What is a Surety Bond in Conservatorship?

Under Minnesota law, a conservator must be appointed by the court before they can assume their duties. These duties include acting in the best financial interests of the protected person while managing their estate. A surety bond is a type of bond that is required in most conservatorship cases to safeguard the financial security of the protected person — and protect them against any violations of the conservator’s fiduciary duties.

What is a Surety Bond?

A surety bond is a type of insurance that is usually required in cases where a conservator has been appointed to manage an estate that is worth more than $10,000. Unlike regular insurance, it is not purchased by the person who seeks to be protected — rather, it is purchased by the conservator. A surety bond is a written agreement between three parties — the principal, the obligee, and the surety. With this arrangement, a qualified surety company is liable for the performance of the conservator and protects the protected person from any misconduct or violation of fiduciary duty committed by them.

A surety bond can guarantee a conservator will carry out their duties in good faith. It can provide protection against a variety of fiduciary duty violations, including the following:

• Theft
• Embezzlement
• Fraud
• Mismanagement of funds
• Negligence

Under Minnesota law, the court has the authority to determine the amount of the surety bond. The amount of every bond is different, depending on the value of the protected person’s estate, the income the estate is anticipated to generate, and the conservator’s qualifications. The amount of the bond can be adjusted during the course of the conservatorship if determined appropriate by the court.

Who Can Obtain a Surety Bond?

Anyone who is concerned about the protected person can ask the court to set a bond. It is not the responsibility of the protected person to obtain one. The conservator must obtain and pay for the bond, using funds from the estate, before they commence their duties.

To determine eligibility for a surety bond, most surety companies will look at a number of factors. They may assess the conservator’s credit history and occupation, whether the conservator is a family member or replacing a prior fiduciary, and if they have ever been convicted of a felony. The surety company will also consider the conservator’s income and resources, ability to pay debts on time, bankruptcy history, and ability to fulfill their fiduciary duties.

What Duties Does a Conservator Have?

In order to have a full understanding of how a surety bond works, it’s essential to be aware of what a conservator does. A conservator is often a family member of the person in need of protection — or a professional organization can also be appointed. Not to be confused with a guardian, who cares for a legally incapacitated person’s daily needs and welfare, a conservator only handles the financial needs of the protected person. Their duties can include paying bills, entering into contracts, making prudent investments, handling business matters, filing tax returns, and applying for government benefits.

A conservator also has a number of responsibilities to the court that must be fulfilled. They are required to file an inventory report with the court within 60 days of their appointment and file an annual accounting of the protected person’s estate. In addition, they must sign the Annual Notice of Right to Petition to Restoration to Capacity and provide a copy to the protected person.

What are the Legal Remedies if a Conservator Breaches their Fiduciary Duty?

A claim may be made against a conservator if they breach their fiduciary duty and cause financial harm to the protected person or their estate. To avoid any claims against a bond, a conservator in Minnesota must ensure they adhere to all their fiduciary duties and obey all court orders. Any abuse of power, misuse of the protected person’s assets, or negligence by the conservator can give rise to a cause of action brought by the protected person or any interested person.

In the event the conservator mismanaged the funds in the estate, the court may determine that the bond should reimburse the estate for the loss — the bond company would then recover the funds from the conservator. In addition, at the time the financial report is filed, the protected person or an interested person can dispute the account statements or request any relief that is in the protected person’s best interests. The protected person or any interested person can also petition for the removal of a conservator at any time if they engaged in misconduct or failed to perform their fiduciary duties.

Contact an Experienced Minnesota Conservator Attorney

Guardianship and conservatorship attorney Dave Burns handles conservatorship matters in the Twin Cities Metro Area. To learn more about how I can help, I welcome you to contact me at (612) 677-8351 or by emailing dave@daveburnslaw.com.