Executors, curators, liquidators and trustees (commonly referred to as “Estate Administrators”) may be required to furnish security to the satisfaction of the Master for their administration prior to commencement of their duties in any estate. Where they are so required to do, they may approach SRM for a security bond, which is also known as a surety bond.
What is a surety bond?
A surety bond or surety is a guarantee by a surety (the Insurer) to pay one party (the Master) a certain amount if a second party (the executor/ curator/ liquidator/ trustee. If any default if made by any executor/ curator/ liquidator/ trustee in the proper performance of his functions, the Master may enforce the security and recover from such executor/ curator/ liquidator/ trustee or his sureties the loss to the estate.
In essence the surety guarantees the proper administration of funds and property by the executor/ curator/ liquidator/ trustee. The bonds are required in accordance with applicable legislation governing the administration of the various estates.
Who pays for the surety bond?
The Master allows the reasonable costs of finding security , insurance premiums charged at a percentage of the estate asset value to be paid out of the estate.
- Executor bonds 0.5% plus vat
- Curator bonds 0.6 % plus vat
- Liquidation bonds 0.5% plus vat
- Trustee bonds 0.6% plus vat
- Tutor bonds 0.6% plus vat
Surety’s right of recourse
Should it arise that the surety is required by the Master to pay any losses suffered by the estate as a result of the default of the executor/ curator/ liquidator/ trustee, the surety is subrogated to the rights of the creditor i.e., the insurer has the same rights as those of the Master. It can sue the executor/ curator/ liquidator to exercise those rights.
At SRM you can obtain Executor bonds / Curator bonds / Liquidation bonds / Trustee bonds / Tutor bonds
Essentially the terms of the suretyship are all the same for the different types of estates. However the Master’s reference on the bond will indicate whether it is for an Executor, curator, liquidation or Trust bond.
In respect of all these types of bonds, where the estate administrators have accounted to the satisfaction of the Master for any property, the value of which was taken into consideration when the amount was assessed, the Master may reduce the amount of security (the bond) to an amount which would in his opinion, be sufficient to cover the value of the property which such estate administrator has been appointed to liquidate and distribute and which has not yet been accounted for.
Once all the property of the estate, has been administered, the bond may be reduced to nil, at which point the surety’s obligations are likewise reduced to zero from the date confirmed by the Master.