Montana 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 Montana
- Purpose: To ensure the protected person receives compensation for financial harm if the conservator mismanages their estate
- Who Regulates Conservator Bonds in Montana: The district court with jurisdiction over where the protected person resides or has property
Background
Montana Code 72-5-409 requires all conservators to be appointed by a court before assuming their fiduciary duties. The Montana legislature enacted the appointment requirement to ensure 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 Montana Conservator Bond?
Montana requires most conservators to purchase a surety bond as a prerequisite to being appointed as a fiduciary over an 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 Montana Code 72-5-411 and 72-5-412. Specifically, the bond protects the individual 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 unauthorized 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 Montana Conservator Bond?
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How is the Bond Amount Determined?
Montana Code 72-5-411 dictates that the bond amount must equal the aggregate capital 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The bond amount may be reduced by the value of any assets deposited that cannot be withdrawn without a court order or any land that the conservator can not sell without authorization from the court. Conservators that do not wish to purchase a bond may request to submit another form of collateral instead, such as a pledge of securities or a mortgage of land.
Can the Bond Amount be Adjusted?
Yes, as Montana Code 72-5-413 allows for any person interested in the welfare of the protected person to petition the court to adjust the required bond amount or require an additional bond if they deem one necessary. The court will have the final say in making any changes to the required bond amount.
What are the Underwriting Requirements for the Montana Conservator Bond?
Most surety companies will examine the following factors when determining eligibility for the Montana 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 Montana 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.
The following table illustrates the pricing structure for the Montana 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?
Montana requires most conservators to purchase a surety bond as a prerequisite to becoming a court-appointed fiduciary. To paraphrase Montana Code 72-1-103 and 72-5-101, a “conservator” is an individual or organization appointed as a fiduciary to manage the estate of a protected person. Likewise, a “protected person” is a minor or incapacitated person for whom a conservator has been appointed. Additionally, a “minor” is a person under the age of 18, and an “incapacitated person” is an adult who has been judged by a court to be unable to manage their property or take care of themselves.
The court has the sole authority to waive the surety bond requirement for conservators and will determine if a bond is necessary on a case-by-case basis.
How do Montana Conservators Become Appointed as Fiduciaries?
Conservators in Montana must navigate several steps to become appointed as fiduciaries. Below are the general guidelines, but appointees should refer to the appointment statutes or the Montana Judicial Branch’s website 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:
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- Persons already appointed as a fiduciary over the individual in this state or another
- A person or corporation nominated by the individual if they have the sufficient mental capacity
- The spouse of the individual or their nominee
- The adult child of the individual or their nominee
- A parent of the individual or their nominee
- A relative of the protected person who has resided with him or her for at least 6 months before the petition is filed
- A person or corporation nominated by an entity caring for or paying benefits to the individual
- A conservator corporation organized under Title 35, Chapter 2
- The public administrator
The court will appoint the conservator best suited for the individual and may choose to appoint a person with lower priority or without priority.
Step 3 – File a Petition for Appointment
Persons seeking conservatorship over a minor or incapacitated adult must file a petition for appointment with the district court with jurisdiction over where the minor/adult resides or owns property. Petitioners can obtain the necessary forms online here or from the court, and must ensure they include the following information:
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- Personal information of the proposed protected person
- Personal information about the person seeking the appointment
- General statement and evaluation of the individual’s condition and estate
- The reasoning for why a conservatorship is necessary
- Any additional information requested by the court
The person to be protected, the parents or guardian of the person, or any other person interested in the individual’s estate, affairs, or welfare may petition the court to begin protective proceedings over a minor or incapacitated adult. The court may appoint a medical professional to evaluate the incapacitated adult’s alleged disability and provide a report which will be used as evidence in the hearing (more on this in Step 4).
Step 4 – Attend a Hearing
Conservators must attend a hearing conducted by the court and present evidence as to why the minor or incapacitated adult is in need of conservatorship. The court will examine the evidence presented by the conservator as well as that presented by the individual 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 5 – Purchase a Surety Bond
Unless otherwise exempt, conservators must purchase and maintain a surety bond (limits outlined above).
How do Montana Conservators File Their Bonds?
Conservators should file their completed bond forms, including the power of attorney, to the clerk of the probate court of the county where the protected person resides or owns property.
The surety bond requires signatures from the surety company that issues the bond, the applicant, and a notary public. The surety company should include the following information on the bond form:
- Legal name of the entity/individual(s) buying the bond
- Legal name and county of the protected person
- Surety company’s legal name
- Type of fiduciary relationship
- Bond amount
- Date the bond is signed and goes into effect
- The judicial district where the proceedings are being held
What can Montana Conservators do to Avoid Claims Made Against Their Bonds?
To avoid claims against their bonds, conservators in Montana must ensure that they:
- Perform all of their fiduciary duties
- Obey all court orders
- Do not mismanage the estate’s assets
