Opening an estate bank account is one of the first tasks for anyone serving as executor or administrator of a deceased person’s estate. The account serves as a central place to collect income owed to the estate, hold proceeds from asset sales, and pay debts and expenses during the probate process. Before you can open this account, you need formal legal authority and a tax identification number from the IRS.
Why You Need an Estate Account
When someone dies, their personal bank accounts typically get frozen once the bank learns of the death. You cannot simply continue using the deceased person’s accounts, even if you have the PIN or checkbook. Using a deceased person’s accounts can create legal problems and complicate estate administration.
An estate account serves several important purposes:
Collecting assets. Checks payable to the deceased person or to the estate of the deceased person can only be deposited into an account in the estate’s name. This includes final paychecks, tax refunds, insurance proceeds, rental income, and payments from the sale of estate property.
Paying obligations. The executor or administrator must pay the deceased person’s final bills, funeral expenses, probate court costs, professional fees, and any taxes owed. These payments should come from the estate account, not your personal funds, to maintain clear records.
Maintaining separation. As the person responsible for the estate, you have a fiduciary duty to keep estate funds separate from your personal money. Commingling funds can expose you to personal liability and creates accounting problems when you file required reports with the probate court.
Creating a record. Probate courts typically require a detailed accounting of all money that comes into and goes out of the estate. Having a dedicated estate account makes this accounting straightforward.
Step 1: Get Appointed by the Probate Court
Before you can open an estate account, you must be formally appointed as the legal representative of the estate. This requires filing paperwork with the probate court in the county where the deceased person lived.
If the deceased person left a will naming an executor, you typically file the original will with the court along with a petition asking the court to admit the will to probate and appoint you as executor. After a waiting period (often 30 to 90 days after death, depending on state law), the court holds a hearing and, assuming no objections, issues Letters Testamentary confirming your appointment.
If there was no will, or if the named executor cannot serve, you file a petition for Letters of Administration. The court appoints an administrator according to a statutory priority list, typically starting with the surviving spouse, then adult children, then other relatives.
The letters you receive—either Letters Testamentary or Letters of Administration—are the legal documents proving your authority to act on behalf of the estate. Banks, investment companies, and other institutions will require certified copies of these letters before dealing with you.
According to the IRS, the probate court’s appointment of an estate administrator is typically one of the court’s first actions after a probate proceeding opens.
Step 2: Obtain an Employer Identification Number
An Employer Identification Number (EIN) is a federal tax identification number assigned by the IRS. Estates need an EIN because the estate is a separate legal entity with its own tax obligations, distinct from the deceased person. You cannot use the deceased person’s Social Security number for the estate account.
To apply for an estate EIN, use the IRS online EIN Assistant at IRS.gov. The online application provides your EIN immediately. You will need your own identifying information, the state and county where you were appointed, the deceased person’s name, Social Security number, and date of death, and the desired end of the estate’s tax year.
According to the IRS, you will need this EIN to file Form 1041 (the estate income tax return) if the estate generates more than $600 in annual income.
Step 3: Gather Required Documents
Banks have their own requirements, but most will ask for similar documentation: certified copies of your Letters Testamentary or Letters of Administration (many banks require these dated within 90 days), the estate’s EIN confirmation, a certified death certificate, and your personal identification such as a driver’s license or passport.
Contact the bank in advance to confirm exactly what they need so you can gather everything before your appointment.
Step 4: Open the Account
Take all your documentation to the bank and request to open an estate account. You can open this account at any bank, but using the deceased person’s existing bank often simplifies things. That bank already has information about the deceased’s accounts and may be able to transfer funds more efficiently.
The account should be titled in the estate’s name, typically in a format like: “Estate of John Smith, Deceased, Mary Smith, Executor.” You will be the sole signatory on the account, authorized to make deposits, withdrawals, and transfers.
Most executors open a checking account rather than a savings account because you will need to write checks to pay bills, creditors, and eventually beneficiaries. Some banks offer estate-specific checking accounts with features designed for estate administration.
You might also consider whether you need multiple accounts. If the estate is large or will take a long time to settle, you might open a money market account for funds that will not be needed immediately, earning some interest while maintaining access.
Step 5: Use the Account Properly
Once the account is open, use it consistently for all estate transactions. Deposit all estate income—proceeds from selling property, dividends, rental income, tax refunds, and insurance proceeds payable to the estate. Pay all expenses from this account: funeral costs, medical bills, utilities, probate fees, attorney fees, and accountant fees.
Keep detailed records of every transaction. When you prepare the final accounting for the probate court, you will need to explain every deposit and disbursement. Do not use the account for personal expenses, even if you are a beneficiary. If you advanced money before the account was open, you can reimburse yourself with clear documentation.
Handling Joint Accounts and POD Accounts
Not all of the deceased person’s bank accounts pass through the estate. Joint accounts with right of survivorship pass automatically to the surviving owner—the survivor just needs to provide a death certificate. Payable-on-death (POD) accounts pass directly to the named beneficiary outside of probate. Only accounts held solely in the deceased person’s name without a POD beneficiary become part of the probate estate and should be transferred to the estate account.
When You Might Not Need an Estate Account
Not every estate requires a separate account.
If the deceased person owned no significant assets other than those passing outside of probate (joint accounts, POD accounts, retirement accounts with named beneficiaries, life insurance with named beneficiaries, and property in a living trust), there may be nothing to put in an estate account.
Some states offer simplified procedures for small estates. If the estate qualifies, you might be able to collect assets using an affidavit procedure without opening a full probate case. The dollar limits and procedures vary by state.
However, if you are going through formal probate, receiving checks payable to the estate, or need to file an estate income tax return, you will almost certainly need an estate account.
Closing the Estate Account
The estate account remains open throughout probate, which typically takes several months to a year or longer. Before closing, you must complete probate administration: pay all debts and taxes, receive court approval for your final accounting, and get authorization for final distributions.
Once the court approves distribution, pay out remaining funds to beneficiaries. After the last check clears, close the account. Keep your final statements with other estate documents—some states require you to retain records for several years after probate closes.