On February 21, 2019, the state of Wyoming passed House Bill 30 to raise the amount of the surety bond required for trust companies from $100,000 to $1 million. This surety bond is required to cover the costs incured by the Wyoming State Banking Commissioner should the trust company be put into receivership or liquidation. These circumstances may arise if the company becomes unsafe, such as a trust company that is unable to pay its obligations when they are due or if it fails to effectively manage its operational and financial risks.
What is a trust company?
A trust company is a legal entity owned by a separate bank or financial institution. They act on behalf of an individual or business to handle the administration, transfer, or management of trusts, estates, assets, businesses, and other entities. They often act as a fiduciary, managing the assets of another person and performing duties like making investments with the individual’s best interests in mind. Trust companies make a profit by either taking a portion from the assets they manage when they are transferred to a third party or taking a portion annually. Trust companies also handle estate services like estate-management and guardianship.
Why do trust companies need a bond?
Before a trust company can start doing business in Wyoming, they must present a surety bond to the Wyoming State Banking Commissioner. The Banking Commissioner is responsible for licensing, chartering and supervising financial institutions in their state to make sure they operate safely. Unsafe practices could include making unsafe investments for clients or having liabilities that exceed assets. The bond amount is based on the amount that would offset the cost of receivership or liquidation the banking commissioner would have to pay should the trust company not be able to pay off their obligations. The bond amount must now be no less than $1 million.
A trust company may still submit security in the form of its capital account or other investments in place of a surety bond. However, the security provided must still amount to at least $1 million.
How do you qualify for a surety bond for a trust company?
As is the case with all underwritten surety bonds, business and credit information is needed to evaluate the quality of the applicant. Due to the substantial amount of the bond, the underwriting process for trust company bonds in Wyoming is a bit more in-depth than the usual application. An applicant seeking a surety bond for a trust company would need to submit a resume, credit report, and cash verification, among other documentation, for review by an underwriter who will determine the risk associated with writing the bond.
Ready to apply for your Wyoming trust company surety bond?
The experts at SuretyBonds.com have years of experience issuing commercial bonds nationwide, meaning they know what it takes to get the bond you need quickly and easily. Visit SuretyBonds.com or call 1 (800) 308-4358 today for a free, no obligation quote on your surety bond!