The cost of Estate administration bonds and guardianship bonds are slightly differently.
The cost of an estate administration bond is based on a rate multiplied by the value of the bond. This rate varies based on the strength of the application, the size of the bond and complexity of the situation, but the rate typically ranges from 0.3% to 1%. That means if you have a $1,000,000 estate and the rate is 0.75% the bond will cost $7500. This is a one-time fee and it’s paid upon issuance of the bond.
Guardianship bonds however are billed by most bond companies as an annual fee based on an annual rate. The bond will be billed each year it is required. As with estate administration bonds, the rate varies based on the situation, the size of the bond and the strength of the application. Compared to estate administration bonds, this rate is much lower and ranges from 0.25% to 0.5% per year. At FCA we always request a bond company quotes an option for a one-time fee in addition to annual fees. This one-time fee is typically in the 1.5% to 2.5% range but on guardianships that can last a decade or longer there are considerable savings to be had.
In order to secure an administration or guardianship bond, a bond application process to an insurance company must take place. As a first step in the process to making an application, you must select a broker who will approach insurance companies on your behalf. Your broker will discuss with you the administration or guardianship circumstances requiring the bond and go through a list of documents you will need to provide. These documents include:
Your broker will then approach bond companies, present them with this information and secure terms for the bond. After reviewing with you and your lawyer, you will be in a position to accept terms and have the bond issued.
Because it isn’t feasible for insurance companies to personally get to know the executor, bond companies look at several different areas to help get a sense of the risk. First, they will look at the situation surrounding the application and determine if there are any issues that might put their bond at risk. They will review an applicant’s job and credit history along with their personal net worth to get a sense of the applicant’s capabilities to handle this fiduciary duty. The bond company wants to know if the applicant is working with a lawyer and getting good professional advice to help them perform their duty successfully. It is your broker’s responsibility to explain what it is the bond company is trying to determine, and help you put together the documentation to demonstrate your capabilities.
FCA is one of many commercial insurance brokers in Canada. What sets us apart is that within our bond department we have an estate team dedicated to estate bonds. That’s all we do! Like most other brokerages, we have people that specialize in construction bonds, and in condominium bonds; however, there are very few brokers that work specifically with estate bonds. This not only makes us one of the most knowledgeable estate bond brokers, it means we do large volumes of business with bond companies and are able to secure the lowest rates in the marketplace and get approvals fast without any wasted time and effort. In fact, another key difference is our in-house authority. Because all of our brokers have previously worked for bond companies, we are able to approve bonds without submitting the file to the bond company. This makes us fast and easy to deal with.
I required a bond to take over an estate. FCA Insurance was amazing to deal with. Chris Dardarian provided outstanding service, he kept me updated and informed throughout the entire ordeal. He was quick to return my calls and emails and was extremely knowledgeable. The experience was a lot smoother than what I initially anticipated would be a lengthy and stressful process. I would highly recommend FCA to anyone reading this.
My wife needed to obtain a surety bond as part of the process of gaining guardianship for her father. Neither of us were sure of what to do. We contacted FCA, and were connected to Chris. He was very responsive (in the middle of the first wave of the pandemic), and walked us through what we needed to provide. When it came time to finalize the bond, he was definitely on our side. He pushed hard for the best/lowest fee possible so that we could minimize the impact on my wife’s father’s finances. Furthermore, he and the team at FCA made it very easy to finalize the paperwork and obtain the bond. I would highly recommend FCA.
I required a bond to take over an estate requested by the court. FCA Insurance has been amazing to deal with. Chris Dardarian offered impeccable service, was quick to answer all my questions and was extremely knowledgeable. It’s great to deal with such a professional team. They turned what I thought was going to be a long stressful process into a breeze. I couldn’t be more impressed.