Iowa Personal Representative 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 personal representatives handling the estates of deceased Iowa residents or property owners
- Purpose: To ensure estate beneficiaries and creditors receive compensation if the personal representative mishandles the estate’s assets
- Who Regulates Personal Representatives in Iowa: The district court of the county where the deceased individual resided or had property
Background
Iowa Statute 633.168 requires all personal representatives of an estate to be appointed by a court and swear an oath before assuming their fiduciary duties. The Iowa legislature enacted the appointment requirement to ensure that personal representatives do not mismanage the estate’s assets. To provide financial security for the enforcement of this requirement, the court may require the personal representative to purchase a probate surety bond to be eligible for appointment.
What is the Purpose of the Iowa Personal Representative Bond?
Iowa requires personal representatives 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 personal representative fails to abide by the regulations outlined in Iowa Statute 633.169. Specifically, the bond protects beneficiaries and creditors if the personal representative engages in 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 personal representative violates their fiduciary duties.
How Can an Insurance Agent Obtain an Iowa Personal Representative Surety Bond?
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How is the Bond Amount Determined?
Iowa Statute 633.170 dictates that the clerk of the district court must set the bond in an amount equal to the value of the estate’s personal property plus the estimated gross annual income the estate will generate while being administered by the personal representative. The bond amount may be reduced by the value of all personal property deposited with an Iowa financial institution.
What are the Underwriting Requirements for the Iowa Personal Representative Bond?
Most surety companies will examine the following factors when determining eligibility for the Iowa Personal Representative bond:
- Personal representative’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 personal representative is replacing a prior fiduciary
- If the personal representative 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 Iowa Personal Representative Bond Cost?
Surety companies typically determine the premium rate for personal representative 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 Iowa Personal Representative bond:
$1,500,000 Personal Representative 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 Iowa Personal Representative Bond?
Iowa requires personal representatives to purchase a surety bond as a prerequisite to obtaining a fiduciary appointment. To paraphrase Iowa Statute 633.3, a personal representative is a court-appointed fiduciary responsible for administering a deceased individual’s estate. Personal representatives are referred to as executors if the deceased individual nominated them in their will (testate), or administrators if they were not nominated if no will exists (intestate).
Personal representatives are not required to purchase a bond if:
- The will explicitly waives the bond requirement
- They are a bank or trust company
- All estate beneficiaries agree to waive the bond requirement and the interests of creditors are not violated
- The court determines that the bond is unnecessary to protect the interests of estate beneficiaries and creditors
However, the court has the authority to require an otherwise exempt personal representative to purchase a bond at any point in the administration process.
How do Personal Representatives Become Appointed in Iowa?
Personal representatives in Iowa must navigate several steps to become court-appointed fiduciaries. Below are the general guidelines, but applicants should refer to Iowa’s probate statutes for details on the process.
Step 1 – Meet the Qualifications
Personal representatives are ineligible for appointment if they are:
-
- They are under the age of 18
- They are deemed incompetent
- The court deems them to be unsuitable
Step 2 – Determine Priority
Priority to serve as a personal representative is granted in the following order:
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- Persons nominated in the will
- Surviving spouse
- Any heir
- Any creditor
- Any other interested person
Step 3 – Hire an Attorney
Although not explicitly required, it is highly recommended that personal representatives hire an attorney to assist with the probate process.
Step 4 – Contact the Court
Personal representatives must contact the district court of the county with jurisdiction over the deceased individual’s estate. A representative of the court will walk the personal representative through the appointment process, provide them with all required forms, and answer any questions they may have.
Estates worth $50,000 or less that do not contain real property (or all real property passes to persons exempt from the inheritance tax) may be administered by an affidavit, provided the deceased individual has been dead for at least 40 days.
Step 5 – Purchase a Surety Bond
Unless otherwise exempt, personal representatives must purchase and maintain a surety bond (limits outlined above).
How do Iowa Personal Representatives File Their Bonds?
Personal representatives should submit their completed bond forms, including the power of attorney, to the circuit court with jurisdiction over the estate.
The surety bond requires signatures from the company that issues the bond and the personal representative. The surety company should include the following information on the bond form:
- Court 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 personal representative was appointed
What can Iowa Personal Representatives do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, personal representatives in Iowa must ensure that they:
- Do not engage in any acts of fraud
- Do not mismanage the estate’s assets
- Fulfill their fiduciary duties
