What is a Probate Bond (Estate Administration Bond)?

A probate bond or estate administration bond is like expensive insurance that an estate trustee may have to obtain before applying for probate. While the bond does not technically insure an estate trustee, the bond company will step in to pay third parties like beneficiaries or creditors for the negligence or malfeasance of an estate trustee.  If the bond company makes a payment, it will pursue the estate trustee for repayment.

Probate Bond Value and Cost

The value of the bond is usually double the value of the assets of the estate. For example, the probate bond for an estate valued at $1,000,000 will be $2,000,000. The downside to a bond is the cost, which varies but can be between 1.5% and 2.5% of the value of the bond.  A $2,000,000 bond could cost about $40,000.  

When is a Probate Bond Needed?

You may need a bond for probate when:

1. the deceased passed away without a Will (intestate),
2. the deceased passed away with a Will, but the Will does not name an executor/estate trustee, or
3. the deceased passed away with a Will that does name an executor/estate trustee, but they live outside of Canada (non-resident executor).

When is a Probate Bond not needed?

A probate bond will not be needed when:

1. The estate’s value does not exceed $150,000, and the person applying for the role of estate trustee:
   1. resides in Ontario,
   1. is over the age of 18, and
   1. is not incapable,
2. the person applying for the role of estate trustee:
   1. was the spouse of the deceased at the time of death,
   1. the deceased died intestate, and the net value of the estate does not exceed $350,000,
3. a government entity (such as the Public Guardian and Trustee) applies for the role of estate trustee, or
4. a registered and approved trust company applies for the role of estate trustee.

Can The Value of the Probate Bond Change?

Yes. If a probate application is granted, but it is discovered that the estate’s value was underestimated, the value of the bond would need to increase proportionately. 

Can I Dispense with a Probate Bond?

Maybe. On application to the Court, bonds can be dispensed if the Court is satisfied that the applicant for estate trustee will faithfully uphold their fiduciary duties to the creditors and beneficiaries of the estate. To do this, the applicant must fully disclose every possible beneficiary of the estate to the Court and ideally secure their consent to dispense with bond. If a beneficiary is unwilling or unable to consent (if the beneficiary is a minor or incapable), then the applicant must explain to the Court how they intend to protect the interests of those beneficiaries. If all the debts of the estate have not been paid, the applicant must explain to the Court what arrangements will be made to ensure that outstanding estate debts will be satisfied.

On a Court application, the value of the bond can also be reduced.  If 3 of 4 beneficiaries consent to dispensing with a bond, the bond may be reduced by 75%.