By Simon Barber, Technical Manager at Title Research
Our Scottish clients will be familiar with Bonds of Caution – a uniquely Scottish procedure. Whilst not missing beneficiary insurance, these Bonds are an insurance policy that protects the beneficiaries of an estate from an Executor failing to distribute that estate according to the law. A Bond is required for all estates where an Executor has not been appointed via a Will, unless the entire estate is being inherited by a spouse or civil partner, or the estate is less than £36,000. This therefore includes all intestacies. As you might expect, the cost of the Bond varies depending on the estate value – our provider reports average Bond fees of around £400.
What are Bonds of Caution and when are they required?
Over the years there have been discussions and rumours that the requirement to obtain a Bond will be removed, and the Scottish Parliament does have powers available to them to do this – but they have not yet used them. So currently, the Court does not have the power to waive the requirement for an Executor to obtain Caution for an estate above the small estates limit. A recent case demonstrated this when Sheriff John McCormick at Glasgow gave his decision in an application by a son of an intestate Deceased, who sought to be confirmed as Executor Dative on the estate of his late father. The estate was valued after liabilities at around £32,000. The only beneficiaries were the applicant and his sister.
The proposed Executor had written to the Court asking the Sheriff "to exercise his/her discretion to confirm myself... without having a 'Bond of Caution'", urging the Court to be mindful of the Scottish Government’s intention to abolish the need for a Bond of Caution and to take into account :
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The modest estate value
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The likelihood that the estate would be properly administered
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The unlikelihood of creditors and beneficiaries of the estate requiring to be indemnified against loss caused by his acts
Recent legal developments and limitations on waiving Bonds
Despite the Executor’s belief that the Court had a discretion, the Sheriff said it had been accepted since an unreported 1874 decision referred to in Currie on Confirmation that the Court had no discretion to waive Caution. While ministers do have the power to prescribe cases where confirmation would not be required, or to end the requirement to find Caution, it conferred no power of waiver on the Court. Furthermore, while the Court could reduce the amount for which Caution was sought, it could not reduce it to nil.
Therefore, the requirement remains in place. Fortunately, the market for these Bonds has opened up in recent years and there are now more providers, which has impacted the efficiency of the procurement process. It is now possible to obtain the quotation online, with the Bond being incepted as soon as the signed documents are received by the Cautioner. The requirement for wet signatures is now the sole time-limiting factor.
How Title Research supports Executors with Bonds and genealogical services
Of course, once the Bond is in place, the Executor will need to undertake genealogical research to verify the family tree and ensure that all entitled heirs are included. Completing this exercise will enable missing beneficiary indemnity insurance to be obtained, which is an additional product to the Bond, protecting the Executor from any potential future liability.
Title Research are experts in genealogical research, and can refer clients to our Bond of Caution partner who can provide the Bonds as quickly as 48 hours from application. Unlike some genealogy firms, we are also regulated by the FCA so can provide a full mediation service to help with missing beneficiary indemnity insurance.
If you’d like to find out more about how Title Research can help with Bond of Caution and genealogy research, call our Client Services Team on 0345 87 27 600 or email fill in the form below.
Topics: Intestacy, Estate administration, Executors
