Illinois Probate Act 755 ILCS 5/12-9: Additional Bond for Proceeds of Sale or Mortgage
When someone passes away, the estate administrator or executor is the person appointed by the Illinois Probate Court to manage the estate of a deceased person and distribute his or her assets according to the laws of Illinois. Before a person who wishes to serve as estate administrator can do so, he or she must petition the court and the court must approve the appointment. When the court appoints an administrator the court will issue that person a document called “Letters” as legal proof of authority to manage the decedent’s estate. However, the court will only issue Letters after confirming that the petitioner is qualified and meets all of the procedural requirements. If you are involved in the administration of a decedent’s estate and have questions or concerns about the requirements of Illinois Probate Act, section 12-9- Additional bond for proceeds of sale or mortgage, contact an experienced Chicago estate administration lawyer at the Law Offices of Stephen Bilkis & Associates.Bond Requirement
A bond is a type of insurance policy that protects estates, beneficiaries, and heirs from financial loss due to the actions of the administrator. Generally, unless the estate is small, bond will be required. The exceptions to this rule are in cases where the decedent’s waived the requirement in his or her will, or where there is a corporate representative. To understand why Illinois requires that administrators have a bond, you must first understand the responsibilities of an estate administrator.
An administrator, also referred to as a representative or executor, is responsible for completing the tasks necessary to settle estate and distribution assets as required by law. The first task is to identify the assets that are part of the estate and take control of them. This may mean accessing the money in the decedent’s bank account as well as the decedent’s investment accounts. The decedent will also be responsible for safeguarding the decedent’s property. This may mean making sure that a house is properly secured and insured.
Once the administrator has taken control of estate assets and secured them, the administrator is responsible for paying estate debt. The administrator is required to pay all valid claims against the estate that have been timely filed, to the extent that estate assets are sufficient to pay them. Finally, the last major responsibility of the administrator is distributing estate assets to the decedent’s beneficiaries or heirs.
As an experienced estate administration attorney in Chicago will explain, throughout the process there are many opportunities for the administrator to make mistakes or to commit misdeeds that could result in a financial loss to the estate. A financial loss to the estate would mean that creditors may not get paid or that beneficiaries or heirs might end up receiving fewer assets than they otherwise would have.Examples
Julie was appointed to serve as the administrator for her brother, Jason’s estate. His estate included significant investments in securities. Even though Julie had no experience managing investments, she decided to manage the decedent’s portfolio until the estate was closed. Unfortunately, Julie made some very bad decisions that an experienced investment professional would not have made. As a result, the value of Jason’s investment portfolio decreased significantly.
Isaac was named executor in his nephew’s will, and the Probate Court in downtown Chicago formally appointed him. During the administration process, various other family members complained to the Probate Court that valuable property had been taken from the decedent’s home. There was evidence that Isaac did not take any steps to secure the house and that during the extended administration period, no one was living at the house. In addition, Isaac let the home owner’s insurance lapse. As a result, the decedent’s estate suffered losses.
In both of these cases, the person responsible for administering the decedent’s estate violated his or her fiduciary duty and as a result the estate was damaged. As an experienced Chicago estate administration attorney can explain, in these types of situations, the Probate Court would likely hold the administrator personally liable for the losses suffered by the estate. This is where the bond would kick in, covering some or all of the losses that resulted from the negligence of the estate administrators.Additional Bond for Proceeds of Sale or Mortgage
The amount of bond required is based on the size of the estate and the type of surety. If the surety is an individual surety, the bond will be at least 2 times the value of the personal estate. If a surety company issues the bond, the bond will be at least 1.5 times the value of the personal estate.
However, under Illinois Probate Act, section 12-9- Additional bond for proceeds of sale or mortgage, if the representative plan sot sell or sell or mortgage real estate or any oil, gas, coal or other mineral interest the representative must file a bond and have it approved by the Probate Court. The amount of the bond must be at least double the value of the amount of revenue that the representative is likely to receive on behalf of the estate as proceeds from the sale or mortgage if individuals act as sureties and not less than 1 1/2 if a surety company acts as surety.Related Statutory Provisions
- Amount of bond: Illinois Probate Act, 755 ILCS 5/12-5
- Deposit in lieu or reduction of bond: Illinois Probate Act, 755 ILCS 5/12-7
- Joint or several bonds: Illinois Probate Act, 755 ILCS 5/12-8
- Further bond or security: Illinois Probate Act, 755 ILCS 5/12-10
(a) Except as provided in subsection (d), at or before the entry of an order authorizing a representative to sell or mortgage real estate or any interest therein or to sell any oil, gas, coal or other mineral interest and before a representative sells or mortgages real estate or any interest therein pursuant to a power in the will or pursuant to subsection (i) of Section 28-8, the representative shall file a bond and have it approved by the court.
(b) Where written additional bond is required, the bond shall identify the real estate or interest therein being sold or mortgaged.
(c) The bond shall be for an amount not less than double the value of the personal estate likely to come into the hands of the representative as proceeds of the sale or mortgage if individuals act as sureties and not less than 1 1/2 times that value if a surety company acts as surety; but in case of the sale of any oil, gas, coal or other mineral interest upon a royalty basis and not for a lump sum, and except as provided in subsection (d), the bond prescribed in this Section shall be for such an amount as the court directs.
(d) Where bond or security by the representative is excused by the will, the bond of the representative shall be increased without writing by double the value of the personal estate coming from time to time into the hands of the representative from the proceeds of such sale or mortgage, unless the court requires the filing of a written additional bond.Contact the Law Offices of Stephen Bilkis & Associates
Estate administration is the process of settling a decedent’s estate that is managed by a court appointed representative. Before a representative can move forward with his (or her) estate management duties, he must follow all of the procedural requirements, including the bond requirements of Illinois Probate Act, section 12-9- Additional bond for proceeds of sale or mortgage. If you have questions or concerns related to the appointment of a representative, talk to an experienced estate administration attorney serving Chicago. The attorneys at the Law Offices of Stephen Bilkis & Associates have over 20 years of experience representing clients in estate matters, including matters related to probate and administration. Contact an attorney in our office attorneys at 855-454-5529 to schedule a free, no obligation consultation regarding your case. We serve individuals throughout Chicago.