Two Reasons A Person May Be Denied A Fiduciary Bond
Posted on: 7 October 2017
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A fiduciary bond is a type of insurance that protects heirs and beneficiaries of an estate from the bad actions of the executor of the estate. The bond pays out if the executor steals money or otherwise causes financial losses. Many states require administrators to obtain fiduciary bonds before they can proceed with their duties. While they're generally easy to obtain, here are two reasons why a bond company may reject someone's application:
Criminal Record
One of the top reasons a bond company may decline to issue a fiduciary bond for someone is because the individual has a criminal record. As noted previously, the bonds are a kind of insurance, and companies that issue them want to keep the risk of having to pay out on claims low. As such, they will conduct criminal background checks, and reject applicants that have been convicted of crimes that indicate those people may not handle the estates properly.
For instance, your application may be declined if you have ever been convicted of fraud, embezzlement, or other financial crimes.
However, different companies have different levels of risk they're willing to take. Additionally, the amount of the fiduciary bond will also play a role in whether a person with a criminal record will get approved for the bond or not. A bond company may be willing to take a chance on a $100,000 bond but not a $500,000 one.
Poor Credit
A second reason why you may be denied a fiduciary bond is that your credit score is too low. This is for the same reason a person may be denied because of a criminal record. The company wants to make sure you'll handle the estate finances in a responsible manner, and having bad credit is seen as an indicator that you are more likely to mismanage money.
Again, companies differ when it comes to how low a person's credit score can be and still get approved for a bond. If your score is below 650, for instance, you may still qualify for a non-standard bond that would be charged at a higher fee. Additionally, the type of negative marks on your report can also influence whether you'll get approved. If you have civil judgments, liens for unpaid taxes, or a bankruptcy on your credit file, you may be denied the bond.
There may be ways to get around these issues. For instance, putting up collateral may make a company more comfortable approving you for a bond. Contact a surety company for more information about and assistance with this issue. Contact a company like Got Surety Bonds for more information and assistance.