Will Stuck in Probate? Apply to be a Preliminary Executor

by Court Bond Now

Will Stuck in Probate? Apply to be a Preliminary Executor by Neil Pedersen

When a will is delayed in probate, an individual can apply to be the preliminary executor prior to admission of the will. During this interim phase, certain restrictions are placed on the preliminary executor, yet there are many benefits as well — including the potential to save money in the long-term.

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No Will? No Problem. Administrator Bonds Guarantee Estate Distribution

by Court Bond Now

No Will? No Problem. Administrator Bonds Guarantees Estate Distribution by Neil Pedersen

When a decedent dies without a will, an administrator is appointed to administer an estate and the court requires that the administrator obtain an administration bond. An administrator bond guarantees that the estate will be properly distributed and that outstanding debts will be paid. New York State has specific intestacy laws that stipulate how an estate will be distributed should a person die without a will.

Through seeded distribution, an individual — usually a family member — can petition the court to apply to be administrator of the estate. The court will consider the value of the assets and liabilities of the estate, and how much the individual is receiving from the estate pursuant to the intestacy laws to determine the bond amount. It is suggested for estates with small amounts of equity to request a nominal bond to preserve the estate assets.

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Surety Bonds: Start With Pre-Approval

by Court Bond Now

Surety Bonds: Start With Pre-Approval by Neil Pedersen

When seeking to obtain a surety bond, there are important considerations one needs to be aware of before applying to the court.

Since there are costs associated with making an application to the court for the appointment of a guardian, conservator, administrator, executor, preliminary executor, trustee, or another fiduciary appointment in respect to drafting the orders and conducting the hearings, we recommend that clients first complete an application for the bond and submit it to my agency to ensure that they are able to obtain the bond. There is little reason to spend money on these tasks if the client cannot ultimately obtain the bond.

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The Importance of Verifying Appeal Bonds

by Neil Pedersen

The Importance of Verifying Appeal Bonds by Neil Pedersen

In New York State, an automatic stay of execution of a judgment (CPLR 5519) is granted upon the filing of an Undertaking on Appeal and a Notice of Appeal. CPLR 5519 requires that appeal bonds (Undertaking on Appeal) include a provision to bond post-judgment interest and costs pending appeal.

Post-judgment interest in New York is 9%—and appeals generally last a little over two years. Given this, after two years there should be approximately 20% worth of interest and costs. Certain bonding agencies provide a provision on the first page of the bond that states “provided, however, the maximum liability of this undertaking is fixed at $xxx,xxx.xx.” They usually put the judgment amount there, which is incorrect and does not adequately protect your client. Careful attention to this potential scenario is advised.

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Appeal Bonds 101

by Neil Pedersen

Appeal Bonds 101 by Neil Pederson

In New York State’s court system, the prevailing party has the ability to execute on a judgment as soon as it has been entered by restraining assets and eventually seizing assets such as real property or bank accounts.

The losing side can avoid having money restrained without their consent only by obtaining an appeal bond and filing a Notice of Appeal. The Stay is granted automatically pursuant to CPLR 5519 upon the filing of the Notice of Appeal together with an Appeal bond.

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Difference Between Preliminary Injunction and Temporary Restraining Order (TRO)

by Joshua Malone

The difference between a temporary restraining order (TRO) and a preliminary injunction seems fairly subtle. In litigation cases, the terms sometimes get used interchangeably. Both a TRO and a preliminary injunction provide a remedy for an allegedly aggrieved party and typically require an undertaking to provide monetary relief to the alleged aggressor.

According to NY case law, judges only issue preliminary injunctions in instances where the movant has demonstrated likely success at trial as well as a chance of irreversible damage if not for the preliminary injunction.These qualifications make preliminary injunctions somewhat rare. However, the most common preliminary injunctions arise in business disputes between shareholders and management or between business partners. For example, minority shareholders may wish to stop a corporation’s board from selling the company to the shareholders’ detriment.

A temporary restraining order has the same effect as a preliminary injunction but typically lasts only a few days where as an injunction could go on for months. Attorneys will seek a TRO when their clients need immediate remedy to prevent irreversible harm. Typically, the attorney motions the court with an Order to Show Cause and the judge will ask the Plaintiff to file their undertaking within the next few days but before opposing counsel can appear in a later trial.

The undertaking on a temporary restraining order or preliminary injunction protects the Defendant in the event the later trials determine the Plaintiff lacked the entitlement to any injunctive relief. Basically – the bond protects the Defendant. Judges usually determine the bond’s amount after hearing counsels’ recommendations. These bonds are highly time sensitive and require careful consideration. Underwriters typically want partial or full collateral for these bonds because of the unpredictable outcome of litigation. Underwriters will consider the Plaintiff/Principal’s financial strength and prestige of their attorney and law firm. To read some earlier posts concerning preliminary injunctions bonds, click here and here to learn how to cancel one of these bonds.

1. Chernoff Diamond & Co. v. Fitzmaurice, Inc., 234  A.D.2d, 200, 201, First Department, 1996.

Preliminary Injunction and Temporary Restraining Order

Preliminary Injunction and Temporary Restraining Order

Attorney Retainer Letters

by Joshua Malone

An attorney retainer letter diminishes some of the risk of fiduciary and probate bonds. The letter states the principal on the bond – the administrator, executor, or guardian - will keep their attorney involved throughout the entire duration of the principal’s appointment. Sureties prefer to maintain the attorney’s involvement during these appointments because attorneys have the expertise and knowledge to ensure a smooth and orderly administration or guardianship.

The letter typically states the attorney will assist the principal with drafting and filing the yearly accounting documents, as well as any other pertinent documents such as orders, affirmations, and ex parte orders of discharge. The attorneys prepare these documents and submit them to the court for a judge’s approval. Sureties must see all yearly accounting documents to verify the guardian or administrator has complied with the court and has not mishandled funds. As a further safeguard, the letter may state the principal must keep all funds and accounts within the state of jurisdiction.

Retainer letters always promise the principal will pay the premiums in a timely manner. Indemnity agreements already state this, but many Principals overlook or forget this important aspect. All filed accounting documents must take into consideration the paid premiums on the surety bond.

Usually, the attorney drafts the letter and presents it on their law firm’s letterhead. The attorney and the principal both sign the letter.The attorney and principal address the letter to the Surety undertaking the bond. The letter indicates the principal’s application for the bond as well as the bond amount.

Finally, the letter provides a provision in the event the principal changes attorneys. In the event of a change of counsel, the principal and/or attorney must notify the surety immediately. If the principal changes attorneys, it may indicate a disagreement between the parties and could potentially lead to claims. In any event, a fiduciary should always retain the services of an excellent attorney to help guide them through the sophisticated legal landscape of their appointment.

Retainer Letter

Retainer Letter

Happy Holidays!

by Carolyn McGrail

happy holidaysOffenhartz & Pedersen, LTD. would like to wish you and yourfamily a healthy and happy Holiday Season!

The holidays are a time to spend with family and friends and at O&P, we are available throughout the entire holiday season to take your calls and help guide you through any bonding procedures. We offer our expertise and insight 24/7 because bonding issues can come up at any time.

The Holidays are the most joyful time of the year, so here are some tips to stay safe and enjoy the season.

  1. Always assign a family member or friend to be the designated driver. It is easy to forget when drinking strong holiday drinks like eggnog and hot cocoa with peppermint Snapps, the ability to drive becomes impaired.
  2. Take precautions against inclement weather. New York City has recently been covered with enough snow to make the roads dangerous and more difficult to navigate. Remember to change to winter tires, carry an ice scraper, and proceed with caution when snow is present.
  3. Be wary of shady vendors around the City. The holidays are a perfect time for swindlers to use shoppers for a quick buck. If a brand item is being sold for a reduced price, it could be stolen, and you could be implicated in the crime.

If you don’t have an immediate question but still have some concerns about a type of bond, you can look through our extensive blog post history to learn more about bonds for guardianship(s), appeals, preliminary injunctions, mechanic’s liens, and much, much more. We also offer some insight into common underwriting principles such as how to read financial statements and their components like income statements and balance sheets. O&P prides itself on our expertise in the field of commercial surety bonding.

Stay safe and Happy Holidays! 

Advance Payment Bond

by Joshua Malone

An advance payment bond provides an estate’s executor or administrator an early release of funds for a specific purpose. The bond guarantees the return of an advance payment if the court later finds the executor or administrator wrongly took the money. The court reviews the estate upon approval of the estate’s final accounting.

Most executors and administrators may request an advance payment to circumvent tax issues, especially if a large estate will make large lump sum distributions in the future.

If the estate’s heirs and beneficiaries agree to allow the executor or administrator to take an advance payment, no need for a bond would arise. However, some beneficiaries may disagree with the advance payment, and some heirs or beneficiaries (such as non-profits) may take too long to respond. Many deceased have Last Wills and Testaments bequeathing gifts to large charities and non-profits.

Typically, the executor or administrator pays the bond premium out of his own pocket. Furthermore, the bond does not renew. Premiums may equal  a percentage of the bond amount, and the bond amount equals the size of the advance payment. These bonds differ from regular administration and executor bonds, which typically allow for the executor or administrator to pay the bond premium with estate funds. Administration and executor bonds also renew yearly and the premiums follow a rate schedule based on the bond amount.

To underwrite these bonds, surety underwriters look at an applicant’s credit and regard the quality of the applicant’s legal counsel. An executor or administrator must petition the court to receive a decree awarding the advance payment. Therefore, sureties expert legal counsel’s involvement throughout the whole process to avoid the pitfalls of the legal system and prevent claims. Good legal counsel may protect the surety in the event of a claim as well. Our office can easily secure most advance payment bonds.

Last Will and Testament

Page by Craig A. Andreoli, www.andreolilaw.com

Market Capitalization

by Joshua Malone

Market capitalization is one of the go-to statistics for surety underwriters when evaluating a public corporation’s financial information. The market capitalization (commonly referred to as “market cap” for short) represents the value of the corporation’s outstanding shares and thus basically the value of the company. If an investor wanted to try and purchase a corporation via the market, he would theoretically have to pay the market cap value.

Market cap equals outstanding shares multiplied by the price per share. So for example, Target Corporation (NYSE: TGT) has a $39.7 billion market cap and $68.2 per share, so $39.7 billion divided by $68.2 per share equals 582 million outstanding shares.

Surety underwriters initially look at market cap to get some idea of the corporation’s size. As a general rule of thumb, big market caps exceed $10 billion. Middle market caps range from about $1 or 2 billion to $10 billion, and smaller caps equal less than $1 billion. The larger the market cap, the bigger the corporation. Thus, an underwriter will more likely approve the issuance of the corporation’s bond.

Depending on the bond amount and the market cap, some surety bond applicants can easily obtain various litigation bonds such as TROs, preliminary injunctions, and appeals without having to provide collateral. For example, Wal-Mart Stores, Inc. (NYSE-WMT) has a market cap of $264 billion. If Wal-Mart needed a $1 million dollar court bond, surety underwriters wouldn’t have much difficulty approving the bond. However, a corporation with a smaller market cap may need to post collateral or meet other requirements to obtain such a bond.

In sum, the market cap provides a quick frame of reference, as well as excellent starting point, for an underwriter to evaluate a corporation’s application. Public corporations have much of their financial data – including market cap – on business websites such as Google, Yahoo! and Bloomberg.

Please note: all example math figures are based on estimates from Yahoo! Finance as of the date of this article.

Comparing Target and Wal-Mart - Market Capitalization

Comparing Target and Wal-Mart – Market Capitalization