The Bond Requirement

In order to protect the interests of heirs, devisees and creditors against the possibility that the personal representative might mishandle the estate, A. R. S. § 14-3603 requires the Personal Representative to file a bond. However, because such risk is often minimal, the statutes also provide several exceptions to this bond requirement. In fact, the exceptions are such that the filing of a bond in an informal probate is relatively uncommon. In cases where a bond is required, the amount of the bond can be provided in the will (see A. R. S. § 14-3604(A)) or, if not, it will generally not be less than the amount of the Personal Representative’s estimate of the value of the estate (less encumbrances), together with the annual income expected to be earned by the estate (see  A. R. S. § 14-3604(A)). Several other factors, mentioned below, can also affect the bond amount.

Exceptions to the Bond Requirement

There are three exceptions to the bond requirement that often apply to an individual personal representative in an informal probate. In a testate probate, the bond requirement can be expressly waived in the will (see A. R. S. § 14-3603(A)(1)). Even if the will doesn’t expressly waive the bond requirement, this requirement can be waived by writings signed by all of the devisees (see A. R. S. § 14-3603(A)(2)). Similarly, in an intestate probate, the bond requirement can be waived by writings signed by all of the heirs (see A. R. S. § 14-3603(A)(2)).

Certain entities are exempt from the bond requirement when they serve as personal representative. These include most banks, savings and loans, title insurance companies, and certified trust companies (see A. R. S. § 14-3603(A)(3)).

The final exception to the bond requirement applies in the limited situation in which the estate is small enough to qualify for summary administrative procedures under A. R. S. § 14-3973 and the surviving spouse is either applying to serve as personal representative or is nominating someone to serve as personal representative.

Although there is generally no bond requirement under these exceptions, A. R. S. § 14-3603(A) provides that the court may still require a bond if an interested party petitions for a bond requirement, providing reasonable evidence that the interested party’s interest in the estate “in danger of being lost because of the administration of the estate.” Such a petition can even be filed by a party who earlier waived bond.

Reductions in the Bond Amount.

In cases where bond is required, the registrar may permit the amount of the bond to be reduced by the value of assets deposited in a restricted account with a domestic financial institution (see A. R. S. § 14-3604(A)). On petition by the personal representative or another interested party, the registrar may further reduce the bond amount, eliminate it altogether, or even increase it (see A. R. S. § 14-3604(A)).