What an estate bond guarantees
Under section 35 of Ontario's Estates Act, a person granted administration gives a bond to the judge, for the benefit of the Accountant of the Superior Court of Justice. The condition is the "due collecting, getting in, administering and accounting for" the property of the deceased. In plain terms, the surety guarantees the trustee will do the job honestly and by the rules.
The bond protects the estate, not the trustee. If the trustee misapplies funds, the court can assign the bond to someone who sues on it for everyone with an interest in the estate. The surety pays valid claims up to the bond amount and recovers from the trustee.
When Ontario requires a bond
The Ministry of the Attorney General lists three cases where a bond must be filed with the probate application:
- The deceased died without a will.
- The deceased left a will, but the applicant is not the estate trustee named in it.
- The deceased left a will, but the applicant does not live in Ontario, elsewhere in Canada or in a Commonwealth country.
There are exceptions in the Estates Act. A surviving spouse administering a small intestate estate within the spousal preferential share, with an affidavit of debts, does not need a bond. A small estate, $150,000 or less under the small estate process, generally does not need one either, unless a beneficiary is a minor or an incapable adult, and the non-resident rule still applies.
How much, and who can be the surety
Section 37 sets the bond at double the value of the estate as sworn in the application. A judge can reduce the amount or dispense with the bond in special circumstances, on a motion supported by an affidavit.
The court accepts two kinds of surety:
| Surety | Who qualifies | What to know |
|---|---|---|
| Insurer (surety bond) | An insurer licensed in Ontario to write surety and fidelity insurance | No friends or family on the hook. The applicant signs an indemnity with the surety. |
| Personal sureties | Adult Ontario residents with assets to cover the bond. Two for estates over $100,000, one at $100,000 or less. Not a lawyer or court registrar. | Each personal surety is liable for the full bond. Many families prefer not to ask. |
On a $600,000 estate, the bond is $1.2 million unless the court orders otherwise. That is why personal sureties are hard to find on larger estates, and why most of these bonds go to the surety market.
What the underwriter looks at
An estate bond is underwritten on the trustee, not the estate. The underwriter wants to know the person handling the money is creditworthy and accountable, and that the estate itself is straightforward.
- The trustee's credit and personal assets. A clean record and some net worth carry the file.
- The estate. What it holds, what it owes and how easy the assets are to value and distribute.
- The family. Disputes between beneficiaries, minors or incapable beneficiaries, and claims against the estate all add risk.
- The lawyer. An experienced estates lawyer acting on the file is a real comfort to the underwriter.
- Conditions. On some files the surety can ask for conditions on how estate funds are held or paid out. We tell you early if a file needs them.
How the bond ends
An estate bond does not expire on a date. It stays in force until the court directs that it be delivered up and cancelled. Under sections 42 and 43 of the Estates Act, that happens after the trustee passes final accounts and pays out or distributes the estate, or shows that debts are paid and the residue distributed. Where a minor or an incapable person shares in the estate, notice goes to the Children's Lawyer or the Public Guardian and Trustee first.
Plan for it at the start. Getting the release order is part of closing the estate, and premium can continue until it is done.
Working with the estate lawyer
For estate lawyers and law clerks. Most court bonds arrive through the lawyer acting on the application. If you are the lawyer, send the draft application or the court's direction and the client's broker details, or ask us to work with the client's broker. Approved works through brokers on these files.
