A surety guarantee is a written promise given to the Supreme Court of Western Australia by a third party, called the surety, to make good any loss suffered by someone interested in the estate if the administrator breaches their duties.
The Court requires a guarantee in certain situations before it will make the grant that gives the administrator authority to collect the assets and distribute the estate.
What does a surety guarantee actually secure?
A surety guarantee secures your conduct as administrator. Section 26 of the Administration Act 1903 (WA) lets the Court require sureties to guarantee that they will make good, within any limit imposed by the Court, any loss that any person interested in the administration of the estate may suffer in consequence of a breach by the administrator of their duties as an administrator. A person interested in the estate is someone who stands to lose if it’s mishandled, usually a beneficiary who’s entitled to a share of the estate.
It isn’t a guarantee that the estate is solvent, that the debts will be paid or that the assets are worth what you’ve sworn they’re worth. It answers for loss caused by your breach, so if you distribute to the wrong person or take estate money for yourself, the person who loses out can look to your surety.
When does the Court require a surety guarantee?
Rule 27 of the Non-contentious Probate Rules 1967 (WA) tells the Registrar not to require a guarantee except in four situations or if there are special circumstances. The Registrar is the Supreme Court officer who deals with grant applications and decides whether a guarantee is needed.
The four situations when a surety guarantee is likely to be required are:
- where the grant is for the use and benefit of another person or where the grant is otherwise limited;
- where the applicant is resident elsewhere than in Western Australia;
- where a beneficiary is not of full age or capacity; and
- where a beneficiary is not resident in Western Australia and has no agent or attorney there.
How much is the guarantee for?
The starting point is the whole estate, however we can usually persuade the Court to limit the guarantee to the value of the vulnerable beneficiary’s share.
Who can act as your surety?
A surety is a third party who’s prepared to answer to the Court for your conduct as administrator, so it has to be someone who is residen in Western Australia and whose financial position can carry the amount guaranteed. The Court will generally require two people to provide guarantees, not just one.
Frequently asked questions
Does every Letters of Administration application need a surety guarantee?
No. Rule 27 tells the Registrar not to require one except in the four listed situations or if there are special circumstances, so an estate where someone died without a Will and everyone inheriting is an adult living in Western Australia usually doesn’t need one.
Can the Court limit the amount guaranteed?
Yes. Section 26 lets the Court impose a limit and the guarantee then secures loss only within that limit. Generally the guarantee will be limited to the amount of the vulnerable beneficiary’s entitlement.
Does the surety have to pay anything up front?
No. A surety guarantee is a promise to make good a loss if one happens, so nothing is paid to the Court when the guarantee is filed. Your surety is exposed only if you breach your duties and someone interested in the estate suffers loss as a result.
We can tell you whether your grant needs a surety
Call us on (08) 9220 4490. See what’s involved on our Letters of Administration service page.
Related: Administration Act 1903 (WA): executors and administrators
This article is general information about the law in Western Australia and isn’t legal advice. Your circumstances may turn on facts this article doesn’t deal with, so please get advice on your own estate.
