If you have been named as the guardian of a disabled individual, you may need to take out a guardianship bond. This is a type of fiduciary bond, and it offers a lot of advantages to both you and your ward. Here's a closer look at the advantages:
1. Fiduciary Bonds Protect the Financial Interests of the Ward
When someone is a ward of another individual, the guardian has a lot of power over the ward's finances. That can lead to potential issues. A bond ensures that the ward's money and assets are protected.
For example, if the guardian misappropriated or steals some of the ward's money, the bond can ensure that the ward doesn't sustain any lasting losses. Essentially, if someone makes a claim, the bond acts as an insurance policy.
2. Guardianship Bonds Make It Easier for You to Become a Trusted Guardian
If you are trying to become a guardian for a disabled adult, taking out a fiduciary bond shows that you are serious about your responsibilities. When you take out a fiduciary bond in this situation, you are basically making a legal statement that if you steal or misuse some of that individual's funds, you promise to repay them.
Here's how a fiduciary bond works. You, the guardian, act as the principal on the bond; the disabled person and the courts are your obligees, and the company that issues the bond acts as the surety. If the obligees see that you have misused funds, they will initiate a claim. At that point, the surety will cover the amount of the claim, but you will be required to pay the fiduciary.
Because you may be called on to repay the entire amount of the bond, you typically need to have strong credit or assets to get this type of bond. That said, there are companies that work with fiduciaries (guardians) with less than perfect credit.
3. A Fiduciary Bond Can Save You Money
In some cases, the courts may ask you to put up the funds before you take guardianship of an individual. The amount requested by the courts is generally equal to the assets of the disabled person. If that individual has a large estate, that may be an unwieldy amount.
Taking out a fiduciary bond helps you avoid that expense. Generally, when you buy a guardianship bond, you just pay a fraction of the amount requested by the courts. That means that your personal funds aren't tied up. Contact a company that offers money transmitter bonds for more information and assistance.