Administration Bond

Definition - What does Administration Bond mean?

An administration bond is the financial security that courts require from administrators of an estate before allowing them to distribute the assets of the deceased. This bond guarantees that the assets are distributed fairly to the beneficiaries, creditors, and other parties that are financially linked to the deceased.

Insuranceopedia explains Administration Bond

The distribution of the assets of a deceased person is made simple when the they have left behind a will. The estate also usually has an executor tasked with interpreting the will. In the absence of both a will and an executor, the court appoints an administrator through a probate procedure.

To ensure that the administrator does not make any mistakes in the distribution of the deceased's assets, the court will ask the administrator to purchase an administration bond. The price of the bond is usually of equal value to the estate but it can sometimes be higher. When the administrator does their job well and to the satisfaction of the survivors and those who have financial relations with the deceased, the court returns the bond to the administrator.

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