Maryland Guardian Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a Maryland Guardian 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: Most guardians appointed as fiduciaries over a person’s property in Maryland
• Purpose: To ensure the minor or disabled person receives compensation for financial harm if the guardian mishandles the estate’s property
• Who Regulates Guardian Bonds in Maryland: The circuit court of the county where the minor or disabled person resides or has property

Background

Maryland Statute 13-201 requires all guardians to be appointed by a court before assuming their fiduciary duties. The Maryland legislature enacted the appointment requirement to ensure guardians act in the minor or disabled person’s best interests when managing their estate. To provide financial security for the enforcement of this requirement, most guardians with decision-making authority over a minor or disabled person’s estate must purchase and maintain a probate surety bond before becoming appointed as a fiduciary.

What is the Purpose of the Maryland Guardian Bond?

Maryland requires most guardians to purchase a surety bond as a prerequisite to being appointed as a fiduciary over an estate. The bond ensures that the estate will receive compensation for financial harm if the guardian fails to abide by the regulations outlined in Maryland Statute 13-208. Specifically, the bond protects the minor or disabled person if the guardian fails to adhere to all court orders or mismanages the estate’s assets.

For example, if a guardian uses money from a minor’s bank account to pay for unauthorized expenses or mixes the estate’s funds with their own, the minor can file a claim against the guardian’s bond to recoup their losses. In short, the bond is a type of insurance that protects the ward if the guardian does not fulfill their fiduciary duties.

How Can an Insurance Agent Obtain a Maryland Guardian Bond?

BondExchange makes obtaining a Maryland Guardian bond easy. Simply log-in to your account and use our keyword search to find the “Guardian” 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?

Maryland Statute 13-208 dictates that the bond amount must be no greater than the aggregate value of the estate’s property under the guardian’s control minus the value of any assets deposited that cannot be withdrawn without a court order and the value of any land that the guardian can not sell without authorization from the court.

Guardians 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.

What are the Underwriting Requirements for the Maryland Guardian Bond?

Most surety companies will examine the following factors when determining eligibility for the Maryland Guardian bond:

• Guardian’s credit history
• Whether or not the estate has an attorney
• Whether or not the guardian is a family member
• The guardian’s occupation
• Whether or not the guardian is replacing a prior fiduciary
• If the guardian 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 Maryland Guardian Bond Cost?

Surety companies typically determine the premium rate for Guardian bonds based on a tiered structure, so larger bond amounts will be charged a lower premium rate than smaller bonds. Maryland Court Rule 10-702 allows for the guardian to pay the cost of the bond with the income of the estate.

The following table illustrates the pricing structure for the Maryland Guardian bond:

$1,500,000 Guardian Bond Cost

Who is Required to Purchase the Bond?

Maryland requires most guardians with decision-making authority over an estate to purchase a surety bond as a prerequisite to becoming a court-appointed fiduciary. To paraphrase Maryland Statute 13-101, a “guardian” is an individual or organization appointed as a fiduciary to manage and make decisions for a person’s care and/or property. Likewise, a “minor” is a person under the age of 18, and a “disabled person” is an adult who has been judged by a court to be unable to manage their property or meet daily needs concerning their health and safety.

There are different kinds of guardianships available in Maryland as outlined below:

• Guardian of the Person: A guardian authorized to take custody of and provide care for a minor or disabled person. Generally, a guardian of the person makes decisions about a person’s medical care, housing, food, clothing, and other subjects that affect the person.
• Guardian of the Property: A guardian with legal control over the finances and property of a minor or disabled person. A guardian of the property typically makes decisions about a person’s assets, investments, real estate, and other financial matters.

Guardians are not required to purchase a surety bond, unless explicitly required by the court, in the following situations:

• The guardianship is only for the person, not the property
• If the guardian is a corporation
• A person with the power to nominate a guardian in a will or other similar writing waives the bond requirement
• If the estate only consists of less than $10,000 in cash and the guardian deposits the cash in a restricted account

How do Maryland Guardians Become Appointed as Fiduciaries?

Guardians in Maryland must navigate several steps to become appointed as fiduciaries. Below are the general guidelines for guardianships over a person’s property, but appointees should refer to the appointment statutes or the Maryland Court’s website for details on the process.

Guardians of a Disabled Adult

Step 1 – Hire an Attorney

Although not explicitly required, it is highly recommended that guardians hire an attorney to assist with the guardianship process.

Step 2 – Determine Priority

Priority to serve as a guardian is granted in the following order:

• • Persons already appointed as a fiduciary over the person in this state or another
  • An individual or corporation nominated by the adult if they have the sufficient mental capacity to make an intelligent choice
  • The spouse of the adult or their nominee
  • The parent of the adult or their nominee
  • A person or corporation nominated by the will of a deceased parent
  • The children of the adult or their nominee
  • A person or corporation nominated by an entity caring for the adult
  • A person or corporation nominated by a government agency paying benefits for the adult
  • Any other person considered appropriate by the court

The court will appoint the guardian best suited for the adult and may choose to appoint a person with lower priority or without priority. Individuals are not qualified to be appointed as a guardian if they have been convicted of a felony, violent crime, or crime involving dishonesty.

Step 3 – File a Petition for Appointment

Persons seeking guardianship over a disabled person must file a petition for appointment with the circuit court in the county where the adult resides or owns property. Any person interested in the estate can file a petition, including the following:

• • The guardian of the person
  • The heirs of the individual with a disability
  • Any governmental agency paying benefits to the person
  • Any person or agency eligible to serve as guardian of the property.

Petitioners can obtain the necessary forms online here or from the court, and must also pay a filing fee determined by the court. Instructions for completing the form can be found here.

Step 4 – Notify the Appropriate Parties

After submitting the required items to the court, petitioners must notify the alleged disabled person, their attorney, and all interested persons listed in the petition. Each person to be served must receive the following items:

• • A copy of the petition
  • Any papers filed with the court
  • The show cause order issued by the court.

Instructions for serving notice can be found here. After successfully giving notice to all required parties, petitioners must file a proof of service form with the court.

Step 5 – Attend a Hearing

Guardians must attend a hearing conducted by the court and present evidence as to why the disabled adult is in need of guardianship. The court will examine the evidence presented by the guardian as well as that presented by the adult being evaluated (if any) and make a determination as to whether or not guardianship 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 guardianship to the petitioner.

Step 6 – Purchase a Surety Bond

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

Guardians of a Minor

Step 1 – Hire an Attorney

Although not explicitly required, it is highly recommended that guardians hire an attorney to assist with the guardianship process.

Step 2 – Determine Priority

Priority to serve as a guardian is granted in the following order:

• • Persons already appointed as a fiduciary over the person in this state or another
  • An individual or corporation nominated by the minor if they have sufficient mental capacity to make an intelligent choice
  • The spouse of the minor or their nominee
  • The parent of the minor or their nominee
  • A person or corporation nominated by the will of a deceased parent
  • The children of the minor or their nominee
  • A person or corporation nominated by an entity caring for the minor
  • A person or corporation nominated by a government agency paying benefits for the minor
  • Any other person considered appropriate by the court

The court will appoint the guardian best suited for the minor and may choose to appoint a person with lower priority or without priority. Individuals are not qualified to be appointed as a guardian if they have been convicted of a felony, violent crime, or crime involving dishonesty.

Step 3 – File a Petition for Appointment

Persons seeking guardianship over a minor must file a petition for appointment with the circuit court in the county where the minor resides or owns property. Only interested persons can file a petition for guardianship of a minor’s estate, and this includes the following parties

• • The minor or their parents, spouses, or other adult relatives
  • Persons with responsibility for the minor
  • A guardian, fiduciary, or healthcare agent for the minor
  • Government agencies paying benefits to the minor
  • Any person with interest in the minor’s estate
  • Any other person deemed appropriate by the court

Petitioners can obtain the necessary forms online here or from the court, and must also pay a filing fee determined by the court. Instructions for completing the form can be found here.

Step 4 – Notify the Appropriate Parties

After submitting the required items to the court, petitioners must notify the minor, parents and/or guardians, any person with care and custody of the minor, the minor’s attorney, and all interested persons listed in the petition. Each person to be served must receive the following items:

• • A copy of the petition
  • Any papers filed with the court
  • The show cause order issued by the court.

Instructions for serving notice can be found here. After successfully giving notice to all required parties, petitioners must file a proof of service form with the court.

Step 5 – Attend a Hearing

Guardians must attend a hearing conducted by the court and present evidence as to why the minor is in need of guardianship. The court will examine the evidence presented by the guardian as well as that presented by the minor being evaluated (if any) and make a determination as to whether or not guardianship 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 determine the type of guardianship necessary and issue a letter of guardianship to the petitioner.

Step 6 – Purchase a Surety Bond

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

How do Maryland Guardians File Their Bonds?

Guardians should file their completed bond forms, including the power of attorney, to the clerk of the circuit court of the county where the minor or disabled person resides.

The surety bond requires signatures from the surety company that issues the bond, the applicant, and the judge presiding over the case. The surety company should include the following information on the bond form:

• Legal name and address of the entity/individual(s) buying the bond
• Legal name of the ward
• Surety company’s name
• Date the bond is signed
• Bond amount
• Case number

What can Maryland Guardians do to Avoid Claims Made Against Their Bonds?

To avoid claims against their bonds, guardians in Maryland must ensure that they:

• Perform all of their fiduciary duties
• Obey all court orders
• Do not mismanage the estate’s property
• Obtain court approval before using any of the estate’s funds