Illinois Probate Act 755 ILCS 5/12-11: Counter Security - Release of Surety
Estate administration is the legal process of settling an estate. It typically involves inventorying the estate's assets, paying estate bills, and finally distributing estate's assets to the decedent’s beneficiaries and heirs. The process is managed by a representative appointed by the Illinois Probate Court. The representative can be an executor or an administrator. In addition to meeting the general qualifications for serving as a representative, the person must also meet the bond requirements before he or she will be permitted to proceed with activities related to estate administration. If you are involved in the administration process of a loved one’s estate and would like more information about the bond requirements, including the requirements of Illinois Probate Act, section 12-11- Counter security - release of surety, contact an experienced Chicago Probate Court lawyer at the Law Offices of Stephen Bilkis & Associates.Bond
A bond is an insurance policy purchased by representatives to protect estates, beneficiaries, and heirs from negligent or illegal acts by the representatives. To understand why Illinois and other jurisdictions require bonds, let’s examine what a representative of an estate does.
- Controls estate assets. One of the primary jobs of a representative is to take control of the assets of the administrator. The representative will have access to the money in the decedent’s bank account. He (or she) will also have the authority to open accounts in the name of the estate. In other words, the representative will have practically the same access and control of the decedent’s estate as the decedent did while alive. If the representative is negligent in the manner in which he or she manages the estate, or if the representative is decides to steal property from the estate, the estate’s finances may suffer irreparable harm. For example, after receiving letters of administration to manage the estate of a loved the one, the representative made very poor decisions related to managing the decedent’s investments. As a result, the decedent’s estate suffered significant losses.
- Pay estate bills. The representative must pay bills owed by the decedent at the time of his death, as well as bills accumulated by the estate during the administration process. Such bills may include utility and credit card bills owed by the decedent at the time of his death, fees associated with maintaining and securing estate assets during administration, and other bills associated with estate administration. For example, Henry was the estate administrator for his cousin’s estate. The estate included a house. When Henry took over the administration responsibilities, he failed to make sure that the house was adequately secured. He also failed to visit the house for months. Since the house was vacant for so long and did not have a security system, it was broken into and vandalized. To make things worse, Henry had let the home owner’s insurance lapse.
- Distribution of assets. The representative is responsible for distributing the assets of the estate. If the decedent had a will, the assets go to the beneficiaries named in the will. As an experienced Chicago Probate Court lawyer will explain, if the decedent did not have a will, the assets go to the decedent’s next of kin as defined by Illinois’ rules on intestate succession. There are rules related to when assets can be distributed, and rules related to complications such as when there is a missing heir or a lapsed gift. For example, Joe was the executor named in his mother’s will. Joe is an impatient man, and wanted to wrap up the process as quickly as possible. After doing quick calculations, he determined what was needed to pay estate bills. He did so, paid the bills, and distributed the estate assets according to the terms of the will. However, he then found out about another creditor who was owed an amount the equaled almost the entire value of the estate. Unfortunately, Joe had distributed all of the assets that were in the estate.
Because there are so many opportunities for the representative to make mistakes or engage in other activities that would diminish the value of the estate, the law requires the representative to take out a bond. If the representative does something that causes a loss to the estate, the surety company will cover the losses suffered by the beneficiaries, heirs, or creditors.Amount of Bond
There are statutory rules related to the amount of bond required that are based on the value of the personal property in the estate and the type of surety. A surety is the entity that guarantees that the principal will perform as agreed. A surety can be a person or company. Under Illinois law, if the surety is an individual, the amount of bond required will be more than if the surety is a company. As an experienced Probate Court lawyer in Chicago will explain, while the amount of the bond that the court requires is established before the representative begins administration, the judge can increase or decrease it based on circumstances that develop during the court of administration. For example, under Illinois Probate Act, section 12-11- Counter security - release of surety, if the court believes a representative to be insolvent or in doubtful circumstances, the court may require the representative to give counter security to his surety. In addition, if the surety or the representative wants to have the surety released from further liability on the bond, the representative must settle his (or her) accounts and to give a new bond. One reason that the surety may want to be released is if the representative fails to pay the premium.Related Statutory Provisions
- Notice to representative of action on bond - answer : Illinois Probate Act, 755 ILCS 5/12-12
- New or additional bond: Illinois Probate Act, 755 ILCS 5/12-13
- Bond on appeal: Illinois Probate Act, 755 ILCS 5/12-14
- Suit on bond: Illinois Probate Act, 755 ILCS 5/12-15
(a) If the court believes a representative to be insolvent or in doubtful circumstances, upon petition of the surety on his bond, the court may require the representative to give counter security to his surety.
(b) If a representative or the surety on his bond petitions the court to have the surety released from further liability on the bond, except for good cause shown the court shall require the representative within a reasonable time to be fixed by the court to settle his accounts and to give a new bond in such amount and security as may be approved by the court.
(c) Notice of hearing on the account shall be given as provided by this Act for the hearing on final accounts. Upon approval by the court of the account and of the new bond the surety on the old bond is discharged from all further liability.
(d) If a representative fails to pay the annual bond premium within 120 days of the date he has received notice from the surety company that the premium is due and owing, the surety company may elect to terminate its liability on the bond by notifying the representative and his attorney, if any, and all interested parties that liability on the bond shall cease 60 days after the date of said notice which shall be given by certified mail and a copy thereof shall be filed with the Court forthwith. If payment is not made within the required time, the terminating surety shall by motion notify the court of its election to terminate and shall give notice of such motion to the representative and all interested parties. The court shall then require the representative to give a new bond in such amount and with such security as it may require.Contact the Law Offices of Stephen Bilkis & Associates
The bond requirement is there to protect the estate from negligence or malfeasance on the part of the representative. There are many rules related to the amount of the bond, increasing and decreasing the bond, waiving bond, and surety, including the requirements of Illinois Probate Act, 12-11- Counter security - release of surety. If you have questions or concerns related to the bond requirement or any other requirements related to the appointment of an executor or administrator, it is important that you discuss your concerns with an experienced Probate Court lawyer serving Chicago. The attorneys at the Law Offices of Stephen Bilkis & Associates have over 2 decades of experience representing clients in estate matters, including matters related to representative and details of administration. Contact an attorney in our office at 855-454-5529 to schedule a free, no obligation consultation regarding your case. We serve individuals throughout Chicago.