Typically when someone dies without a will, an administrator is appointed in probate court to settle the affairs of the deceased. When there is a will, an executor generally performs this role. In either case, it’s a good idea to open a bank account to handle the estates affairs.
There’s No Magic Wand
Often, when we use the phrase “settling affairs” it seems abstract. Maybe there is a “settle affairs” button somewhere? Alas, the duties of those designated to administer the affairs of the deceased involve a lot of nitty gritty. For example, an essential role of administrators and executors is collecting the cash assets of the deceased, and paying the bills. This process is overseen by probate court. While “settling affairs,” experts advise establishing a bank account specifically for the estate. It’s best to do so in the state where the deceased lived. There are specific steps to follow when opening a bank account for the estate, as NOLO details:
You’ll need a taxpayer ID number for the estate, which is itself a taxpayer. You can apply for an ID number online, at www.irs.gov. You need to complete a simple form with a confusing title: IRS Form SS-4, Application for Employer Identification Number. …Fill it in and then either call the IRS (phone numbers are listed on the back of the form) or mail in the form. If you mail in a paper form, you should get your ID number (EIN) back in about four weeks. If you call, the IRS will assign a number over the phone that you can use immediately. You’ll still need to write that number on the SS-4 form and mail or fax it to the IRS.
Once you have navigated the process of opening a bank account for the estate, you will transfer the funds from the deceased person’s accounts into it, along with any income your receive on behalf of the deceased. For example, any income that is generated by the estate, like stock dividends or real estate rentals, should also be deposited in the estate’s bank account. You will then use the funds in the account to pay off debts, taxes, probate fees, and other expenses involved in settling the affairs of the deceased. Ultimately, following the state’s probate process, you will also administer monetary gifts to beneficiaries from this account.
Understanding Administrator Bonds?
Given the responsibilities involved in being an administrator or executor, probate courts frequently request administrator bonds or executor bonds. These are a type of fiduciary bond—they protect the interests of the estate and its beneficiaries in accordance with state law. Essentially, an administrator or executor bond guarantees the faithful performance of the appointed administrator or executor.
As a leading national provider of fiduciary bonds, Colonial Surety Company helps court appointed administrators and executors in every state quickly and affordably obtain their bonds. Uniquely, Colonial offers a direct, instant and digital way to obtain fiduciary bonds.
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Avoid Mixing!
NOLO‘s experts stress the importance of keeping good, clear and detailed records of all financial transactions made as an administrator or executor, and further advise:
Never mix personal and estate funds. If you ever find it absolutely necessary to pay expenses with personal funds and then reimburse yourself from estate assets, keep meticulous records. For example, say you find yourself at the court clerk’s office without the estate checkbook and need to pay a fee. If you write a check from your personal account, be sure to get a receipt and put it in your files. And when you reimburse yourself from the estate account, note exactly why.
So Many Details!
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