Opening a Bank Account for Estate Funds

May 20, 2022

Something that often catches a newly appointed personal representative off guard is the requirement to open and manage an estate banking account. Typically, the account is a basic checking account and is often named “Estate of Deceased’s Name, Executor’s Name, Executor”.

Below are some important rules to keep in mind regarding operating an estate account during the probate process:

1. Checking Account. The bank account must be a checking account that allows you to write check so you can pay the deceased’s final bills, court costs and final distributions. Make sure you choose a financial institution in the state where the deceased person died and probate is occurring. It may seem more convenient to open an account near your residence but the probate court requires the account to be in the state of the deceased’s residency.

2. Taxpayer Identification Number (TIN). Prior to opening the estate account with the financial institution, you will need to obtain a TIN for the estate, which is now its own tax entity. The IRS website walks you through the steps to apply for the TIN, which is referred to as Employer Identification Number (EIN). Do not be confused by the name of the form required. As personal representative, you are not an employer; however, that is the name of the form and that is the correct form to use to obtain your EIN (TIN).

3. Set Up. Once the account is set up, you will need to move all of the deceased’s money from other accounts into the estate account. Major exception – If the accounts are listed as POD (payable-on-death) or TOD (transfer-on-death) then those funds go straight to the named beneficiary, not into the probate estate.

4. Deposits. Continue to deposit all income received by the estate such as stock dividends, rental income, tax refunds, etc.

5. Recordkeeping. Keep detailed records of each and every transaction.

6. No commingling. Never mix your personal funds and estate funds. If you find yourself in a position where you need to use your personal funds then reimburse yourself from the estate, keep very accurate records to demonstrate why this occurred.

7. Close Account. When the probate file is closed, be sure to remember to go to the financial institution and officially close the bank account.

Being a personal representative and administering an estate after the death of a loved one can be very complex. For assistance, contact the probate attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.

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