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What is a Court Bond?
Generally speaking, court bonds, also known as Judicial Bonds, protect against a loss to the court or opposition. By definition, court bond refers to any court ordered bond. There are many types of bonds with different underwriting criteria.
Types of Court Bonds
- Appeal Bond
- Injunction Bond
- Custodial / Guardianship Bond
- Probate / Executor Bond
When a court makes a financial judgment and an appeal has been made, the court will order an appeal bond to be in place to protect the original financial judgment. This is for two reasons. One to guarantee the awarded party payment if the appeal is lost, and two is to hopefully stop time wasting appeals.
An Injunction is a good example of a plaintiff bond. This is where the court stops another from continuing an action in question.
Custodial / Guardianship Bond
These bonds are required of the appointed guardian of assets benefiting an incapable person or entity. Often times you will see this when a minor’s parents have passed and assets have been left to the minor. The bond guarantees that the responsible party (new guardian or responsible adult / facilitator of the assets) will manage those assets in the minor’s best interest until an adult. These bonds can also be used for any incapable situation. The physically or mentally incapable, elderly or other reason for a court to deem someone incapable of correctly managing their own assets is a few examples.
Probate / Executor Bond
Probate bonds are required by the person who has been given the responsibility to distribute assets of one’s estate. There is an assumed fiduciary responsibility by the executor and this bond is to protect the estates assets from misuse.