Sec. 703. BOND OF GUARDIAN OF THE ESTATE

(a) Except when bond is not required under this chapter, before being issued letters of guardianship of estates, the recipient of letters shall give a bond that is conditioned as required by law and that is payable to the judge of the county in which the guardianship proceedings are pending or to the judge's successors in office. A bond of the guardian of the estate must have the written approval of either of the judges in the judge's official capacity and shall be executed and approved in accordance with Subsections (b)-(q) of this section.

(b) The judge shall set the penalty of the bond in an amount that is sufficient to protect the guardianship and its creditors, as provided by this chapter.

(c) If a bond is or will be required of a guardian of an estate, the court, before setting the penalty of the bond, shall hear evidence and determine:

(1) the amount of cash on hand and where deposited, and the amount of cash estimated to be needed for administrative purposes, including the operation of a business, factory, farm, or ranch owned by the guardianship estate, and administrative expenses for one year;

(2) the revenue anticipated to be received in the succeeding 12 months from dividends, interest, rentals, or use of real or personal property belonging to the guardianship estate and the aggregate amount of any installments or periodic payments to be collected;

(3) the estimated value of certificates of stock, bonds, notes, or securities of the ward, the name of the depository in which the stocks, bonds, notes, or securities of the ward are held for safekeeping, the face value of life insurance or other policies payable to the person on whose guardianship administration is sought or to the person's estate, and other personal property that is owned by the guardianship, or by a person with a disability; and

(4) the estimated amount of debts due and owing by the ward.

(d) The judge shall set the penalty of the bond in an amount equal to the estimated value of all personal property belonging to the ward, with an additional amount to cover revenue anticipated to be derived during the succeeding 12 months from interest, dividends, collectible claims, the aggregate amount of any installments or periodic payments exclusive of income derived or to be derived from federal social security payments, and rentals for use of real and personal property, provided that the penalty of the original bond shall be reduced in proportion to the amount of cash or value of securities or other assets authorized or required to be deposited or placed in safekeeping by court order, or voluntarily made by the guardian or by the sureties on the bond of the guardian as provided in Subsections (f) and (g) of this section.

(e) If the court considers it to be in the best interests of the ward, the court may require that the guardian and the corporate or personal sureties on the bond of the guardian of the ward agree to deposit any or all cash and safekeeping of other assets of the guardianship estate in a financial institution as defined by Section 201.101, Finance Code, with its main office or a branch office in this state and qualified to act as a depository in this state under the laws of this state or of the United States, and, if the depository is otherwise proper, the court may require the deposit to be made in a manner so as to prevent the withdrawal of the money or other assets in the guardianship estate without the written consent of the surety or on court order made on the notice to the surety. An agreement made by a guardian and the sureties on the bond of the guardian under this section does not release from liability or change the liability of the principal or sureties as established by the terms of the bond.

(f) Cash, securities, or other personal assets of a ward that a ward is entitled to receive may, and if it is deemed by the court in the best interests of the ward shall, be deposited or placed in safekeeping in one or more of the depositories described in this section on the terms prescribed by the court. The court in which the guardianship proceeding is pending, on its own motion or on written application of the guardian or of any other person interested in the ward, may authorize or require additional assets of the guardianship estate then on hand or as they accrue during the pendency of the guardianship proceeding to be deposited or held in safekeeping as provided by this section. The amount of the guardian's bond shall be reduced in proportion to the cash deposited or the value of the securities or other assets placed in safekeeping. Cash that is deposited, securities or other assets held in safekeeping, or portions of the cash, securities, or other assets held in safekeeping may be withdrawn from a depository only on court order. The bond of the guardian shall be increased in proportion to the amount of cash or the value of securities or other assets that are authorized to be withdrawn.

(g) In lieu of giving a surety or sureties on a bond that is required of the guardian, or for purposes of reducing the amount of the bond, the guardian of an estate may deposit out of the guardian's own assets cash or securities that are acceptable to the court with a financial institution as defined by Section 201.101, Finance Code, with its main office or a branch office in this state. If the deposit is otherwise proper, the deposit must be equal in amount or value to the amount of the bond required or the bond shall be reduced by the value of assets that are deposited.

(h) The depository shall issue a receipt for a deposit in lieu of a surety showing the amount of cash or, if securities, the amount and description of the securities and agreeing not to disburse or deliver the cash or securities except on receipt of a certified copy of an order of the court in which the proceeding is pending. The receipt must be attached to the guardian's bond and be delivered to and filed by the county clerk after the receipt is approved by the judge.

(i) The amount of cash or securities on deposit may be increased or decreased by court order from time to time as the interests of the guardianship shall require.

(j) A cash or security deposit in lieu of a surety on the bond may be withdrawn or released only on order of a court that has jurisdiction.

(k) A creditor has the same rights against the guardian and the deposits as are provided for recovery against sureties on a bond.

(l) The court on its own motion or on written application by the guardian or any other person interested in the guardianship may require that the guardian give adequate bond in lieu of the deposit or may authorize withdrawal of the deposit and substitution of a bond with sureties on the bond. In either case, the guardian shall file a sworn statement showing the condition of the guardianship. The guardian is subject to removal as in other cases if the guardian does not file the sworn statement before the 21st day after the guardian is personally served with notice of the filing of the application or before the 21st day after the date the court enters its motion. The deposit may not be released or withdrawn until the court is satisfied as to the condition of the guardianship estate, determines the amount of bond, and receives and approves the bond.

(m) On the closing of a guardianship, a deposit or a portion of a deposit that remains on hand, whether of the assets of the guardian, the guardianship, or surety, shall be released by court order and paid to the person entitled to the assets. A writ of attachment or garnishment does not lie against the deposit except as to claims of creditors of the guardianship being administered or of persons interested in the guardianship, including distributees and wards, and only if the court has ordered distribution, and only to the extent of the ordered distribution.

(n) The surety on the bond may be an authorized corporate or personal surety.

(o) When the bond is more than $50,000, the court may require that the bond be signed by two or more authorized corporate sureties or by one corporate surety and two or more good and sufficient personal sureties. The guardianship shall pay the cost of a bond with corporate sureties.

(p) If the sureties are natural persons, there may not be less than two sureties, each of whom shall make affidavit in the manner prescribed by this chapter. The judge must be satisfied that each surety owns property in this state, over and above that exempt by law, sufficient to qualify as a surety as required by law. Except as otherwise provided by law, only one surety is required if the surety is an authorized corporate surety. A personal surety, instead of making an affidavit or creating a lien on specific real estate when an affidavit or lien is required, may deposit the personal surety's own cash or securities in the same manner as a guardian in lieu of pledging real property as security, subject to the provisions covering the deposits when made by guardians.

(q) If the guardian is a temporary guardian, the judge shall set the amount of the bond.

(r) The provisions of this section relating to the deposit of cash and safekeeping of securities cover, as far as they may apply, the orders entered by the court when:

(1) real or personal property of a guardianship has been authorized to be sold or rented;

(2) money is borrowed from the guardianship;

(3) real property, or an interest in real property, has been authorized to be leased for mineral development or made subject to unitization;

(4) the general bond has been found insufficient; or

(5) money is borrowed or invested on behalf of a ward.

(s) In determining the amount of the bond, the court may not take into account the assets of the estate that are placed in a management trust under Subpart N, Part 4, of this code.

Added by Acts 1993, 73rd Leg., ch. 957, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1999, 76th Leg., ch. 344, Sec. 6.006, eff. Sept. 1, 1999.