Md. R. Guard. & Fid. 10-702

As amended through April 5, 2024

Rule 10-702 - Bond-Fiduciary Estate

(a) When Required or Excused.

(1)Required by Instrument. If the instrument nominating the fiduciary or creating the estate requires the fiduciary to give bond, the fiduciary, whether corporate or non-corporate, shall file a bond before commencing the performance of any fiduciary duties unless excused pursuant to subsection (5) of this section.

(2)Excused by Instrument. If the instrument nominating the fiduciary or creating the estate excuses a noncorporate fiduciary from furnishing bond, the court shall not require a bond unless the court finds that, notwithstanding the provisions of the instrument, exceptional circumstances make a bond necessary for the protection of interested persons.

(3)Corporate Fiduciary. Except as provided in subsection (1) of this section, a corporate fiduciary shall not be required to furnish a bond.

(4)Noncorporate Fiduciary--Bond Not Mentioned in Instrument--Court Appointment. The court may require a non-corporate fiduciary, appointed by the court or nominated under an instrument that is silent as to bond, to file a bond if the court finds that exceptional circumstances make a bond necessary for the protection of interested persons.

(5)Fiduciary Estate not Exceeding $10,000. Unless the court finds that exceptional circumstances make a bond necessary for the protection of interested persons, the court shall not require a fiduciary to furnish or continue in effect a bond if the assets of the estate (A) do not exceed $10,000 in value, (B) cannot be transferred by the fiduciary without approval of the court, and (C) consist only of cash deposited in a restricted account pursuant to Rule 10-705, securities, or real property.

(b) Factors for Court to Consider. In determining whether to require a guardian of the property to post a bond, where one is not required by law or the instrument creating the fiduciary estate, the court shall consider:

(1) the value, liquidity, annual gross income, and other receipts of the estate;

(2) whether a restricted account pursuant to Code, Estates and Trusts Article, § 13-209.1 and Rule 10-705 can be established;

(3) the extent to which the income or receipts are payable to a facility responsible for the minor's or disabled person's care and custody;

(4) the guardian's criminal history, if any;

(5) the potential burden on the estate;

(6) the guardian's credit history;

(7) evidence satisfactory to the court of financial responsibility; (8) if the guardian is an attorney, whether the guardian is a member in good standing of the Maryland Bar and is in compliance with Rule 19-605; and

(9) any impediments to obtaining a bond.

(c) Petition to Require or Change Amount of Bond.

(1)Who May File. Subject to the provisions of section (a), any interested person may file a petition to require the fiduciary to file a bond if a bond has not previously been filed or to reduce or increase any bond that has been filed.

(2)Where Filed. If a court has assumed jurisdiction over the estate, the petition shall be filed in that court. Otherwise, it shall be filed in the county in which the fiduciary resides, is regularly employed, or maintains a place of business.

(3)Notice. Unless the court orders otherwise, the fiduciary shall mail by first-class mail to all interested persons and all others exercising control of any of the fiduciary estate a copy of the petition and a show cause order issued pursuant to Rule 10-104.

(d) Where Bond to Be Filed.

(1)Required by Court. If a court requires a bond, the bond shall be filed in that court, unless the court directs otherwise.

(2)Required by Instrument. If a bond is required by the instrument that creates the fiduciary estate or nominates a fiduciary, the bond shall be filed in the following place:

(A) If the instrument specifies the county where the bond is to be filed, the bond shall be filed in the circuit court specified in the instrument;

(B) If the instrument does not specify a place or provide for a place to be selected, the bond shall be filed in the circuit court for the county where the instrument is recorded. If the instrument is not recorded, the bond shall be filed in the circuit court for the county where the estate will be administered.

(e) Amount of Bond--Other Security.

(1)Generally.

(A) The amount of a fiduciary bond shall be set based on the value of the property of the estate that is or will be under the fiduciary's control and that the fiduciary has or will have authority to expend, encumber, or convey without further order of the court.

Committee note: The intent of subsection (e)(1)(A) is that, ordinarily, property that cannot be spent, encumbered, or conveyed by the fiduciary without specific approval by the court not be considered in determining the amount of the bond. This would include funds deposited in a financial institution as defined in Code, Estates and Trusts Article, § 13-301(h) under arrangements requiring an order of court for their removal and real property that the fiduciary, by express limitation of power, lacks power to sell or convey without court authorization.

(B) In lieu of sureties on a bond, the court may accept other security for the performance of the bond, including a pledge of securities or a mortgage of real property.

(C) The court may at any time, subject to the maximum amount provided by this section, require the amount of the bond, or the type or value of security, to be changed. The approval of a new bond shall not discharge any liability that may have accrued under the existing bond before such approval.

(2)Specified by Instrument. If the instrument creating the estate requires that the fiduciary file a bond in a specific amount, the bond shall be in the lesser of that amount or the maximum amount provided in subsection (1).

(f) Terms of Bond. A fiduciary bond shall be to the State of Maryland and shall be conditioned upon the faithful discharge of the duties of the fiduciary as follows:

The condition of the above obligation is such, that if __________ shall well and truly perform the office of fiduciary as designated by the __________ and shall discharge the duties required by law as fiduciary without any injury or damage to any person interested in the faithful performance of the office, then the above obligation shall be void; it shall otherwise remain in full force and effect.

(g) Payment of Bond Premium From Income. A fiduciary who is required to file a bond shall be entitled to pay and be allowed the cost of the premium out of the income of the estate, unless the court otherwise directs.

Md. R. Guard. & Fid. 10-702

This Rule is derived from former Rule V73, except for subsection (c)(3) which is in part derived from former Rule V71 d and is in part new.

Adopted June 5, 1996, eff. 1/1/1997. Amended Oct. 10. 2017, eff. 1/1/2018.

HISTORICAL NOTES

Derivation:

Maryland Rule of Procedure V71, revised eff. Feb. 2, 1970, amended eff. July 1, 1974; amended April 6, 1984, eff. July 1, 1984, related to jurisdiction over fiduciary estates other than guardianships of minors or disabled persons, rescinded June 5, 1996, eff. Jan. 1, 1997.

Maryland Rule of Procedure V73, revised eff. Feb. 2, 1970, amended eff. July 1, 1974; amended April 6, 1984, eff. July 1, 1984, related to fiduciary bonds, rescinded June 5, 1996, eff. Jan. 1, 1997.

2017 Orders

The October 10, 2017, order added a new section (b) pertaining to factors for the court to consider when determining whether to require a guardian of the property to post bond, added the words "or increase to subsection (c)(1), in subsection (e)(1), deleted language from subsection (e)(1)(A) and added language providing that the amount of fiduciary bond shall be based on the value of the property of the estate that is or will be under the fiduciary"s control and that the fiduciary has or will have authority to expend, encumber, or convey without further order of the court, added a Committee note after subsection (e)(1)(A) explaining the intent of that subsection and containing some of the language of current section (d), and made stylistic changes.

Code, Estates and Trusts Article, § 13-208.