If a person is serving as a fiduciary they may want to consider obtaining a fiduciary bond, many States actually have statutes that require such instruments. Fiduciary bonds are legal instruments that act as insurance for beneficiaries when a trustee fails to perform his or her fiduciary duties. The surety (typically the bonding company or individual acting as surety) will pay the court a specified amount when fiduciary duties are breached. Some State statutes require fiduciary bonds, but even if they don’t people may still want them if there are concerns about the trustworthiness or financial status of the fiduciary.
The amount of bond a person needs to get depends on the amount of assets that the fiduciary is managing. Fiduciaries are generally responsible for acquiring bonds by looking for a bonding company. Most States provide exemptions to corporations, banks, and trust companies under the assumption that such entities have enough assets to pay back the beneficiaries.
See J. Robert Smith, Fiduciary Bonds- Who Needs Them?, The National Law Review, August 3, 2015.
