What is a fiduciary bond?

A fiduciary bond is specifically designed to provide assurance that an individual who has been appointed to manage someone else's assets—such as an estate, trust, or guardianship—will carry out their duties honestly and responsibly. These bonds are crucial in situations where the fiduciary is entrusted with the management or distribution of the assets, ensuring that they act in the best interests of the beneficiaries.

For example, when a court appoints a person as an executor of an estate, that individual is expected to administer the estate according to the deceased’s wishes while following legal requirements. A fiduciary bond gives the court and the beneficiaries confidence that the executor will fulfill these obligations without fraud or mismanagement.

In contrast, the other options describe aspects that do not fully encompass the nature or purpose of a fiduciary bond. A bond that only covers investments focuses narrowly on investment activities rather than the broader responsibilities associated with estate management. A bond for public service officials pertains to the duties of government employees, while a bond that eliminates financial risks entirely is misleading, as bonds provide financial protection up to a certain limit, rather than eliminating risks altogether.