According to California law, the estate of a deceased person is a legal entity. Therefore, it must have its own tax ID number, much like a business does. As a personal representative of an estate, whether it be as an Executor or an Administrator, with court approval you have the authority and the responsibility to make financial decisions on behalf of the estate. While you may need further court approval for some decisions, with full authority you can act unilaterally and make decisions on behalf of the estate in its financial dealings. At some point, as the personal representative of an estate, you will probably need to open an estate account early in the probate process. Opening an estate account is not difficult if you have the correct forms, and they are completed accurately and thoroughly. It is a good idea to hire a registered legal document assistant to help you with the probate process so there will be no delays to be able to open an estate account during probate.
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Estate Account Basics
An estate account is a bank account that belongs to a deceased person’s estate. This account will pay money to the deceased person’s creditors if the person owed anything at the time of death. It will also pay and distribute inheritance money to the heirs and beneficiaries. As the personal representative of the estate, it is your task to open an estate account, to disburse money from it as necessary, and to close the account when the estate settles. If there are any other expenses related to the administration of the estate, you can also pay these from the estate account.
Before you can open an estate account, you must apply for probate. Once the probate process has begun and you have been named as the personal representative of the estate, you can apply for a tax ID number for the estate. Keep in mind, all estates need a tax ID number, even when the personal representative does not open a bank account for them.
Benefits of an Estate Account in Probate
There are several benefits to opening an estate account during the probate process. First, the personal representative must avoid commingling their own funds with estate funds. You should never commingle the decedent’s assets with assets belonging to any person.
Secondly, having a separate estate account makes it very easy to keep proper records. Proper record-keeping is essential when probating an estate. Once the estate bank account is set up, the personal representative can use the funds in the account only for estate purposes during the probate process. This may include paying creditors, costs of the probate proceeding, making mortgage payments, etc. Remember, the funds in the estate account belong to the estate, not the personal representative.
Steps to Open an Estate Account
1. File the Probate case
The first step to open an estate account for a California probate is to file the probate case. The court will schedule a hearing at which time the Judge will appoint and confirm the personal representative who will be in charge of the estate.
2. Court Clerk Issues Letters
Once the court appoints a personal representative and signed the Order for Probate, the Court Clerk will need to issue Letters to the personal representative. These Letters are actually a single-paged document that confirms the authority granted by the Court to the personal representative. You can think of it as a type of “Driver’s License” that can be presented to anyone necessary to confirm you are the court-appointed representative of the estate. Remember to order several certified copies of the Letters from the court. Most agencies will not accept a photocopy as proof of authority.
3. Apply for tax ID number for the estate
This step can only take place after the Judge signs the Order for Probate and the Court Clerk has issued Letters of authority. Once these two steps are complete, the personal representative can now apply to the Internal Revenue Service (IRS) for an estate tax ID number (EIN). This is the same process as an employer would do for their employer tax id (EIN = employer identification number). This EIN is a tax identification number that different entities such as employers, churches, trusts, corporations, partnerships, and other entities use to file various tax returns with the IRS. In this regard, to open an estate bank account in the name of the estate, the bank requires an EIN. The good news is that you can easily obtain your estate tax EIN online. Completing the application takes only minutes, and the EIN number is issued immediately.
4. Select the Bank
Now that you have your estate tax ID number, you will need to go to a bank of your choosing to set up the estate account. Take the letter with your tax ID number, a copy of the Order for Probate and Letters with you. The bank will require to see these before setting up the account.
5. Deposit Funds and Open Estate Account
There will undoubtedly be forms the bank will ask to you complete to set up the estate account. Consider what options the bank offers for their bank customers. Remember, an estate account is just like any other kind of bank account, and you may consider accounts that offer low to zero associated costs with a minimum balance, free checks, bill pay, and other services.
As you can see, opening an estate account is simple enough that you do not need a lawyer to do it for you. However, the probate process is much more complicated and we don’t recommend tackling that process without professional help. Surely you do not want to take risks by making mistakes in your documents. Unfortunately, we often hear of cases suffering from unnecessary delays when people try to file probate on their own without proper help.
Estate Accounts and Probate Made Simple
Hiring a registered legal document assistant can help you avoid glitches in the probate process without the unnecessary costs of hiring a probate lawyer. We feel it is essential for our customers to be well-informed and educated. Knowledge empowers our clients and makes their job as personal representative easier. Using the experienced, efficient, and cost-savings probate services of A People’s Choice is a great way to complete California probate. We have helped thousands of customers just like you successfully complete probate. Using our services is a great way to save money as compared to hiring an attorney. Contact us today at 800-747-280 to learn how we can help you with the documents you need to open an estate account and complete your California probate.
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This Estate Account has two Personal Representatives – one in the US (the widow here in Florida) and a nephew of the deceased who lives and is a citizen of Canada (Vancouver, BC). I have been to many banks and no one will open the account unless the Canadian citizen/nephew is present. Is there any avenue available to resolve this issue? I am so terribly frustrated.
Unfortunately, If that is the terms of the Trust, I do not believe so. You may want to try and speak with an Estate Attorney to make sure.