How to Set Up an Estate Account in 4 Steps

Estate owners want to be sure that all their assets are taken care of after their death. How can estate owners be sure that their money will be properly looked after, even when they are gone? They will likely appoint an executor to manage their estate for them. If you’ve been designated as someone’s executor or administrator, you may want to set up an estate account so that you can manage the deceased person’s finances according to their wishes.

If you're wondering how to set up an estate account, check out these basic guidelines to help you get started.

What is an estate?

To successfully set up an estate account, you must first understand what the estate is. The estate is the total of all the assets in the owner’s possession at the time of their death. This includes their house, vehicles, land, and finances such as liquid cash, savings, and investment accounts.

When owners go through the estate planning process, they decide what will happen to their estate after they pass away. Who should they designate as the executor of their estate to be sure that their wishes are carried out? Who will inherit parts of their estate? Do they want a portion of the estate to go to charity? Would they like to place certain amounts of their estate in a trust? It’s better for everyone if the owner makes all decisions; otherwise, the courts will decide what should happen to their estate after their death.

What is an estate account?

As the executor of this estate, you can further protect the owner’s wishes by placing their liquidated assets into an estate account. You'll manage their money, performing essential duties like paying off debts that they owed and giving their money to their beneficiaries. This estate account is separate from your personal accounts, so there is no fear of a money mix-up.

Why do I need an estate account?

An estate account protects the deceased owner’s money. It allows all their liquid finances to be consolidated into one secure place so that you. as the executor, can easily access them to carry out the owner’s wishes. It also lets you keep everything separate from your own money. This further helps simplify the process of distributing finances according to the written directives the owner left behind.

How do I set up an estate account?

Setting up an estate account takes a bit of time, so it’s helpful to know the steps to go through before starting the process. Check out these basic guidelines to assist you in creating an estate account with confidence!

1. Get all the documents you need.

You’ll want to make sure you have all the legal documents in order to ensure a smooth set-up.

• Create a front sheet that specifies the type of document, as well as the deceased’s full name and the date of their death.
• List out all the assets that will be included in this estate account. Add up the value of each of these assets and write the total at the bottom, making sure you use the value of each asset as it was on the day when the owner died.
• List and add up the total amount of liabilities, such as debts, mortgages, etc.
• List any assets or liabilities that changed in value when they were sold under your administration.
• Has the estate received money or paid out money? List these incomes and expenses accordingly.
• For a distribution sheet, add the total amount of assets, income and changes, and deduct the total amount of expenses and liabilities. This final amount is the most important amount that many people will want to know. From this total, you will assign the appropriate amounts to the beneficiaries.
• Don’t forget to sign and date the final page!

2. Start probate.

Probate is the process wherein an administrator of a deceased person’s estate reviews the owner’s assets and distributes the estate according to the owner’s wishes. However, if the deceased had set up a trust for their estate, no probate is needed.

As the executor, you'll follow the directives laid out in the estate owner’s Will. However, if there is no Will, the courts may have appointed you as the administrator in charge of collecting the deceased person’s assets to pay out as needed.

Did the deceased person leave a Will? Your task is to file the Will with the probate court so they can review it, prove it valid, and officially appoint you as the executor so you have legal power to act. If the deceased person did not leave a Will, the probate court will determine who should act as an administrator (in this case, you) so you can begin locating heirs, transferring assets, and dividing property among the surviving family members.

3. Get estate EIN.

An estate EIN is an Employer Identification Number. An estate needs an EIN for tax purposes. Similar to a business, the estate collected assets and paid out assets while the owner was alive. Now that the owner has passed away, the estate is left behind, meaning it needs an EIN to continue functioning in a legal capacity.

Go to the IRS website to find the EIN Assistant and enter the deceased person’s legal information. You’ll also need to fill out your own role, so make sure you identify yourself as the executor or administrator. Continue following the instructions on the website to fill out the complete EIN application.

4. Open your estate account.

Now it's time to open your estate account with a trusted local bank. It’s easiest to use the bank that the deceased person was already using, since that bank is familiar with their finances. Ask the bank how much this estate account will cost, as well as what they need you to submit: a Will, a death certificate, etc.Once you have all your necessary documentation, you can choose to open an estate account as either a savings or checking account. Checking is usually the simplest, since you'll be withdrawing money regularly from this account. The final step is to transfer the deceased person’s estate assets into this new account. Close empty accounts belonging to the deceased person.

How can LegalShield help?

It's a big honor, but also a big duty, if you have been appointed as an administrator or an executor of someone’s estate. How can you make sure you carry out your responsibilities as effectively and efficiently as possible? Your LegalShield provider law firm can give advice on this journey. You can contact your provider law firm with questions about the estate account process, as part of a personal LegalShield membership.

‍Learn how LegalShield can help you with this process.

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