through the process of probate. One of the most important aspects of establishing probate is appointing an administrator of the decedent’s estate. The role of an administrator in settling an estate is quite important. However, administrators can find themselves in hot water if they do not complete their duties with care and caution.
Potential areas of liability for administrators
If an administrator makes a mistake during the probate process, they can be held responsible for their errors. For example. If an administrator fails to file a tax return for the estate or the decedent or fails to pay taxes, this can create a serious problem for the estate.
Furthermore, if the administrator favors certain beneficiaries over others, this can create a liability issue. An example would be the administrator directing funds in the estate towards an investment that might benefit one beneficiary over another. Or, if the administrator has a personal relationship with one of the beneficiaries, they might make decisions in their friend’s best interest rather than for the betterment of the estate.
How a probate bond could offer protection from potential liability
A probate bond is issued through a surety bond company and provides financial protection against errors made by the administrator of the estate. If the estate is large and has many moving parts, a probate bond could be a benefit, considering there may be more room for errors compared to a simpler estate. Additionally, if this is the first time someone has acted as an administrator, a bond could come in handy, considering they are likely unfamiliar with the probate rules.
While a probate bond might not always be a requirement to settle an estate, it could serve as peace of mind for the administrator. Typically, the probate court will set the required dollar amount of the bond and the time limit in which a bond must be obtained for probate to proceed.