How to manage the estate bank account

One of your most important duties as a personal representative is to open and properly manage an estate bank account. This account becomes the financial center of the estate — it’s where estate money is held, where debts are paid from, and where distributions are eventually made to heirs.

Managing the estate account correctly is critical for maintaining transparency, meeting legal requirements, and protecting yourself from personal liability.

Step 1: Open a Separate Estate Bank Account

You must open a new, separate bank account in the name of the estate. You cannot use your personal bank account — even temporarily.

To open an estate account, you will usually need:

• A certified copy of your Letters Testamentary or Letters of Administration

• A certified copy of the death certificate

• The estate’s Employer Identification Number (EIN), issued by the IRS (not the decedent’s Social Security Number)

👉 An estate must have its own EIN. You cannot use the decedent’s or your own personal Social Security Number.

Step 2: Deposit All Estate Funds Into the Estate Account

Once the account is open:

• Deposit all incoming estate funds into the estate account.

• This includes:

  • Cash found in the decedent’s possession

  • Proceeds from the sale of real estate or personal property

  • Refunds or benefits payable to the estate

  • Outstanding debts owed to the decedent

  • Life insurance or retirement funds payable to the estate (if applicable)

Do not mix personal funds with estate funds. Even small mistakes can create serious legal problems.

Step 3: Pay Estate Expenses Properly

All estate-related expenses should be paid directly from the estate account.

Common examples include:

• Court costs and filing fees

• Attorney fees (only as approved)

• Appraiser fees

• Funeral expenses (if unpaid)

• Valid creditor claims

• Property maintenance costs (utilities, insurance, taxes)

Each payment should have a clear paper trail, including invoices, receipts, and copies of canceled checks or payment confirmations.

Step 4: Keep Detailed Records of Every Transaction

You must maintain a complete, organized record of:

• All deposits (source, amount, date)

• All expenses (payee, amount, reason, date)

• Monthly account statements from the bank

👉 You will use these records to prepare your Annual Accounting and Final Accounting to the Court.

Every penny must be accounted for.

Step 5: Avoid Common Pitfalls

Here are some mistakes to avoid:

• Commingling funds: Never deposit or pay personal money through the estate account.

• Unauthorized distributions: Do not give heirs any money until authorized by the Court or final approval.

• Using estate funds prematurely: Don’t pay personal representative fees, distribute assets, or make non-estate payments until proper steps are completed.

• Failing to track small amounts: Even small ATM fees or minor payments must be documented.

Remember: if you can’t explain every dollar, you could face Court objections or removal as personal representative.

Managing the estate account carefully keeps the estate administration smooth and protects you legally. A well-run estate account also makes it much easier to complete required accountings, close the estate faster, and avoid disputes with heirs. When in doubt, treat the estate’s money as if it belongs to someone else — because it does.

Legal Disclaimer: This information is provided for general educational purposes only and does not constitute legal advice. Please consult an attorney for advice specific to your situation.