What Is a Conservatorship Bond?

When people get into conservatorship arrangements, they usually have their fears. These fears are very valid. A conservatee and concerned family members will be scared of the conservatee falling victim to conservatorship mismanagement and fraud. These fears and concerns are valid due to experiences. The experiences have given rise to solutions and one of the solutions is a conservatorship bond. What is a conservatorship bond? You will find out in this article.

Conservatorship Bond Definition

When defining a conservatorship, two things have to be taken into consideration. First is the definition of conservatorship, and the second is the definition of a bond. Let us define these two first to aid comprehension of the concept of a conservatorship bond.

Conservatorship

A conservatorship is a court proceeding in which a judge, as a result of, and considering a conservatorship petition, appoints a responsible individual or organization to take care of an adult person who cannot care for themselves or their finances due to an ailment, old age, or disability. While the person who is the subject of a conservatorship arrangement is called a conservatee, the responsible individual or agency that has been charged to care for them will be called a conservator.

Bond

A bond in the general sense is issued as a form of debt security. In a bond, the issuer owes the holder so the holder of the bond is the lender. The bond makes for an assurance that the debt owed to the holder will be paid alongside all the interests due.

In the context of conservatorship, the bond is a surety bond that provides protection for the conservatee. The bond makes sure that should the conservator fail to give the conservatee value for their money or mismanage the conservatee’s assets in any way, there will be a financial recompense.

Conservatorship Bond

With the definition given to the two terms that make up conservatorship bonds, we know you now have an idea of what conservatorship bonds are but we will explain for further comprehension. Conservatorship bonds as explained in the definition of bonds above are surety bonds that protect the conservatee from the loss of their real and financial assets.

The conservatorship bond, like all kinds of surety bonds, exists in a bid to hold the bonded party(the conservator) accountable. Conservatorship bonds are required by the court before a conservator can start taking charge of the conservatee’s affairs. To satisfy this requirement, the appointed conservator must provide proof of bonding document that shows that they have the required surety bond.

Conservatorship bonds make sure that the conservatee doesn’t suffer any loss should the conservator fail to deliver their fiduciary duties. They also exist as a guarantee that the conservator will be accountable if the conservatee ever falls victim to the following:

• Fraud
• Theft
• Mismanagement of assets and failure to perform fiduciary duties.

Furthermore, conservatorship bonds ensure that if the conservator fails to pay for whatever loss the conservatee suffers under their care, the surety company that’s standing in for them will step in and make the reparations for the claims. However it happens, the conservatee will get their recompense.

Parties Involved In a Conservatorship Bond

A conservatorship bond typically involves three parties including the principal, the obligee, and the surety. The principal is the one purchasing the bond (the conservator). The person purchasing the bond will also be responsible for the renewal fees of the bond and the settlement of any claim against the bond.

The Obligee is the party that is requiring the bond. In California, the obligee is the court. The court requires the bond with the conservatee being the beneficiary. By doing this, the court is giving the conservatee the right to make claims and request recompense for the loss or theft of any financial asset which is in the care of the conservator.

Lastly, the surety is the issuer of the bond. The surety company is the surety in this context. By issuing the bond to the principal, they accept to pay recompense for claims should the principal be unable to and collect such money from the principal using legal means.

Why Is a Conservatorship Bond Required?

The requirement of a conservatorship bond is to serve four purposes which are trust, responsibility, accountability, and enforceability.

• Trust: Since the role of a conservator is a delicate one, there has to be an extensive level of trust between the conservator and the conservatee. A conservatorship bond, just like every other surety bond, provides this trust. With the presence of a conservatorship bond, the conservatee is assured of good conduct from the conservator and due recompense should the conservator act otherwise.
• Responsibility: The fact that the court requires the presence of a conservatorship bond will help to ensure that only a responsible person can be appointed as a conservator to take charge of the affairs of the conservatee. The requirements for surety bonds are such that it will be hard for a financially irresponsible person or a spendthrift to get one. This way, such a person will be unable to fulfill the proof of bonding document requirement.
• Accountability: Because conservatorship bonds require that there is a guarantee of protection from any loss incurred as a result of the conservator’s irresponsibility, accountability is assured. The bond assures the conservatee and their concerned relatives that the conservator will be accountable for any misconduct.
• Enforceability: When claims of theft, mismanagement of funds, or other misconducts are made, conservatorship bonds ensure that accountability is enforced. Even when the conservator is unwilling or unable to make reparations, the surety company will have to step in and make the payment for any loss the conservatee has suffered as a result of the conservator’s irresponsibility.

Importance of Conservatorship Bond

As pointed out in the above section, conservatorship bonds are important in the protection of the conservatee’s financial assets. Other reasons why conservatorship bonds are important are as follows.

• Protection from theft: A conservatorship bond will protect the ward or conservatee from losing their financial properties to theft. The conservator is bound by the law and will be responsible for the theft of any of the conservatee’s financial properties in their care.
• Protection from fraud: Should the conservator defraud the ward or conservatee during the duration of the conservatorship arrangement, the bond will ensure that the conservatee gets a recompense and doesn’t suffer the loss of the fraud.
• Protection from mismanagement of funds or assets: A conservatorship bond will also protect the ward’s finances and assets from being mismanaged by the conservator. Knowing that a surety bond exists as a protection of the conservatee, the conservator will be bound to play by the rules. Failure to do that will result in the conservatee getting a recompense.
• Protection from the conservator’s failure to perform fiduciary duties: Knowing that a conservatorship bond exists will discourage a conservator from disregarding and abandoning their duties. Failure to perform their duties as conservator will result in the conservatee and their family getting a recompense.

Who Should Obtain a Conservatorship Bond?

Any individual or agency who has been appointed by the court to take charge of the financial affairs of any sick, disabled, or aged adult should get a conservatorship bond. In some states, it is left to the court to require a conservatorship bond as the judge deems fit but in California, a bond must be submitted by the appointed conservator before the court clerk issues the letters of conservatorship.

The conservatorship bond will be effective throughout the duration of the conservatorship arrangement. Basically, any individual who is willing to apply as the conservator of another adult should have partnered with a reputable surety company and have the bond in place as soon as they file the petition for conservatorship.

How Is a Conservatorship Bond Calculated?

According to Section 8482 of the California Probate Code, the court will determine the conservatorship bond amount based on the following criteria:

• The estimated value of the conservatee’s personal property
• The annual gross income of the conservatee’s estate

Furthermore, the bond amount may be determined by the court based on the premium required by the surety.

The calculation of premium is usually done based on a particular percentage of the total bond amount (0.5%). However, bond amounts that are larger than $250,000 will have the premiums calculated based on lesser percentage.

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