If you are named as the executor of a loved one's estate, one item that you will want to know more about is what is known as an Estate Account. As its name might suggest, an Estate Account is a bank account that is set up temporarily in the executor's name, and it is used to take care of financial aspects of an estate's funds, expenses, taxes, debts, costs related to probate, and, finally, to distribute funds to named beneficiaries of an estate. There are many aspects of estate planning where you may find legal advice helpful, from setting up and creating estate planning documents to questions regarding responsibilities as an executor of an estate, and you can get all your legal questions answered for one low, monthly fee of $29.95 with our Legal Subscription Plans for Individuals & Families, and, as an added bonus, our members get estate planning documents created at no additional fee.

How to Create An Estate Account

Estate accounts make accounting for estate funds easy, as you will be able to have records to track where funds are going and how they are being used in case there are ever any questions. This reduces the chance of misused funds, particularly in cases where there is a shared account. Keeping estate funds separate from personal funds also adds a layer of protection as distribution of the estate commences, as well as making taxes easier. As an executor of an estate, you'll start by gathering documents, including the death certificate, a copy of the will if one exists, and any state-specific documents that you might need, as laws and rules vary state-to-state.

Probate is a legal process by which assets from an estate are transferred to beneficiaries as laid out in the Will. If there is no Will, there will probably be additional steps to become the executor of the estate. At this point, the court will want to see the death certificate and a copy of the Will if there is one.

Setting up an estate account will require a tax ID number specifically for the estate account, and you can apply for this online at the IRS web site. This simplifies filing the taxes for the estate to the IRS, and it is the same as getting an employer ID number for taxes. The bank will need this EIN to open the account for the estate, so be sure to bring proof of this number with you to the bank when you open the account. It's also a good idea to contact the bank beforehand to ascertain if the bank will need any further documentation in order to open the account and to bring that with you, too.

Estate accounts don't cost anything extra, and they are virtually the same process to open as any other bank account. Estate accounts are typically just standard checking accounts, but you may need a few different types of accounts, depending on how complex the estate is.

Once the account is open, you'll be able to make deposits, payments, and distribute the estate according to the Will. Once this process is complete, it is likely that you won't need the account, and you should be able to work with the bank to close it when the time comes. The documentation needed to close an estate account can vary from bank-to-bank and state-to-state, so it is best to check beforehand on what documentation you will need once the terms of the Will are satisfied.

Estate management can be confusing, and that's why having access to legal advice any time a legal question arises is so convenient. Our Legal Protection Subscription Plans give you access to experienced, dedicated, estate planning attorneys 24/7 through our app or via telephone at an affordable price. Learn more about all the benefits of membership or sign up today!