The cost of opening an estate account is typically between $0 and $500, depending on various factors. Financial institutions have different policies so fees can vary. Some banks charge no fee if the estate is straightforward, while others charge based on the complexity or size of the estate. The main factors that affect the cost are:
- Bank Policies: Some banks charge setup fees or require a minimum balance to open an account.
- Size of the Estate: Larger estates may incur higher fees due to the complexity of handling multiple assets.
- Location: Local or state laws may influence the cost, especially regarding legal fees or required filings.
- Services Included: Additional services, such as tax preparation or legal assistance, can increase costs.
What Is an Estate Account for Probate?
An estate account is a temporary bank account set up by the executor or administrator of a deceased person’s estate. This account manages the deceased’s financial assets, such as collecting funds, paying debts, and distributing the remaining assets to beneficiaries.
An estate account for probate is specifically established during the probate process. Probate is the legal procedure where a will is validated, and the estate’s assets are distributed. The estate account allows the executor to manage the decedent’s finances properly, including paying taxes, debts, and other obligations while awaiting probate court approval. It helps ensure transparency and accountability during the probate process.
Is an Estate Account Necessary?
Yes, an estate account is necessary for managing a deceased person’s financial matters during probate.
The reasons you need an estate account are:
- Centralized Asset Management: It consolidates all the estate’s assets, making it easier for the executor to manage finances.
- Payment of Debts and Taxes: The account is used to settle the decedent’s outstanding debts, taxes, and other expenses.
- Distribution of Assets: It simplifies the process of distributing the remaining funds to beneficiaries after all liabilities have been cleared.
- Legal Compliance: Most probate courts require the creation of an estate account to ensure transparency and proper accounting during the probate process.
- Protection from Liability: By using an estate account, the executor can avoid personal liability for mismanaging estate funds, as it separates estate assets from personal assets.
What Documents Do I Need to Open an Estate Account?
When opening an estate account, several key documents are required to ensure that the process is handled properly and legally. These documents help confirm the identity of the decedent, authorize the executor or administrator, and ensure compliance with probate laws. Below is a list of the essential documents needed to open an estate account:
- Decedent’s Legal Name: This document is typically provided with the death certificate. It verifies the deceased’s identity and is required by financial institutions to ensure they are opening the estate account for the correct individual.
- Decedent’s Social Security Number: The Social Security number is used to identify the decedent’s financial and tax records. This is essential for reporting purposes, including closing out the deceased’s tax obligations.
- Certified Death Certificate: This official document confirms the individual’s death and is required by banks and other financial institutions to initiate the process of opening an estate account.
- Letters of Administration or Letters Testamentary: These documents are issued by the probate court and authorize the executor or administrator to act on behalf of the estate. Banks require them to ensure that the person opening the account has legal authority to manage the estate.
- Copy of the Will (if applicable): Banks may request a copy to verify the named executor if a will exists. This document helps confirm who has the legal right to manage the estate account.
- Executor or Administrator’s Identification: The executor or administrator must provide personal identification, such as a driver’s license or passport, to confirm their identity and prove that they are authorized to act on behalf of the estate.
- Tax Identification Number (TIN) for the Estate: The estate must have its own TIN, which is used for tax reporting purposes. This number is necessary to open an estate account and handle the estate’s financial responsibilities during probate.
How to Open an Estate Account Without Probate
In order to open an estate account without probate, the process is slightly different and typically depends on the size of the estate and local laws. In many cases, probate can be avoided if the estate is small or if the assets were placed in trust or designated to pass directly to beneficiaries. Here’s how you can open an estate account without probate:
- Small Estate Affidavit: In cases where the estate qualifies as a “small estate” under state law, the executor or beneficiary may be able to use a small estate affidavit to bypass probate. This affidavit is a sworn statement confirming the size and details of the estate. Once approved, banks will open the account.
- Payable-on-Death (POD) Accounts: In cases where the decedent’s accounts were designated as payable-on-death, the funds automatically pass to the named beneficiary without going through probate. The beneficiary can take the death certificate and their identification to the bank to open an estate account and access the funds.
- Joint Accounts with Right of Survivorship: For accounts held jointly with right of survivorship, the surviving account holder becomes the legal owner of the funds upon the decedent’s death. In this case, probate is unnecessary, and the surviving party can directly manage the account or open a new estate account.
- Trust Accounts: When the decedent places assets in a trust, the trustee can manage those assets without going through probate. The trustee can present the trust documents and a death certificate to the bank to open an estate account in the trust’s name.
How to Open an Estate Account Online
Opening an estate account online is becoming more accessible through digital banking services. Follow these steps to open an estate account online:
- Choose a Bank: Research banks that offer online estate account services. Look for institutions with clear guidelines for estate accounts and competitive fees.
- Gather Required Documents: Ensure you have all necessary documents ready in digital form. These typically include a certified death certificate, letters of administration or letters of testamentary, the executor or administrator’s personal identification, and the estate’s Tax Identification Number (TIN).
- Visit the Bank’s Website: Go to the chosen bank’s official website. Navigate to the section dedicated to estate accounts or executors.
- Create an Account: When required, create a personal account with the bank by entering your personal information and setting up login credentials.
- Begin Estate Account Application: Select the option to open a new estate account. You will be prompted to provide details about the decedent and the estate.
- Upload Documents: Upload the required documents (death certificate, letters of administration, executor identification, etc.) through the bank’s secure portal.
- Verify Your Identity: Complete the bank’s identity verification process. This typically involves answering security questions or providing additional identification, such as a driver’s license or passport.
- Review Terms and Submit Application: Review the bank’s terms for the estate account, including fees and policies. Once reviewed, submit the application for processing.
- Await Approval: The bank will review your application and documents. This process may take a few business days. Once approved, you will receive confirmation via email or phone.
- Access the Account: Once approved, you will be granted online access to the estate account. From here, you can manage the estate’s assets, pay debts, and distribute funds as necessary.
How Much Does It Cost to Open an Estate Account Online?
The cost to open an estate account online is typically between $0 and $300, depending on the financial institution. Factors that may affect the cost include:
- Bank Fees: Some banks charge a setup fee for estate accounts, while others offer the service for free, particularly if the estate has a large balance or other accounts are held with the same institution.
- Account Services: Fees may vary based on the additional services provided, such as tax preparation, ongoing account management, or legal assistance.
- Minimum Balance Requirements: Certain banks require a minimum balance to avoid monthly maintenance fees, which can increase the cost if the estate’s funds are limited.
- Location and Legal Requirements: Depending on the state or country, some jurisdictions have specific requirements that could increase the cost, such as additional paperwork or certifications.
- Estate Complexity: Estates with complex assets (such as real estate, investments, or multiple beneficiaries) may incur higher fees due to the additional work required by the bank to manage the estate account.
Should I Open a Checking Account or a Combined Brokerage Account?
You should open a checking account for an estate if the primary goal is to manage everyday financial tasks, such as paying debts, and taxes, and distributing assets to beneficiaries. A checking account is preferable because:
- Ease of Access: Checking accounts offer quick and easy access to funds for paying estate-related expenses.
- Simple Management: The account is ideal for handling straightforward transactions like bill payments and issuing checks to beneficiaries.
- Lower Fees: Checking accounts generally have lower fees compared to combined brokerage accounts, making them more cost-effective for managing an estate.
How to Deposit an Estate Check When There Is No Estate
In order to deposit an estate check when there is no formal estate, you will need to follow alternative methods based on the specific circumstances of the deceased’s assets and local laws. Here are the steps to take:
- Use a Small Estate Affidavit: In cases where the estate qualifies as a small estate under your state’s laws, you can use a small estate affidavit. This legal document allows you to claim the estate’s assets, including the check, without going through probate. Present the affidavit and the death certificate to the bank, which may allow you to deposit the check.
- Joint Account Holder: In cases where the deceased had a joint account with you, the funds may automatically pass to you as the surviving account holder. In this case, you can deposit the estate check into the joint account without probate.
- Payable-on-Death (POD) Beneficiary: In cases where the check is from a payable-on-death account, and you are the named beneficiary, you can present the death certificate and identification to the bank. The funds from the check will be deposited directly to you without the need for an estate account.
- Contact the Bank or Issuer: In cases where none of the above options apply, contact the bank or the institution that issued the check. Explain that there is no formal estate, and inquire about their process for depositing the check in such cases. Some banks may allow you to deposit the check into a personal account with proof of death and a small estate affidavit.
In What State Should I Open an Estate Account?
You should open an estate account in the state where the decedent resided at the time of their death. The reasons behind this state selection are:
- Probate Jurisdiction: The estate will generally be probated in the state where the decedent lived, and opening the account in the same state ensures compliance with local probate laws.
- Ease of Access: Local financial institutions are more familiar with the probate process in their state, making it easier to manage the estate account and fulfill legal requirements.
- Court Requirements: Probate courts may require that the estate account be opened in the same state to track and verify transactions during the probate process.
- Simplified Asset Management: Opening the account in the decedent’s state of residence simplifies the collection and management of local assets, as some financial institutions may not recognize estate accounts from out-of-state banks.
How Long Does Money Have to Stay in an Estate Account?
Money has to stay in an estate account until all debts, taxes, and obligations of the estate are settled, which typically ranges from several months to over a year, depending on the complexity of the estate. Factors that influence the duration include:
- Probate Process: The length of time money remains in the estate account depends on the length of time it takes to complete probate. Larger or contested estates can extend the process.
- Payment of Debts and Taxes: Before distributing funds to beneficiaries, the executor must ensure all outstanding debts, taxes, and administrative expenses are paid. Delays in tax filings or creditor claims can prolong the timeline.
- Asset Liquidation: If the estate includes assets that need to be sold, such as real estate or investments, the time required to liquidate these assets will affect the length of time funds stay in the account.
- Court Approval: In some cases, the probate court may need to approve the distribution of funds, which can extend the time money stays in the account, particularly if there are disputes among beneficiaries.
How to Get an EIN Number for an Estate Account
In order to open an estate account, you first need to obtain an Employer Identification Number (EIN) from the IRS. The EIN is required to legally manage the estate’s financial matters for tax purposes. Below are the steps to get an EIN number for an estate account:
- Visit the IRS Website: Go to the IRS website and navigate to the “Apply for an Employer Identification Number (EIN) Online” page.
- Select ‘Estate’ as the Entity Type: Choose “Estate” as the legal structure for the application.
- Provide the Decedent’s Information: Enter the deceased person’s legal name, Social Security number, and other personal details as required.
- Enter Executor/Administrator Information: Provide your personal information as the executor or administrator of the estate, including your Social Security number and contact details.
- Submit Application: Review the information and submit the online application.
- Receive EIN Immediately: Once the application is processed, you will receive the estate’s EIN immediately, either online or by mail, depending on the method you choose.
How to Open an Estate Account for Deceased
In order to open an estate account for a deceased person, follow these steps:
- Obtain the Necessary Legal Documents: Ensure you have the required documents, including the certified death certificate, letters of administration or letters of testamentary from the probate court, and your identification as the executor or administrator.
- Get an EIN (Employer Identification Number): Apply for an EIN from the IRS, which is required to manage the estate’s tax obligations. You can do this online through the IRS website.
- Choose a Bank: Select a bank or financial institution where you want to open an estate account. It’s often easiest to use the bank where the deceased had their accounts, but any bank that offers estate services can be used.
- Provide the Required Documents to the Bank: Take the certified death certificate, letters of administration or testamentary, your identification, and the EIN to the bank. These documents verify your authority to open the account and handle the estate’s finances.
- Open the Account: Once the bank verifies the documents, they will open the estate account. This account will be used to deposit funds from the estate, pay debts, and distribute the remaining assets to beneficiaries.
How to Claim Deceased Bank Accounts Without Probate
For you to claim deceased bank accounts without going through probate, follow these methods depending on the specific circumstances of the account and estate:
- Payable-on-Death (POD) Accounts: In cases where the bank account is designated as a payable-on-death (POD) account, the funds will automatically transfer to the named beneficiary. To claim the account, the beneficiary must provide the bank with the death certificate and valid identification. This process bypasses the probate estate entirely.
- Joint Account with Right of Survivorship: When the bank account was held jointly with someone else, the surviving account holder becomes the legal owner of the account upon the decedent’s death. The surviving account holder can present the death certificate to the bank to take full control of the account without involving the probate estate.
- Small Estate Affidavit: In some states, if the estate qualifies as a small estate under state law, the heirs can claim the deceased’s bank account using a small estate affidavit. This legal document, along with a death certificate, is presented to the bank, allowing the heirs to claim the account without going through a formal probate estate.
- Trust Accounts: In cases where the deceased had a trust account, the trustee can access the bank account without probate. The trustee will need to provide trust documents, a death certificate, and personal identification to the bank to claim the funds on behalf of the trust.
How Long Can You Keep a Deceased Person’s Bank Account Open?
A deceased person’s bank account can remain open until the estate is settled, typically for several months to over a year, depending on the complexity of the estate.
The reason the account remains open is to manage the financial affairs of the deceased, such as paying outstanding debts, taxes, and other obligations. Once all estate matters are resolved, the account is closed, and the remaining funds are distributed to the beneficiaries. However, many banks may require the account to be transitioned to an estate account within a short time after the death is reported, usually 30 to 90 days, to ensure proper management under legal authority.
Can You Deposit an Estate Check into a Personal Account?
No, you cannot deposit an estate check into a personal account. The reason is that estate funds must be kept separate from personal finances to ensure proper accounting and legal compliance during probate. Estate checks are meant to be deposited into an estate account, which is specifically opened to manage the deceased’s assets, pay debts, and distribute funds to beneficiaries. Depositing the check into a personal account could lead to legal and tax complications for the executor or administrator of the estate.
How Is Closing an Estate Account Done?
Closing an estate account is done after all the financial obligations of the estate have been fulfilled. Here’s how the process is completed:
- Pay All Debts and Expenses: Ensure that all outstanding debts, taxes, and administrative costs have been paid from the estate account. This includes any final expenses like funeral costs and legal fees.
- Distribute Remaining Assets to Beneficiaries: Once all debts are cleared, the remaining funds in the estate account are distributed to the beneficiaries according to the will or state law if there is no will.
- Provide Final Accounting: Prepare a final accounting of all the estate’s financial transactions. This is typically submitted to the probate court for approval and shows how the assets were managed and distributed.
- Obtain Court Approval (if required): In some cases, the probate court may need to approve the final distribution and the closing of the estate account, especially if there were disputes or complex transactions involved.
- Close the Account: After the court gives approval or once all financial matters are settled, the executor or administrator can request that the bank close the estate account.
Some of the reasons for closing an estate account include:
- Settlement of the Estate: The primary reason for closing an estate account is that the estate has been fully settled, with all debts paid and assets distributed.
- Completion of Probate: Once the probate process is completed and the court approves the final accounting, the account is no longer needed.
- No Further Obligations: If there are no outstanding financial obligations, and all funds have been disbursed, the estate account can be closed to conclude the estate’s management.
Meet the Author
Annie L – Distinguished linguist at LegalPen
Annie is a distinguished linguist at LegalPen, bringing a unique blend of legal expertise and linguistic precision to her work. She earned her Juris Doctor degree from Yale University in New Haven, Connecticut, attending on a prestigious Law Faculty Merit Scholarship. At Yale, Annie showcased her exceptional skills by serving as an editor on the Yale Law Review.
Upon graduating, Annie gained invaluable experience through a two-year appellate clerkship at a renowned law firm in Connecticut. During her time in law school, she honed her research and writing abilities as a research assistant and writer for various legal firms. Annie’s deep understanding of legal language and her attention to detail make her an invaluable asset to LegalPen.