Administration Bond - 401(k) Retirement Glossary & Terminologies

Administration bond is an affidavit done on an administrator of an estate to assure that he/she conducts their work duties according to the provisions/legal requirements stated in their work contracts, and that they are expected to represent their clients with ethics and honesty. An administration bond covers any financial losses to the estate of an investor due to dishonest or improper acts by the investment manager/administrator.

Usually an administrator is appointed to handle cases of an investor leaving behind estate without a written formal will. Other reasons why an administrator will be used include an investor has a will, but no executor or when the executor is deceased.