What is a trustee bond?
A trustee bond is an important aspect of Massachusetts’ inheritance law. It is a type of insurance that is purchased when someone is appointed to act as the trustee of an estate. When a person dies, their estate is typically managed by a trustee, who is responsible for carrying out their wishes. A trustee bond protects the beneficiaries of the estate in case the trustee fails to act properly. It is a contract between the beneficiaries and an insurance company that ensures the trustee’s obligations are met, and the beneficiaries receive what is due to them. In Massachusetts, a trustee is required to post a bond in the amount of the maximum value of the trust property. The trustee must pay a fee to the insurance company in exchange for this insurance coverage. The bond is typically based on an amount two to three times the value of the estate. The insurance company will collect a fee, usually 1-2% of the value of the trust, for the coverage, and will pay the beneficiaries if the trustee fails to fulfill his or her duties. If the trust is smaller, and the amount of the bond is more than the value of the estate, then the bond may not be necessary. The trustee will still need to meet the same obligations and responsibilities as if the bond was in place. Trustee bonds are an important part of Massachusetts’ inheritance law, protecting the beneficiaries of an estate from any wrongdoing or negligence on the part of the trustee.
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