Surety Bonds and Estate Disputes in Dallas and Elsewhere in Texas

EDITOR’S NOTE:

Personal representatives of estates, including guardians of the estate, are required to obtain surety bonds. When or if an estate dispute arises, the relationship among the estate, the personal representative, and the company issuing the bond can be complex. In this blog post, we explain when and why estate litigation might begin vis-à-vis these entities.

When is a Bond Company Liable for the Personal Representative’s Bad Acts?

Surety Bonds and Estate Disputes in Dallas and Elsewhere in TexasAs we recently discussed, personal representatives of estates, including guardians of the estate, are required to obtain surety bonds in probate court. The purpose of the probate surety bond is to protect the ward from any misconduct the personal representative may commit. If a personal representative does commit some bad acts, then it is likely that a lawsuit will be filed against both the personal representative and the bond company who issued the bond.

Most of the lawsuits against a former personal representative and a bond company involve these claims:

  • Breach of fiduciary duty
  • Fraud
  • Negligence
  • Conversion (which is similar to theft).

A lawsuit must be brought against both the personal representative and the surety company (effectively, an insurance company). The benefit of bringing a claim against both the personal representative and the surety is that the surety company is responsible for paying all of the money that is awarded to the estate as a result of the wrongful acts of the personal representative (such as an executor, administrator or guardian). The surety company can then go forward and sue the personal representative and try to recover some of the money the surety company paid to the estate, but the estate would have been made whole.

EDITOR’S SUMMARY

Unfortunately, estate disputes are more and more common in Dallas and throughout Texas. Surety bonds are a form of insurance against misconduct by the personal representative of the estate. If you or someone you loved is possibly involved in an estate dispute, reach out to one of our top Texas estate dispute attorneys for a no charge initial phone consultation. They can help you understand not only how surety bonds work but also the legal complexities surrounding estate disputes under Texas law.