How to Open an Estate Account for Probate

Executive Summary 

• An estate account is helpful for separating assets of the estate from anyone’s personal funds or accounts and organizing estate transactions.
• To open an estate account, you should gather and prepare important documentation about the probate process and your role as an executor or administrator.
• Major financial institutions typically offer estate accounts, but you should consider which ones offer the most reasonable fees, customer service benefits, and additional perks.
• An estate and probate administration attorney can offer support in setting up an estate account, navigating the process, and ensuring you follow the appropriate legal procedures.

Introduction

Are you going through the probate process and need to open an estate account to pay the decedent’s bills and creditors? If you’re doing it yourself as an estate executor, most major banks, like Wells Fargo, Bank of America, and E*Trade will be familiar with your needs, and ready to help you open an estate account. 

An estate account offers many benefits, centered around the ability to organize and pay for estate transactions from a singular place. This offers protection for the estate’s assets and minimizes the risk of anyone responsible for managing the estate being accused of self-dealing.

The process for opening an estate bank account requires gathering the necessary documentation, choosing a preferred bank, and transferring assets to the account. A probate estate administration attorney can help you understand your options and how to use an account for your benefit. This simple guide outlines the steps for how to open an estate account. 

What is an estate account for probate and why is it important?

An estate account is an account used by an executor or court-appointed administrator to manage a deceased person’s assets—this may include paying debts, paying estate taxes, distributing money to beneficiaries, or depositing proceeds from insurance policies. 

An estate account for probate is typically opened with the assistance of your probate lawyer. However, any executor appointed by a probate court is authorized to do so, as well. If you’re doing it yourself, it’s often most convenient to open the estate account at the same bank as the decedent’s existing account.

Some reasons it’s important to have an estate account include:

• Protection of the deceased’s assets – A separate estate account will allow you to protect the deceased’s assets in a secure account and keep them separate from anyone else’s personal accounts to avoid the risk of asset theft. 
• A clear organization of funds – An account allows you to keep estate assets organized, easily traceable, and deposit any payments and proceeds made to the estate directly.
• Reduction of risk – Whether you are an executor or family member, a separate estate account also helps you minimize the risk of being accused of self-dealing. With a separate estate account, a comingling of estate and personal funds is less likely to occur. 

All together, a separate estate account provides the ability to organize account assets and manage estate transactions without the risk of intertwining estate and personal interests. 

Where should I open an estate account?

When weighing your options for opening an estate account, it’s important to consider where you should open the account. Oftentimes, it’s best to open an estate account in the state where the decedent lived and the court appointed you as executor to handle the decedent’s affairs. 

Opening an account locally also allows for easier proximity to a branch for in-person customer service, simplicity in submitting documents, and increased familiarity with fees. Choosing a bank that operates locally also increases the chances that they are familiar with local probate laws and regulations. 

When it comes down to choosing the right bank for your estate account, there are a few factors you may want to consider: 

• The types of accounts a bank offers 
• What fees are required to open the account
• Account interest rates
• The bank’s customer service ratings
• The decedent’s history with the bank

How to open an estate account

Opening an estate account is not a particularly difficult process, but it does require that you have the necessary documentation and information in order. You can take the following steps to open an estate account. 

1. Get an EIN for an estate account

You will need a tax identification number from the IRS to open the estate account. This ID number or employer identification number (EIN), should be for the estate only, not any other individual or business. You can apply for this number online on the IRS website or by filing form SS-4, Application for EIN.

2. Research your options for banks

Most major financial institutions allow you to open an estate account. Bank estate accounts are typically pretty similar, but there may be a few slight differences between how they operate. Consider which banks offer the lowest fees, greatest financial incentives, and most convenience.

Common options for banks include: 

• Schwab One Bank
• Fidelity
• Bank of America
• USAA Survivor Relations
• Wells Fargo
• Chase Bank
• BB&T

National banks are not the only option for establishing estate accounts—local banks can also offer options for opening an account along with having an understanding of local regulations.

3. Contact the bank

Once you have the EIN and an idea of your preferred bank, you can reach out to the bank to begin the process of opening an account. Most banks will allow you to begin the process of opening an estate account by phone. Simply call their Estate Unit. They will likely ask you for the following information:

• The decedent’s legal name
• The decedent’s social security number
• The decedent’s financial account numbers
• A new tax identification number for the estate (EIN)
• One certified copy of the death certificate

Then, the bank will provide you with a case number. This is the number you’ll use on all documents provided to the bank.

4. Select the right type of Estate Account 

Selecting the right type of estate account is important for maximizing the benefits of the account and preserving the value of the estate. The best type of estate account typically depends on the types of assets associated with an estate and their value.

The two most common options are checking accounts and combined brokerage accounts: 

• Checking account – A checking account will hold funds belonging to the estate and allow for simple transactions, like paying fees or receiving income while managed by the executor.
• Combined brokerage account – A combined brokerage account is a shared account that allows for multiple contributors, like brokers and investors, to add to the account.

For simple estates, a checking account is often great. A checking account will allow you to deposit any proceeds from insurance policies and pay for expenses like estate taxes. 

However, for complicated estates, particularly estates that hold securities investments, it’s typically recommended to open a combination brokerage and cash account. A combined brokerage account will allow for easy access to all investment accounts, like IRAs. Many major banks will offer the ability to choose between these two accounts.

For guidance in determining the appropriate estate account, you should consult a financial advisor who can offer recommendations on the best account based on the estate’s resources. Remember, if you’re working with an experienced probate attorney, they’ll assist you in reaching out to the appropriate advisors.

5. Transfer estate assets

Once you choose the best account for your scenario, you can officially open the account with the bank. After officially opening the estate account, you can begin transferring the deceased’s assets into it. If you choose to work with the same bank that your loved one already had an account with, the bank can often handle this transfer for you rather seamlessly.

Are all estate accounts the same across major financial institutions?

Most estate accounts are similar at top banks. The differences often center around factors like customer service, administrative fees, and the types of accounts they offer. Some accounts may also offer better interest rates for the estate to accrue interest during probate. With this being the case, the best bank for an estate account often comes down to personal preference. 

There is a benefit to choosing an estate account where your deceased loved one already had an account. Going with a bank that your family has used before often offers a sense of familiarity, a connection to your financial history, and even allows for an easier transfer of funds from the decedent’s original account into their new account.

How much does it cost to open an estate account?

In many cases, opening a checking account is free. Opening a brokerage account may incur some initial fees. However, this will depend largely on the financial institution and the fees they impose. You may also have to prepare for some associated fees, like administrative fees or processing fees.

Some common associated costs with opening an estate account include: 

• Initial deposit – To open any bank account, you typically need to make an initial deposit to keep it open. The required deposit depends on the financial institution. 
• Checks – Although not an extremely high cost, you may need to purchase checks for the account to distribute. 
• Associated fees – Most banks allow you to open an account for free with an initial deposit, but you should research whether there are any other required fees at your preferred financial institution, such as fees associated with minimum balances or monthly transactions.

What documents do you need to open an estate account?

Once you have the estate EIN available and are ready to open an account, you can gather the necessary documents to take to the bank. Banks may vary slightly in the documents they require to open an account, so you should contact your preferred financial institution for specific information regarding the ones they request. 

Generally, necessary documents often include:

• A certified or notarized copy of the death certificate
• Court documents that name you as the personal representative or executor of the estate
• Identifying documents that verify your identity as the executor, like a driver’s license or passport
• A document containing the estate EIN
• A list of all assets, debts, and liabilities that are currently tied to the estate.

Opening an estate account in Texas

To open an estate account in Texas, you must open the probate process by filing an application with the probate court in your county. The court will then validate the will and officially appoint the executor as the individual with authority to manage and administer estate assets. 

With the will and the executor’s position verified by the court, the executor can then take the documentation provided by the court to the bank and open an account. 

Opening an estate account in California

To open an estate account in California, you must first open the probate process through your county court and obtain a court order appointing you as the personal representative or executor. Once you have the documents that name you as a personal representative or executor and verify the opening of probate, you can prove that you have legal standing to manage the account and visit your preferred bank to open an account. 

Rules and regulations governing estate accounts

Executors and estate administrators have several responsibilities involved in managing estate accounts. One of the most crucial requirements is to maintain an accurate accounting of all estate assets to report to the courts and all interested parties—a dedicated estate bank account makes following these rules and regulations simpler.

Under California Probate Codes and Texas Estate Codes, executors and estate administrators are required to provide beneficiaries, the court, and interested parties with a detailed accounting at least annually and as requested. The executor is also required to file an accounting with the probate court to close the probate process. 

An estate bank account dedicated to managing estate assets makes it easier to track all transactions and provide an ongoing record of estate funds. Having a clear accounting of the estate transactions through a bank account will benefit the executor in staying organized and maintaining transparency with interested parties, as bank statements will serve as a strong foundation for reporting.

Is an estate account necessary when someone dies?

It is highly recommended that the executor open an estate account to properly track and account for payments made to estate creditors. This is especially true in cases wherein an estate’s probate process lasts over a year, wherein estate taxes will be paid only once during the probate process.

Having an estate account will make it easier to track assets coming into the estate. All expenses and transactions should move through the estate account, as opposed to an executor’s personal account or the deceased’s accounts they used prior to their death. 

It will also make for improved transparency, recordkeeping, and easier organization regarding estate transactions. This is all valuable when it comes time to submit the final accounting—all transactions in connection with the estate will be clear, distinct, and impossible to mix up estate transactions with personal transactions.

What can be paid out of an estate account?

Any transactions related to the estate can be paid out of an estate account. For example, bills owed by the decedent, property taxes, and property maintenance costs will be paid from the estate account. Keep in mind that not all bills may need to be paid, depending on the legal obligations that the decedent had upon their passing. To determine which bills should be paid and which need not be paid, it’s best to speak with an experienced probate lawyer. 

The estate account is also the central place for paying creditors and debtors who submit valid claims against the estate. The executor will also use the estate account to pay out assets to the appropriate beneficiaries named in a will or according to state intestacy law. 

Closing an estate account

An executor or estate administrator must close the probate process with the court before they can close the estate bank account. Some nuances surrounding how to close probate may look different depending on state law, but the process is generally the same.

After all debts and expenses have been settled and all distributions have been made to heirs and beneficiaries, you can file a petition with the court to close probate. This petition should also have a final accounting of the estate with your probate court, which should include records of disbursements, receipts, and costs attributed to the executor of the estate. 

Then it’s time to close your estate account. By this point, the account should be empty, as all assets should have been distributed to the appropriate beneficiaries. Be sure to have on hand the court documents that verify the closing of probate and then contact your financial institution, and they will guide you through the closing process.

Do I need a probate lawyer near me?

It often helps to work with a probate lawyer near you. However, it’s more important to retain a probate lawyer who is familiar with the county probate court in the decedent’s county of residence. For example, if the decedent lived in Los Angeles, the executor may consider retaining a probate attorney familiar with working with the Los Angeles Superior Court – Probate Division and the local rules that govern the proceedings in that court.

Take control with RMO Lawyers

An estate account offers significant benefits for protecting the assets of the deceased and organizing all transactions made surrounding an estate. Opening an estate account involves gathering the necessary documentation, choosing your preferred financial institution, and opening the best account. The support of an attorney can ease the burden of navigating the process and understanding the legal requirements of an account. 

At RMO Lawyers, we help people like you every day. Our team of estate and probate administration attorneys have decades of experience offering support and guidance to families and loved ones navigating probate. Whether you need to know how to open an estate account in California or Texas, we can help.

Contact us anytime—we’re happy to offer you a free consultation so we can understand the circumstances around your case and what next steps are necessary. 

Call us today at (424) 390-9444 or schedule a consultation online.