Administration Bond

by Joshua Malone

Surrogates require administrators to obtain an administration bond guaranteeing their faithful distribution of the deceased’s assets (when the deceased lacks a “Will and Final Testament.”)

When a person dies intestate, it means they died without leaving behind a “Will and Final Testament.”* A will specifies whom the deceased intends to leave their belongings to. Without a will, a proposed administrator must file a Petition for Letters of Administration in Surrogate’s Court to receive authorization to distribute the deceased’s assets.

The petition usually includes as many known next of kin as possible. Those listed in the petition to receive estate assets are known as “heirs.” Besides the heirs, the petition usually specifies the deceased’s assets which may include real estate, automobiles, checking and savings accounts, market securities, jewelry, and other belongings. The Surrogate sets the bond amount.

The administration bond’s obligee, the State of New York, is for the benefit of all the potential heirs of the deceased. Administration bonds do carry a risk of unknown legitimate heirs making claims against the estate if the administrator fails to recognize them as rightful heirs from the start. The administrator must follow all the rules and laws of the State while performing their duties, as well as any orders the Surrogate may make.

The administration bond remains active until the administrator closes the estate and distributes all of the assets. Some administrations remain open for long periods of time if some of the heirs are under the age of 18, or if the heirs continuously quarrel with one another. Surety underwriters consider these facts as well as other “red flags” before approving administration bonds.

Other “red flags” include insolvent estates, estates including an ongoing business, and administrators who owe money to the estate.

To cancel an administration bond, the administrator must sign an affidavit on the Surety’s letterhead. It includes the bond number, as well as a list of the heirs, their addresses, and their ages. The affidavit states the administrator distributed all the estate’s assets to the listed heirs. To compliment the affidavit, all heirs must also sign a release. The release states how much each heir received from the estate, and further releases the administrator and surety from all further liability. If administrators received assets from the estate, the administrators too must sign a release against themselves.

*An exception to this rule is known as an Administration cum testamento annexo (CTA). A Surrogate appoints an administrator CTA when the decedent’s will explicitly names an administrator, but that named administrator cannot qualify because they are deceased, incompetent, unavailable, or simply did not want the responsibility. Administrators CTA also sometimes need bonds for their role.

The Royal Family are heirs to the British throne.

The Royal Family are heirs to the British throne.

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