If you need to post an estate bond, read this

Did you know that if you appoint an executor who lives outside of the province in which you live, your executor must deal with the issue of a bond? Each province has rules in place which are intended to protect creditors and beneficiaries of an estate by preventing executors from legally accessing the deceased's assets, then leaving the jurisdiction without paying bills or distributing the estate to the right beneficiaries.

It's one of those "bad apple" rules. Some executors are dishonest or negligent, and so rules have been put into place that all executors, including the honest ones, must follow. A bond, in this context known as a fiduciary bond, is much like an insurance policy that an executor buys. If he defaults on the estate, he loses the bond. The bond is for the full value of the estate. Bonds may also be required when there is no will and someone comes forward to ask the court to appoint them as estate administrator.

The issue of bonding comes up on a regular basis, as many parents name children as executors even though the children have moved to a different province (or country) for work or for other reasons.

If you're an executor in this situation and you must post a bond, you may have had some trouble finding a company which sells the bonds. I've heard many clients say they've had to make a dozen phone calls before finding an insurance company that provides this service. I've recently found a reliable provider. Click here for information, for the bond application form, and for instructions on where/how to send the form for processing.

Sometimes an application for probate contains a request from the executor that the bond which would otherwise be needed should be waived. This is in the judge's discretion and cannot be guaranteed ahead of time. Your chances are better if the beneficiaries agree in writing to the bond being waived, and if you can show that the deceased's debts have been paid in full.

Another way to get around bond requirements is to appoint an executor who lives in your province. You could have co-executors with at least one of them living in the province. At the trust company where I work, we sometimes see customers who want us to act as a co-executor with their children, partly to address the bond question.