Court bonds can be simply defined as the surety bonds used by an individual when they want to pursue an action with the help of a court of law. There are many kinds of court bonds which serve different purposes. Generally, the court bonds can be divided into two categories
- Judicial Bonds
- Probate or Fiduciary Bonds
The main difference between Judicial Bonds and Fiduciary bonds is that the Judiciary Bonds are related to finance whereas the Fiduciary Bonds are related to the faithful performance of an individual.
The Judicial Bonds are used in civil court’s proceedings. It is to make sure that the court bears the financial responsibilities for the losses caused by court’s decision. That means if the court makes any decision that causes property or financial loss for an individual, then the court must bear the losses. They can further be divided into two types
These Fiduciary Bonds can also be called as probate bonds and the names can be used interchangeably. Court and Fiduciary Bonds are used when the courts decide to appoint a person as an in charge for another person or their assets. It can also be treated as insurance protection which ensures that the fiduciary (the person who is in charge) carries out his duties faithfully.
These bonds help the court to keep the fiduciary away from committing any kind of embezzlement or fraud. It is a legal tool that protects the beneficiaries, heirs, and creditors against an unfaithful fiduciary. A fiduciary can also be termed as trustee, guardian, administrator and many more.
The fiduciary must be loyal to the person and must fulfill all the obligations genuinely by protecting and guarding the property of another person. If any fraudulent activity is committed by the fiduciary then they are ought to pay a huge amount of penalty to the court. The penalty will be decided based on the requirements and is mentioned in the court and fiduciary bond beforehand. These fiduciaries are used when there is a need to take care of the property of a minor or an incompetent person and there are many other cases too but they are mostly used in these two situations.
There are many situations where the people who were appointed as in charge to take care of a particular property commit embezzlement causing a huge loss to the owners. To avoid such cases courts have introduced these fiduciary bonds which make sure that the fiduciary works for the specific person and their property loyally.