Louisiana Executor Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a Louisiana Executor bond.

At a Glance:

• Average Cost: Calculated based on a tiered structure
• Bond Amount: Determined on a case-by-case basis (more on this later)
• Who Needs it: Some executors and most administrators handling the estates of deceased Louisiana residents or property owners
• Purpose: To ensure estate beneficiaries and creditors receive compensation if the executor/administrator mishandles the estate’s assets
• Who Regulates Executors and Administrators in Louisiana: The district court of the parish with jurisdiction over where the deceased individual resided or had property

Background

Louisiana Code of Civil Procedure 3159 requires all executors and administrators of an estate to be appointed by a court and swear an oath before assuming their fiduciary duties. The Louisiana legislature enacted the appointment requirement to ensure that executors and administrators do not mismanage the estate’s assets. To provide financial security for the enforcement of this requirement, most executors and administrators must purchase a probate surety bond to be eligible for appointment.

What is the Purpose of the Louisiana Executor Bond?

Louisiana requires executors and administrators to purchase a surety bond as a prerequisite to being appointed as a fiduciary over an estate’s assets. The bond ensures that the estate’s beneficiaries and creditors will receive compensation for financial harm if the executor/administrator fails to abide by the regulations outlined in Louisiana Code of Civil Procedure 3151. Specifically, the bond protects beneficiaries and creditors if the executor/administrator commits any acts of fraud or mismanages the estate’s assets. In short, the bond is a type of insurance that protects the estate’s beneficiaries and creditors if the executor or administrator violates their fiduciary duties.

How Can an Insurance Agent Obtain a Louisiana Executor Surety Bond?

BondExchange makes obtaining a Louisiana Executor bond easy. Simply login to your account and use our keyword search to find the “Probate” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

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How is the Bond Amount Determined?

Louisiana Code of Civil Procedure 3151 dictates that the bond amount must be equal to 125% of the estate’s total value. However, the court may reduce the required amount if the executor/administrator can prove the required amount is far more than what is needed to protect the interests of the estate’s beneficiaries and creditors.

What are the Underwriting Requirements for the Louisiana Executor Bond?

Most surety companies will examine the following factors when determining eligibility for the Louisiana Executor bond:

• Fiduciary’s credit history (not considered for bonds with limits less than $25,000)
• Whether or not the estate has an attorney (not considered for bonds with limits less than $25,000)
• How long the fiduciary appointment is for
• Whether or not the executor/administrator is replacing a prior fiduciary
• If the fiduciary has ever committed a felony
• If there are disputes among the estate’s beneficiaries
• Whether or not there is any ongoing business in the estate
• If the bond is being required by a creditor

How Much Does the Louisiana Executor Bond Cost?

Surety companies typically determine the premium rate for executor bonds based on a tiered structure. As a result, larger bond amounts will be charged a lower premium rate than smaller bonds.

The following table illustrates the pricing structure for the Louisiana Executor bond:

$1,500,000 Executor Bond Cost

Who is Required to Purchase the Louisiana Executor Bond?

Louisiana requires some executors and most administrators to purchase a surety bond as a prerequisite to obtaining a fiduciary appointment. An executor is a person nominated in the deceased individual’s will to administer their estate. Likewise, an administrator is responsible for administering the estate of a deceased individual who either did not nominate them in their will or died without one.

Executors are only required to purchase a bond in the following situations:

• If the will explicitly requires one
• If a forced heir or the surviving spouse with community petitions the court to require one
• If a creditor of the estate petitions the court to require one

Administrators are not required to purchase a bond if the estate is subject to independent administration unless the will explicitly requires a bond or an interested person petitions the court to require one.

How do Executors and Administrators Become Appointed in Louisiana?

Executors and administrators in Louisiana must navigate several steps to become court-appointed fiduciaries. Below are the general guidelines, but applicants should refer to the state’s probate code for details on the process.

Step 1 – Meet the Qualifications

Executors and administrators are ineligible for appointment if they are:

• • Under 18 years of age
  • Deemed mentally incompetent
  • A convicted felon
  • Not a resident of Louisiana and have not appointed a resident agent for the service of process
  • A corporation that has not been authorized to act as an executor or administrator
  • Deemed to have bad moral character

Step 2 – Determine Priority

Persons nominated in the will have priority to serve as the executor of the estate. If no person was nominated by the deceased individual, or if the nominated person is ineligible or unwilling to serve, then priority shall be granted in the following order:

• • The most qualified among the:
    • Surviving spouse
    • Competent heirs, legatees, or their legal representatives
  • The most qualified among the nominees of the surviving spouse, competent heirs, or their legal representatives
  • The most qualified among the creditors of the estate or a co-owner of immovable property with the deceased individual

Step 3 – Hire an Attorney

Although not explicitly required, it is highly recommended that executors and administrators hire an attorney to assist with the probate process.

Step 4 – Determine the Succession Type

Louisiana has four distinct succession (probate) types, as outlined below:

• • Small Succession: Available for estates worth less than $125,000, and the court costs are half of those for other succession types. Certain small estates without creditors do not need to be administered and can instead be distributed by filing an affidavit the relevant court.
  • Regular Succession: The executor or administrator must obtain approval from the court before distributing or selling the estate’s property. This process is required for estates that are ineligible for independent succession.
  • Independent Succession: After their appointment, the executor or administrator does not need the court’s permission to distribute or sell the estate’s property. Estates are eligible for independent succession if the deceased individual named an independent executor in their will or if all heirs or legatees consent to the appointment of an independent executor or administrator
  • Succession without Administration: No executor or administrator needs to be appointed and the estate’s assets may be distributed by the court if all heirs are competent and petition the court to do so. The estate must be relatively free from debt to qualify for succession without administration.

Step 5 – Contact the Court

Executors and administrators must contact the district court with jurisdiction over the deceased individual’s estate. A representative of the court will walk the executor/administrator through the appointment process, provide them with all required forms, and answer any questions they may have.

Step 6 – Purchase a Surety Bond

Unless otherwise exempt, executors and administrators must purchase and maintain a surety bond (limits outlined above).

How do Louisiana Executors and Administrators File Their Bonds?

Executors and administrators should submit their completed bond forms, including the power of attorney, to the district court of the parish where the deceased individual resided or had property.

The surety bond requires signatures from the company that issues the bond and the executor/administrator. The surety company should include the following information on the bond form:

• Court and parish where the bond is to be filed
• Legal name of the entity/individual(s) buying the bond
• Surety company’s name and state of incorporation
• Bond amount
• Date the bond is signed
• Date the fiduciary appointment was made

What can Louisiana Executors and Administrators do to Avoid Claims Made Against Their Bonds?

To avoid claims against their bonds, executors and administrators in Louisiana must ensure that they:

• Do not engage in any acts of fraud
• Do not mismanage the estate’s assets
• Fulfill their fiduciary duties