Estate Bank Accounts: Why Executors Should Open One

The size of the estate and the number of transactions during the estate administration process can make it very complex for the estate executor to manage all the debts the estate owes and the funds coming into the estate from asset liquidation. In most cases, we recommend executors to open an estate bank account. This account, reserved solely for the estate’s financial transactions, is a temporary one that the executor of a will uses to consolidate all of the estate’s funds. This consolidation helps the executor reduce the complexity of recording all transactions they make on behalf of the estate.

Benefits of an Estate Bank Account

All Assets and Transactions are in One Place

It’s no secret that estate administration involves numerous transactions, which may include paying off the deceased’s credit card debt or selling their house. Having an estate bank account simplifies accounting related to the estate and ensures no assets of the estate are lost or unaccounted for. Using an estate bank account allows the executor to directly deposit any proceeds from the sale of estate assets directly back into the estate, simplifying the asset liquidation process. Further, cheques written out to the deceased can be directly deposited to the estate account by the executor. A single estate bank account makes it much easier for an executor to account for all the assets and cash of an estate, while simplifying the distribution process when the time comes to distribute the proceeds of an estate to its beneficiaries.

Easier to Make an Account of the Estate for the Beneficiaries

When the executor finishes the estate administration process and prepares to distribute the remainder of the estate to the beneficiaries, they must provide a comprehensive account of all the funds that entered and left the estate. The beneficiaries must approve the accuracy and detail of this report before the executor can distribute any assets. In cases where a beneficiary does not approve of the account, they can request a passing of accounts, where the executor must prove all the transactions of the estate before the courts.

Having an estate bank account makes it very simple to account for all the transactions made. In the rare circumstance where the executor must prove the transactions in a passing of accounts, most bank institutions can provide a comprehensive account summary. The summary will be clear and exact in its description of when assets left the estate and when assets came into the estate.

Prevents Joint Accounts from Causing Confusion

In some cases, people have joint bank accounts with their spouses, this can complicate the process of differentiating between the estate’s assets and the spouse’s assets. Establishing how much of the joint account belongs to the deceased, and putting that amount into a separate estate account ensures that the joint owner will not be able to spend any funds that rightfully belong to the estate.

Additionally, estate bank accounts help to avoid the commingling of funds (mixing funds belonging to different people into one account) with the executor’s accounts. Without a separate estate bank account, it can be easy for an executor to accidentally use the estate’s funds for their own personal use. This creates personal liability concerns for the executor – estate bank accounts can help to minimize this risk.

Easy to Open an Estate Bank Account

An estate bank account is not a special bank account; the executor can simply open a regular chequing account with the bank under the name of the deceased. The bank will likely need to see the will and a death certificate to ensure that the person opening the account is an executor of the will. When the will names multiple executors, they must make decisions unanimously. Therefore, for a cheque written out of the estate bank account to be valid, all the executors must sign it.

Executors don’t have to open estate bank accounts with the same institution that the deceased used before their death. The executor can choose any bank institution to open the estate bank account. Executors can even open estate bank accounts before the grant of probate in preparation for administering the estate.

While it may seem like additional work for an executor to set up an estate bank account, estate administration is typically more complex than one expects and having an estate bank account will be hugely beneficial to the executor in making their duties more straightforward. Having all the estate’s assets in one account will make it easy for executors to prepare accurate accounts of the estate administration transactions, while avoiding any risk of commingling of funds or complications arising from joint accounts.

If you’re an executor of a will and need help administering an estate, contact an experienced estate lawyer today. We can help to ensure that the will is executed properly and in a seamless manner.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.