Hawaii Conservator Bond: A Comprehensive Guide
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: Most conservators appointed as fiduciaries in Hawaii
- Purpose: To ensure the protected person receives compensation for financial harm if the conservator mishandles their estate
- Who Regulates Conservator Bonds in Hawaii: The circuit court with jurisdiction over where the protected person resides
Background
Hawaii Statute 560:5-401 requires all conservators to be appointed by a court before assuming their fiduciary duties. The Hawaii legislature enacted the appointment requirement to ensure that conservators act in the protected person’s best interests when managing their estate. To provide financial security for the enforcement of this requirement, most conservators must purchase and maintain a probate surety bond before becoming appointed as a fiduciary.
What is the Purpose of the Hawaii Conservator Bond?
Hawaii requires most conservators to purchase a surety bond as a prerequisite to being appointed as a fiduciary over a protected person’s estate. The bond ensures that the protected person will receive compensation for financial harm if the conservator fails to abide by the regulations outlined in Hawaii Statute 560:5-415. Specifically, the bond protects the protected person if the conservator fails to adhere to all court orders or mismanages the estate’s assets.
For example, if a conservator uses money from the protected person’s bank account to pay for the conservator’s personal expenses or mixes the estate’s funds with their own, the protected person can file a claim against the conservator’s bond to recoup their losses. In short, the bond is a type of insurance in favor of the protected person if the conservator does not fulfill their fiduciary duties.
How Can an Insurance Agent Obtain a Hawaii Conservator Bond?
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How is the Bond Amount Determined?
Hawaii Statute 560:5-415 dictates that the bond amount must equal the aggregate value of the estate’s property under the conservator’s control plus the estimated income to be generated by the estate over the next year.
The bond amount may be reduced by the value of any assets deposited that cannot be withdrawn without a court order or any land that the conservator can not sell without authorization from the court. Fiduciaries that do not wish to purchase a bond may request to submit a form of collateral instead, such as a pledge of securities or a mortgage of land.
Can the Bond Amount be Adjusted?
Yes, as Hawaii Probate Rule 107 dictates that the court may adjust the required bond amount if there is a significant change to the value of the estate under the conservator’s control. The court may consider reducing the required bond amount if the majority of the estate in the conservator’s control is deposited in a federally-insured financial institution. Hawaii Statute 560:5-414 allows for any interested person to petition the court to adjust the bond amount.
What are the Underwriting Requirements for the Hawaii Conservator Bond?
Most surety companies will examine the following factors when determining eligibility for the Hawaii Conservator bond:
- Conservator’s credit history
- Whether or not the estate has an attorney
- Whether or not the conservator is a family member
- The conservator’s occupation
- Whether or not the conservator is replacing a prior fiduciary
- If the conservator has ever committed a felony
- Whether or not there is any ongoing business in the estate
- If a creditor is requiring the bond
- If the bond amount is greater than or equal to the estate’s value
How Much Does the Hawaii Conservator Bond Cost?
Surety companies typically determine the premium rate for Conservator bonds based on a tiered structure, so larger bond amounts will be charged a lower premium rate than smaller bonds. Additionally, Hawaii Statute 560:5-415 allows for the protected person’s estate to pay for the cost of the bond.
The following table illustrates the pricing structure for the Hawaii Conservator bond:
$1,500,000 Conservator Bond Cost
| Bond Amount | Premium Rate | Total Bond Cost |
|---|---|---|
| First $20,000 | 0.75% | $150 |
| Next $40,000 | 0.60% | $240 |
| Next $140,000 | 0.50% | $700 |
| Next $300,000 | 0.375% | $1,125 |
| Next $1,000,000 | 0.25% | $2,500 |
| Total cost of $4,715 |
Who is Required to Purchase the Bond?
Hawaii requires most conservators to purchase a surety bond as a prerequisite to becoming a court-appointed fiduciary. To paraphrase Hawaii Statute 560:5-102, a conservator is a person who is appointed as a fiduciary to manage a protected person’s estate. Likewise, a “protected person” is defined as a minor or adult for whom a conservator has been appointed that is deemed incapable of managing their estate.
Hawaii Probate Rule 107b grants the circuit court the authority to waive the bond requirement, at their discretion, if the majority of the estate in the conservator’s control is deposited in a federally-insured financial institution.
How do Hawaii Conservators Become Appointed as Fiduciaries?
Conservators in Hawaii must navigate several steps to become appointed as fiduciaries. Below are the general guidelines, but appointees should refer to the appointment statutes or the state’s probate rules for details on the process.
Step 1 – Hire an Attorney
Although not explicitly required, it is highly recommended that conservators hire an attorney to assist with the conservatorship process.
Step 2 – Determine Priority
Priority to serve as a conservator is granted in the following order:
-
- Persons already appointed as a fiduciary over the protected person in another jurisdiction
- An individual or corporation nominated by the protected person if the protected person is at least 14 years of age
- An individual nominated by the protected person under a durable power of attorney
- The spouse of the protected person
- The adult child of the protected person
- The parent of the protected person
- An adult who has resided with the protected person for at least six months before the filing of the petition
Step 3 – File a Petition for Appointment
Persons seeking a conservatorship over a protected person must file a petition for appointment with the circuit court with jurisdiction over where the protected person resides. Conservators can obtain the necessary forms online here or from the circuit court, and must include the following information:
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- Personal information of the minor and their relatives
- Personal information about the person seeking conservatorship
- General statement and evaluation of the person’s estate and property
- The reason for the petition for appointment
- A proposed itemized budget for the estate
Conservators must pay a $100 filing fee to begin the appointment process. For conservatorships over an incapacitated adult only, the court will appoint a kokua kanawai to interview the protected person and the conservator. The kokua kanawai will help determine if a conservatorship is appropriate and will submit a report of their findings to the court which will be used in the hearing (more on this in Step 5).
Step 4 – Notify the Appropriate Parties
After submitting the required items to the court, persons seeking conservatorship must have another adult, known as a server, notify all of the interested parties involved in the case. The notice must be served personally, but if the protected person’s whereabouts are unknown, the notice can be served via mail.
Step 5 – Attend a Hearing
Conservators must attend a hearing conducted by the circuit court and present evidence as to why the protected person is in need of conservatorship. The court will examine the evidence presented by the conservator as well as that presented by the protected person being evaluated (if any) and make a determination as to whether or not conservatorship is necessary.
Any interested person can apply to the court to participate in the hearing. If the court finds a basis for the appointment, it will issue a letter of conservatorship to the petitioner.
Step 6 – Purchase a Surety Bond
Unless otherwise exempt, conservators must purchase and maintain a surety bond (limits outlined above).
How do Hawaii Conservators File Their Bonds?
Conservators should submit their completed bond forms, including the power of attorney, to the circuit court with jurisdiction over where the protected person resides.
The surety bond requires signatures from the company that issues the bond and the conservator. The surety company should include the following information on the bond form:
- 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 of the appointment
- Type of fiduciary relationship
- Name and county of the circuit court
What can Hawaii Conservators do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, conservators in Hawaii must ensure that they:
- Perform all of their fiduciary duties
- Obey all court orders
- Do not mismanage the estate’s assets
