What makes a bond fiduciary
A fiduciary holds property for someone else and owes them a duty of loyalty and care. When the law makes that person post security, the bond is a fiduciary bond. The obligee is the court, and the people protected are the beneficiaries, the creditors or the person whose property is managed.
Fiduciary bonds serve several purposes. They protect beneficiaries with compensation when a fiduciary fails. They promote accountability. And in many situations, such as the administration of estates, they are a legal requirement before the appointment takes effect.
Fiduciary bonds Ontario courts require
Most fiduciary bonds placed in Ontario fall into one of these appointments.
| Appointment | Authority | Bond rule |
|---|---|---|
| Estate trustee without a will, or not named in the will | Estates Act s. 35 and 37 | Bond at double the estate value unless the judge orders otherwise. See estate bonds. |
| Non-resident estate trustee with a will | Estates Act s. 6 | Same security as an administrator, unless reduced or dispensed with. |
| Temporary administrator | Estates Act s. 14(2) | Security as the court directs. |
| Administrator appointed in special circumstances | Estates Act s. 29(3) | Security as the court directs. |
| Statutory guardian of property replacing the PGT | Substitute Decisions Act s. 17(6) | Security as the PGT requires. See guardianship bonds. |
| Court-appointed guardian of property | Substitute Decisions Act s. 25(2) | Security if the order requires it. |
| Non-resident guardian of property | Substitute Decisions Act s. 24(3) | Security for the value of the property unless the court orders otherwise. |
| Guardian of a child's property | Children's Law Reform Act s. 55 | Bond payable to the child, unless a parent is appointed and the court waives it. |
Other orders can require security too: a trustee appointed by the court, a receiver of property, or a person given control of funds in a family or civil matter. If the order says "security" or "bond", send it.
Who does not need a bond
- The Public Guardian and Trustee, and trust corporations appointed as guardian of property (Substitute Decisions Act s. 25(3)).
- The Government of Ontario and its ministries, commissions and boards acting as executor, administrator, trustee or guardian (Estates Act s. 36(1)).
- A surviving spouse administering an intestate estate within the preferential share, with an affidavit of debts (Estates Act s. 36(2)).
- Most small estates of $150,000 or less, unless a beneficiary is a minor or incapable (Estates Act s. 36(3)).
- Anyone the court excuses by order. Courts can reduce or dispense with most fiduciary bonds on a motion.
How fiduciary bonds are underwritten
Fiduciary bonds are personal credit. The fiduciary signs the indemnity, and the underwriter looks at the person first and the property second.
- Character and credit. A clean record and some personal net worth.
- The property. Its size, type and how easy it is to value and control.
- Oversight. A lawyer on the file, passing of accounts and any conditions in the order.
- Duration. An estate may close in a year or two. A guardianship can run for decades.
- Disputes. Family conflict or competing claims raise the risk.
Fiduciary bonds end by court order
Unlike most commercial bonds, a fiduciary bond does not lapse on a renewal date. It stays in force until the court discharges it, usually after the fiduciary passes final accounts. If a surety needs to come off the bond, or the fiduciary wants to substitute security, the Estates Act lets the judge allow it on terms (s. 41). If the security becomes inadequate, the judge can require more (s. 40).
Working with the 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.
