A type of insurance that will protect an asset if a fiduciary fails to fulfill his or her fiduciary duty.

• A. Bonding
• B. Surety bond
• C. Fidelity bond
• D. Insurance policy

Answer: (B)

Surety bonds are the instrument that protects an estate when a fiduciary does not perform their duties. It’s a three-party arrangement: the fiduciary (the principal) promises to administer the estate faithfully; the beneficiaries or the court (the obligee) are protected; and the bonding company (the surety) backs that promise. If the fiduciary breaches or mismanages assets, the bond pays damages up to the bond amount to the estate or beneficiaries, and the surety can seek reimbursement from the fiduciary. In probate practice, courts often require this bond to ensure faithful administration and to provide a remedy if losses occur. Fidelity bonds cover employee dishonesty rather than fiduciary performance, and a general insurance policy is not tailored to guarantee proper fiduciary conduct. Bonding, while describing the overall idea, is not the specific vehicle—the surety bond is the precise tool used to protect assets from fiduciary failure.