What is a trustee bond?
A trustee bond is an important component of inheritance law in Hawaii. It is a type of surety bond, or an agreement between three parties – a principal (the person who will receive the trust fund), an obligee (the party who sets up the trust) and a surety (an insurance company). The surety guarantees to the obligee that the principal will faithfully comply with the terms of the trust. A trustee bond offers protection to the beneficiaries of the trust, ensuring that the trustee will properly handle the trust fund and follow any instructions provided. It also ensures that if the trustee does not handle the trust in the manner specified, the beneficiaries can receive financial compensation from the surety. In order to obtain a trustee bond, the trustee must first be approved by the State of Hawaii and submit an application to the surety with background information, a financial statement, and references. The surety will also investigate the trust fund before authorizing the bond. It is usually necessary for the trustee to purchase a bond of at least the full amount of the trust fund. This will protect against potential losses, or any failure of the trustee to fulfill the role of the trust. In addition, a trustee bond creates peace of mind for both the trustee and the beneficiaries, ensuring that the trust will be managed in accordance with the trust guidelines.
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