Guardianship Bonds In Ontario: Protection for Legally Incapable Persons

The Role of the Guardian

In Ontario and most jurisdictions in North America, safeguards are put in place to protect an incapable person from abuse both financial and otherwise. For this reason, the governing body may require the appointment of a legal “guardian of property” to help the incapable manage their affairs. In Ontario the governing body is called the Office of the Public Guardian and Trustee “OPGT”.

The role of a guardian of property is to step into the shoes of the incapable person for the purpose of financial decisions and transactions on that person’s behalf. This serves to protect the welfare of the incapable. It also indirectly benefits others whose own financial interests are connected to those of the incapable person.

This obligation is a very serious one. Almost every aspect of the incapable person’s life is affected – directly or indirectly – by the guardian’s actions. By performing the role diligently and sensitively, the guardian will give the incapable person the most comfortable, enjoyable and safe life that the incapable person can afford.  On the other hand, extreme harm can result to the incapable person and to others if the guardian does not act diligently and honestly. Therefore, the highest standards of honesty, integrity and trust are demanded from the guardian.

More information about the purpose, role and responsibilities of the Guardian are outlined on the following link to the Ontario Ministry of the Attorney General:

https://www.attorneygeneral.jus.gov.on.ca/english/family/pgt/guardduties.php

What is a Surety Bond and Why is it necessary?

Given the incapable is so vulnerable and the nature of this obligation is so serious, the court may require a guarantee from a third party to protect the incapable from misuse of their assets. The guarantee ensures that the guardian will fulfill these very important responsibilities. The guarantee is what is known as a surety bond. Effectively, the surety bond, or guardianship bond, guarantees that the guardian will fulfill all of their duties as outlined in a management plan approved by the governing body. If the guardian does not fulfill their obligation and there is a financial consequence to the incapable person, then a claim can be made against the bond and the bond company will have to step in and pay for the shortcomings.

I’m a Guardian, How do I get a surety bond?

In order to obtain a surety bond, you must work with an insurance broker who works with surety bond companies to place these bonds. Effectively the broker will represent you, and help you make an application to submit to the bond company. Your broker will walk you through the entire process, clearly outlining the application process, the costs involved and the procedure for issuing and submitting the bond to the OPGT.

What is the Process?

Step 1 – OPGT approval of the Guardian

Before you apply for a bond, you must become approved to be the guardian of property for an incapacitated person. You must prepare and submit a management plan to the OPGT for their approval. At this point, you may receive an approval conditional upon posting a surety bond to protect the guardian.

Step 2 – Choose an insurance broker to start the process

Your next step is to start working with an insurance broker. It is critical you work with a broker that specializes in surety bonds, most specifically surety bonds for guardianship and estates. Your broker will explain the process, discuss the documents required to make an application for a bond, and outline the costs involved.

Step 3 – Gathering the Documents

There are several documents required to make an application as follows:

1. Surety Bond Application – A simple two-page document.
2. Copy of the management plan submitted to the OPGT.
3. Personal Net Worth Statement – This is required to assess the financial position of the guardian. The theory goes that the stronger someone’s net worth, the less likely they are to use some of the incapable’s funds.
4. Other relevant information. This could be a court order for the case of a motor vehicle accident, supporting financial documents or other things deemed necessary.

Step 4 – Submission to the Bond Company

Your broker will review the documents and ask any questions that come up. Once satisfied, the broker will submit the documents to the bond company.

Step 5 – Bond Company Review, Approval

The bond company may have some questions. In some cases they will want to have a quick call with the guardian or the lawyer involved. After satisfied they will provide their approval. This typically takes 1-3 business days.

Step 6 – Bond Issuance

Once the approval is received and the terms are accepted by the guardian, the bond will get issued by the brokerage. In order to issue the bond the signed bond application and payment is required.

Although this can seem overwhelming with lots of new and sometimes complicated information, if you work with the right professionals, it will make a world of difference. Using an estate lawyer and a surety bond broker that specializes in Estates and guardianship will save you time and potentially money from commonly made mistakes.