“Be prepared and don’t throw [bond of] caution to the wind”
Administering a deceased person’s estate can be a complicated and stressful process. A Bond of Caution (pronounced “kay-shun”) is an aspect of executry administration which can be an unexpected expense for the executors acting under someone’s estate, where the deceased has died without making a Will.
‘Caution’ is only required where an individual has died intestate (i.e. without a Will). It is a guarantee that an executor in an intestate estate performs his or her duties properly and does not embezzle the estate. It is supported by insurance and the premium payable under the Bond of Caution can range from a few hundred pounds to thousands of pounds, depending on the value of the estate.
Prior to the Succession (Scotland) 2016 all executors acting in an intestate estate [excluding spouses or civil partners whose prior rights exhaust an estate] were required to find Caution. Under the current legislation civil partners are now brought in line with the provisions which previously applied only to spouses. Further, Caution is not required if the deceased person’s estate does not exceed £36,000. In the majority of intestate estates, however, the executors are required to obtain Caution and the estate cannot be wound up without it.
The procedure has received criticism, especially in cases where the executor is the sole residuary beneficiary. The requirement for Caution seems unnecessary in this instance. Another criticism is that Caution is only a Scottish phenomenon and it is not required in England and Wales.
One of the simplest ways to ensure that Caution is not required, is to make a valid Will, which appoints an executor. Legal advice should be sought to ensure that your Will is prepared correctly. Preparing a Will helps to reduce the costs (which includes additional procedural requirements) associated with administering your intestate estate. So be prepared and don’t throw [bond of] caution to the wind.