What Is a Surety Bond? Roles, Costs, and Legal Framework Explained

In South Africa, surety bonds (also called security bonds) are often required by the Master of the High Court before estate administrators (such as executors, curators, liquidators, and trustees) can commence their duties. These bonds serve as a financial guarantee that the appointed individual will administer the estate correctly and in line with applicable legislation.

A surety bond is issued by a registered insurer and guarantees payment to the Master should the administrator fail in their legal duties. If mismanagement or misconduct occurs, the Master can call in the bond to recover losses on behalf of the estate. The bond thus plays a vital role in safeguarding estate assets during administration.

How Surety Bonds Work in South Africa

A surety bond involves three parties:

• The principal – the estate administrator (executor, curator, trustee, etc.)

• The obligee – the Master of the High Court

• The surety – the insurer providing the bond

If the principal defaults, the obligee (Master) may claim against the bond. The surety then has a right of recourse, meaning it may legally pursue the defaulting administrator to recover any losses paid out.

Benefits of Surety Bonds for Estate Management

• Ensures fiduciary accountability to beneficiaries
• Mitigates risk of financial mismanagement
• Satisfies the Master’s legal requirement before appointment
• Provides recourse for the insurer in case of default
• Offers transparency in the estate administration process

Once an estate is fully administered and all property has been accounted for, the bond value may be reduced to nil, effectively releasing the surety from further obligation from the date approved by the Master.

Different Types of Surety Bonds Available

Shackleton Risk Management (SRM) offers the following types of surety bonds in compliance with estate requirements:

• Executor Bonds – For deceased estates
• Curator Bonds – For mentally incapacitated individuals
• Liquidation Bonds – For insolvent estates
• Trustee Bonds – For trusts and sequestrated estates
• Tutor Bonds – For minors’ estates

The bond type is specified by the Master’s office and each is governed by relevant South African estate legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

How Much Do Surety Bonds Cost in South Africa?

The cost of a surety bond is considered a reasonable estate expense and is payable from the estate itself, subject to approval by the Master of the High Court. Premiums are calculated as a percentage of the estate’s asset value, with different rates applying based on the type of bond required.

Typical premium rates (excluding VAT):

• Executor bonds: 0.5%

• Curator bonds: 0.6%

• Liquidation bonds: 0.5%

• Trustee bonds: 0.6%

• Tutor bonds: 0.6%

Final costs may vary depending on estate complexity and the amount of security required by the Master.

Surety’s right of recourse

Should it arise that the surety is required by the Master to pay any losses suffered by the estate as a result of the default of the executor/ curator/ liquidator/ trustee, the surety is subrogated to the rights of the creditor i.e., the insurer has the same rights as those of the Master.  It can sue the executor/ curator/ liquidator to exercise those rights.

At SRM you can obtain Executor bonds / Curator bonds / Liquidation bonds / Trustee bonds / Tutor bonds. Essentially the terms of the suretyship are all the same for the different types of estates. However the Master’s reference on the bond will indicate whether it is for an Executor, curator, liquidation or Trust bond.

In respect of all these types of bonds, where the estate administrators have accounted to the satisfaction  of the Master for any property, the value of which was taken into consideration when the amount was assessed, the Master may reduce the amount of security (the bond) to an amount which would in his opinion, be sufficient to cover the value of the property which such estate administrator has been appointed to liquidate and distribute and which has not yet been accounted for.

Once all the property of the estate, has been administered, the bond may be reduced to nil, at which point the surety’s obligations are likewise reduced to zero from the date confirmed by the Master.

Need a Surety Bond? Start with a Trusted Provider

Whether you’re acting as an executor, trustee, or curator, navigating surety bond requirements shouldn’t delay your appointment. Shackleton Risk Management offers compliant bond solutions tailored to estate administrators in South Africa.

If you’re ready to proceed or have questions, contact us directly to speak with a specialist about your bond requirements.