As part of their job, the executor or administrator of an estate (also known as the personal representative) must perform certain duties, including, among others, creating an inventory of the deceased person’s assets, paying their creditors and taxes, distributing their assets to beneficiaries or heirs, and preparing estate accountings.
Some of an administrator or executor’s duties may require them to spend money belonging to the deceased person’s estate. Is a deceased person’s bank account a part of their estate? And if so, can the executor of the will access the bank account?
Additionally, what is an estate account? Are the rules for a personal representative withdrawing cash from an estate account the same as the rules for a personal representative withdrawing cash from a bank account?
Suppose a deceased person’s estate predominantly consists of real estate. As a result, there is not sufficient cash available in the estate to satisfy all their debts. If the deceased had jointly owned a bank account with their surviving spouse, can the executor withdraw money from the deceased’s bank account to satisfy their debts? Or would it be necessary for the executor to sell the deceased person’s real properties?
Suppose a deceased person’s will provides for their bank account to pass to their adult child; however, the bank account has a payable-on-death beneficiary who is different from the child named in the will. Can the executor of the will take everything in the bank account to distribute to the estate beneficiary? Or is the payable-on-death beneficiary entitled to the account?
Suppose someone dies without a will. They owned a bank account, but the bank account is not payable on death. Can the administrator close the bank account and transfer its funds into a new account created specifically for the deceased person’s estate? And if so, can the administrator withdraw money from the estate account to pay estate administration costs?
Suppose someone becomes administrator of their sibling’s estate while having a full-time job. Due to their time limitations, they would like to enlist professionals, such as probate attorneys and CPAs, to assist with administrative tasks. Can an administrator withdraw money from an estate account to cover the cost of professional services?
Whether a personal representative can access a deceased person’s bank accounts depends on a variety of factors, such as the type of bank account the deceased owned and for what purpose the executor wishes to access the account.
To understand an executor or administrator’s rights and limitations in each of the scenarios mentioned above, it’s necessary to first understand the differences between a deceased person’s bank accounts and a deceased person’s estate account. We discuss the differences between the two in the next section.
If you are a beneficiary, heir or personal representative with specific questions around deceased persons’ bank accounts or estate accounts, our team of probate attorneys can help. Schedule a free consultation with us today.
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
Section 7
What Is the Difference Between Estate Accounts for Deceased Persons and Bank Accounts of Deceased Persons?
On the surface, it may seem like an estate account is a simpler way of referring to a deceased person’s bank account, but estate accounts and deceased persons’ bank accounts have very different implications.
As previously mentioned, most estates belonging to deceased persons will own estate accounts, but there is no guarantee they will own deceased persons’ bank accounts. Continue reading to find out why.
What Is a Deceased Person’s Bank Account?
As you might suspect, a deceased person’s bank accounts consist of any financial accounts the deceased person owned at the time of their death.
Many bank account owners convert their standard bank accounts into what are known as Totten trusts, or accounts with payable-on-death beneficiaries. In other words, bank accounts that are Totten trusts can be paid out to the beneficiaries designated on the account immediately following the account owner’s death.
Payable-on-death bank accounts are not considered to be a part of the deceased person’s estate, and as a result, they generally bypass the court-supervised probate process to which estate assets typically are subject.
On the other side of the coin are joint bank accounts (also called survivorship accounts). Joint ownership refers to a way of holding title in which two or more people share equal ownership of an asset for their lifetimes. When one co-owner dies, the remaining co-owners assume ownership of the deceased co-owner’s share of the asset.
A deceased person’s joint bank accounts are not considered to be a part of their estate, either. As a result, they generally are also exempt from probate.
What Is an Estate Account?
A personal representative opens an estate account after a person’s death to house the estate’s money while administration is ongoing. Estate accounts are temporary and cannot be accessed by anyone other than the personal representative.
Suppose the executor sells a real property belonging to the deceased person’s estate. Once they receive proceeds from the sale, they generally would be responsible for depositing them into the estate account. In the same vein, they should take money from the estate account anytime they need to pay an estate-related expense, such as administration costs, debts or probate fees.
An estate account can not only prevent the personal representative from commingling estate funds with non-estate funds, but it can streamline estate accounting as well. If all estate-related transactions are made from one account, it’s easy to keep track of them.
That said, while personal representatives generally can access estate accounts without prior court approval, it would be considered fiduciary misconduct if they were to use the estate account to benefit someone other than the beneficiaries or heirs, or the estate in general.
Suppose an administrator wishes to provide themselves a loan from an estate account. Even if they repay the full amount they borrowed, it would be considered a breach of their fiduciary duties because the transaction at issue wasn’t carried out for the benefit of the heirs to the estate.
Self-dealing occurs when a fiduciary acts in their own best interests, as opposed to acting in the best interests of the person(s) they represent. In most contexts, self-dealing is unlawful and can result in the fiduciary being sued for breaching their duties.
Personal representatives should remember that they generally will need to account for every estate-related transaction they make to beneficiaries and heirs. They may also need to provide proof of these transactions, which can include everything from bank statements to receipts. As a result, if they are engaged in any form of executor misconduct, chances are they will be caught.
Executor Rights — Bank Accounts of Deceased Persons
A deceased person’s bank accounts could potentially be off-limits for an executor of an estate. As previously mentioned, payable-on-death bank accounts and jointly owned bank accounts generally are not considered estate assets, and therefore, are not subject to probate.
That said, how can an executor find out if a deceased person’s bank account is an estate asset? And if it is one, how can they access it? Continue reading to find out.
How Can the Executor of a Will Access Bank Accounts of Deceased Persons?
Before the nominated executor can access estate assets, they must formally be appointed to the role. The court generally appoints an executor at the initial probate hearing.
Once an executor is appointed, they will be issued letters testamentary (or letters of administration if they are an administrator), which is a court document conferring them with the power to oversee estate assets and distribute them to the appropriate parties.
Without letters, the executor cannot access a deceased person’s bank accounts. After letters are issued, however, they can provide the bank with a certified copy of the account owner’s death certificate to find out whether or not they are authorized to claim the accounts for the estate.
If the executor is able to claim a deceased person’s bank account for the estate, they generally must deposit its contents into a separate estate account, which they’ll have the authority to open once letters are issued.
When Can the Executor of a Will Access Bank Accounts of Deceased Persons?
A deceased person’s bank account may not be accessible to the executor at all. It depends on the nature of the account.
In the following sections, we discuss the circumstances under which the executor generally would be able to claim a deceased person’s bank account for their estate.
Bank Account Is Not Payable-on-Death
An executor may be able to access a deceased person’s bank account if it is not payable on death (i.e., it is not a Totten trust), though this is not the only condition a bank account must meet for an executor to be able to claim the account for the estate.
When a bank account is payable on death, it means the account owner had designated beneficiaries to inherit the account after their death. Such an account generally would not be considered an estate asset, and therefore, would not need to pass through probate.
The beneficiary designation on a payable-on-death bank account generally takes precedence over the terms of a deceased person’s will. For example, if a will provides for the deceased person’s son to inherit their bank account, but their daughter is designated as a beneficiary on the account, the daughter would most likely be entitled to it.
This, however, is not to say that a payable-on-death account cannot be contested. POD accounts can be contested in certain situations. For instance, if the executor has proof the deceased person intended for their account to be distributed as part of their estate to their son, they could file what is known as an 850 petition to try to have the asset transferred into the estate without it being formally probated.
Bank Account Does Not Include Rights of Survivorship
If an executor has confirmed a deceased person’s bank account is not payable on death, the next factor they’ll need to check for is whether the account was jointly owned. In other words, they’ll need to check whether it includes rights of survivorship, or the right of the surviving co-owners of the account to assume ownership of the deceased co-owner’s share of the account upon their death.
Co-owners of joint bank accounts own equal shares of the account for their lifetimes, regardless of their specific contributions to the account. Upon a joint account owner’s death, however, their share of the account does not pass to their estate. Rather, the account generally remains functioning as it normally would, with its funds being available for withdrawal by the surviving co-owner(s).
An exception would be if the person who died was the last surviving co-owner of a bank account. If they had not designated beneficiaries on the account, it’s possible the account would be considered an estate asset, which would entitle the executor to access it.
Can the Executor of a Will Take Everything in a Deceased Person’s Bank Account?
The executor could potentially take everything in a deceased person’s bank account for the estate, but they could never take everything for themselves.
In other words, if an executor has confirmed that a deceased person’s bank account is indeed an estate asset, they could claim the account on behalf of the estate and then transfer its funds into an estate account.
On the other hand, if a deceased person’s bank account has a beneficiary designation, the executor generally wouldn’t be able to claim the account for the estate without successfully contesting the beneficiary designation first. In the same vein, if a bank account had been jointly owned, the executor generally wouldn’t be able to claim the account for the estate without contesting the joint owner(s) of the account.
Remember, executors must have valid reasons for contesting payable-on-death beneficiaries and joint owners. For example, if the executor has evidence to show a joint owner exerted undue influence on the deceased person in order to be added as a joint owner, they could contest the joint owner to try to have the account recharacterized as an estate asset.
Administrator Rights — Bank Accounts of Deceased Persons
Just like for executors, a deceased person’s bank account could be off-limits for administrators. The court appoints an administrator when someone dies without a will. However, the fact that there is no will does not play into whether or not the administrator can access the account.
As discussed previously, payable-on-death and jointly owned bank accounts typically are not considered estate assets, and therefore, are not subject to probate.
That said, how can an administrator determine whether a deceased person’s bank account belongs to their intestate estate (an estate without a will)? And if it does, what steps must they take to access it? Keep reading to find out.
How Can the Administrator Access Bank Accounts of Deceased Persons?
The process for accessing the bank accounts of a deceased person as an administrator is almost identical to the process for accessing the bank accounts of a deceased person as an executor.
In other words, the court will need to issue letters of administration to the administrator in order for them to find out from the deceased person’s financial institution whether they have access to the deceased person’s bank account.
Whereas the court generally appoints the executor nominated in the will to serve unless it has a reason to believe they are not right for the job, the court appoints an administrator based on the order of priority established by California Probate Code section 8461.
In addition to administrators being appointed by statute rather than by nomination, they must make distributions to heirs in accordance with intestate succession laws, since there is no will to instruct them.
When Can the Administrator Access Bank Accounts of Deceased Persons?
To access a bank account of a deceased person, the administrator must confirm the account is an estate asset. In other words, they must confirm the account neither has a beneficiary designation nor is jointly owned.
Once the administrator confirms this, they most likely can claim the contents of the account to distribute to the deceased person’s closest surviving heirs as part of the intestate estate. They, however, must remember to deposit the contents of the account into a separate estate account.
The administrator is responsible for keeping track of all transactions they make using the estate account to include in the annual accounting they provide heirs (unless heirs waived their right to an accounting in writing). Additionally, they must be careful to only use the estate account to benefit the heirs, or the estate in general.
Can an Administrator of an Estate Take Everything in the Bank Accounts of Deceased Persons?
An administrator could potentially take everything in a deceased person’s bank account if the account is an estate asset. They, however, must remember they are only entitled to claim a deceased person’s bank account for their estate, never for themselves.
When a deceased person’s bank account has a beneficiary designation or joint owner, and therefore, is not an estate asset, administrators, like executors, can contest the beneficiary designation or joint owner on the account.
That said, if an administrator wishes to bring a contest, they should have a valid reason for doing so. In other words, they should be able to back up with evidence that the deceased didn’t intend for the account to be paid to the designated beneficiary or become the property of the joint owner(s).
Executor Rights — Estate Accounts for Deceased Persons
Unless an estate is small (which, in California, means the estate is valued at less than $184,500), the executor generally will need to open a temporary estate account to hold the estate’s money. The executor should make all estate-related transactions from this account once it’s been opened.
That said, how does an executor go about opening an estate account? And once an estate account is opened, what kinds of transactions can the executor make using its funds?
How Can an Executor Open an Estate Bank Account?
In order to act on behalf of a deceased person’s estate in any capacity, the court must first formally appoint the nominated executor to serve. This is usually done at the initial probate hearing.
Once the executor is formally appointed, they will be issued letters testamentary, which will entitle them to manage estate assets and distribute them to the appropriate parties. An executor generally will not be able to open an estate account without having been issued letters.
An executor may also need to provide the financial institution with a certified copy of the death certificate, the employer identification number (EIN) for the estate, and proof of their own identity.
It is simplest for the executor to open an estate account in the same financial institution where the deceased had banked; however, this is not a requirement. They generally can open an estate account in any local or national financial institution, so long as it has a presence in California.
After probate is complete, the executor can distribute whatever assets remain in the estate to beneficiaries. Once they do this, the estate account can be permanently closed.
When Can an Executor Withdraw Money From an Estate Account?
An executor generally has unrestricted access to the assets of an estate, including the funds housed in an estate account; however, this does not mean they can use these funds in whatever way they wish.
An executor has a fiduciary duty to act only in the best interests of the beneficiaries. When they act according to their own best interests or the best interests of someone other than the beneficiaries, they are, in effect, breaching their duties.
Because having access to large sums of money can tempt even the most honest of people, executors generally are required to secure what is known as a probate bond to cover any damage they may cause to the estate. Some executors, however, may not be able to secure a probate bond. This may be the case if they have no credit history.
When an executor is unable to secure a probate bond, they may be required to place estate funds in what is known as a blocked account for the purpose of estate asset protection. If this is a requirement for them, they likely will need a court order to access the funds in the blocked account.
That said, regardless of whether an estate account is blocked or unblocked, the executor can only use its funds for certain purposes. We go over what these purposes are in the following sections.
Paying Estate Administration Costs
An executor can withdraw funds from an estate account to cover the cost of estate administration. Needless to say, an executor would not be required to pay this cost from their own pockets.
All estates, even small ones, must be administered. Therefore, administration costs must be paid first, even before paying the deceased person’s financial liabilities. Administration costs can comprise everything from probate fees and executor fees to the fees of third-party professionals, who were hired to assist the executor with their duties.
However, it is important to note that legal fees cannot be paid using estate assets without a court order approving payment of the fees.
Paying Debts and Taxes
An executor can withdraw funds from an estate account to satisfy the deceased person’s financial liabilities, including their taxes and debts. They must do this after creating an inventory of estate assets, but before making distributions to beneficiaries.
Creditors generally have one year from the date of the debtor’s death to file a creditor claim with the estate. An executor can either accept a claim or reject it, based on its validity. As long as an estate has the funds to settle a valid debt, it must do so.
If the debts of an estate exceed the cumulative value of its assets, the executor will need to file a petition with the court to have the estate declared insolvent. In the event this happens, beneficiaries will not receive an inheritance from the estate.
Paying Beneficiaries According to Terms in Will
Once the probate process completes, the executor can withdraw whatever funds remain in the estate account to make distributions to beneficiaries. Before doing this, however, they must file a petition for final distribution with the court. Only if the petition is granted can the executor proceed with making distributions.
It’s important that the executor pay administration expenses and the deceased person’s outstanding financial obligations prior to making distributions to beneficiaries, though there are exceptions to this rule (e.g., probate homestead exemption, family allowance). Additionally, they must take care to not stray from the terms of the will.
As previously mentioned, once final distributions are made to beneficiaries, the executor can permanently close the estate account.
Can the Executor of a Will Take Everything in an Estate Account?
If you are asking whether an executor can run off with all the money in an estate account, the only circumstance under which this could be legal would be if the executor were also the sole beneficiary of an estate.
This is not to say there is no way for the executor to take everything in an estate account for themselves. They absolutely could, but not without facing serious legal consequences.
If, on the other hand, you are asking whether an executor could exhaust the funds in an estate account before any distributions are made to beneficiaries, they could. An estate’s administration costs and debts sometimes do surpass the value of the estate. When this happens, it would be unlawful for the executor to not exhaust the funds in an estate account to cover these expenses.
Administrator Rights — Estate Accounts for Deceased Persons
An administrator’s rights and limitations surrounding estate accounts are virtually identical to those of an executor. For example, most administrators are required to open an estate account to hold an estate’s money until it can be distributed to the appropriate parties.
Again, if an estate is small, the administrator may not need to open an estate account. But for estates of significant value, estate accounts are generally required. Once opened, the estate account should exclusively be used to make estate-related transactions.
That said, how does an administrator open an estate account if there is no will to nominate them as the personal representative? And once an estate account is opened, what kinds of transactions can the administrator make using its funds?
How Can an Administrator Open an Estate Bank Account?
When an estate has an administrator instead of an executor, it generally means the deceased died without a will. This fact has little relevance when it comes to opening an estate account.
As we mentioned earlier, administrators are appointed according to the order of priority established by Probate Code section 8461. If you are first in line to serve and the court formally appoints you, you can open an estate account as soon as letters of administration are issued to you.
Like executors, administrators will need to provide the financial institution where they wish to open the estate account with a certified copy of the death certificate, proof of their own identity and the estate’s EIN. Once they do this, an estate account can be opened to hold estate funds. The administrator must make all estate-related transactions from this account.
When Can an Administrator Withdraw Money From an Estate Account?
An administrator can withdraw money from an estate account for the same purposes as an executor, including paying the estate’s administration and litigation costs, and the deceased person’s outstanding financial obligations.
An administrator, of course, can also withdraw money from an estate account to make distributions, but rather than making distributions to beneficiaries according to the terms of the deceased person’s will like executors do, they must make distributions to the deceased person’s closest surviving heirs according to intestate succession laws.
Once an administrator has fully distributed the funds in an estate account, they can close out the account permanently.
Can an Administrator of an Estate Take Everything in an Estate Account?
As we’ve covered extensively, there is no way for an administrator to run off with all the funds in an estate account without facing legal consequences. They, however, could exhaust the funds in an estate account before heirs have had a chance to receive an inheritance.
Most of the time, an administrator exhausting the funds in an estate account is the result of the estate having more financial liabilities than it has assets. There is little the administrator can do in such a situation.
That said, if you have reason to believe an administrator took everything in an estate account for themselves or another unauthorized purpose, it is crucial you work with a probate attorney to further investigate the situation, and if necessary, take legal action.
What Happens if an Executor Spends All the Money?
What will happen if a personal representative spends all of an estate’s money will depend on what the personal representative spent the money on.
In many cases, administrators and executors have no choice but to spend all of an estate’s money to fulfill the responsibilities of their role, such as paying administration expenses and the deceased person’s debts.
In the following sections, we go over what happens when an executor spends all the money in an estate on valid expenses versus what happens when an executor spends all the money in an estate on invalid expenses.
Administrator / Executor’s Use of Estate Funds Was Proper
If a personal representative spends all of an estate’s money on valid expenses, resulting in heirs and beneficiaries not receiving an inheritance, the personal representative cannot be held liable for heirs’ or beneficiaries’ lack of an inheritance.
The responsibilities of the personal representative’s role required them to pay these valid expenses prior to making distributions to heirs or beneficiaries, who generally are paid last. Hence, they did nothing wrong.
If you are an heir or beneficiary with doubts about the personal representative having only spent the estate’s money on valid expenses, it may be a good idea to get in touch with a probate attorney, who could investigate the personal representative’s financial transactions to determine whether any wrongdoing took place.
Administrator / Executor’s Use of Estate Funds Was Improper
If a personal representative spends all of an estate’s money, but some of the expenditures seem suspicious or altogether improper, the personal representative could be held personally liable for heirs’ or beneficiaries’ lack of an inheritance.
A personal representative has a fiduciary duty to only make decisions that are in the best interests of the heirs or beneficiaries. If a personal representative’s decisions primarily benefit someone other than the heirs or beneficiaries, they could be sued. This especially holds true if any of the personal representatives’ decisions financially harmed the estate.
Beneficiaries or heirs suing the executor or administrator generally entails their filing a petition with the court to have the executor or administrator suspended or removed. In addition, they can ask the court to impose a surcharge (otherwise known as punitive damages) on them.
If beneficiaries or heirs win their misconduct claim against a personal representative, they may be able to recoup their attorney fees and costs from the personal representative. This, however, is not a guaranteed outcome, so beneficiaries and heirs should frankly discuss their budgetary concerns with their attorney to find a cost-effective legal solution.
FAQs: Bank and Estate Accounts for Deceased Persons
Navigating the complexities around a deceased person’s bank accounts and estate accounts can be challenging, even for seasoned financial and legal professionals. We try to address some frequently asked questions that were not covered in the content above; however, if you continue to have questions, we recommend directly reaching out to our legal team for a free consultation.
Is court approval needed for an executor withdrawing cash from an estate account?
Court approval generally is not needed for an executor withdrawing cash from an estate account.
That said, if the bank account in question is a blocked account due to the executor not having been able to secure a probate bond, court approval likely will be needed for the executor to withdraw cash from the estate account. Also, as noted above, an executor or administrator will need court approval to make certain expenditures, such as paying attorneys representing the estate.
Can an executor open an estate account without probate?
In general, an executor cannot open an estate account without probate.
The initial probate hearing is usually where the executor is issued letters testamentary. Because letters typically are needed to open an estate account, it’s not usually possible for the executor to open an estate account without at least having initiated the probate process.
Can the executor be the sole beneficiary?
Yes, an executor can be the sole beneficiary of an estate. While the estate in question would still need to be administered, the executor being the sole beneficiary would significantly streamline the process.
Executors who are the sole beneficiary of an estate must remember they will still have responsibilities to fulfill. For example, they will still need to probate the estate, as well as pay administration costs and the deceased person’s valid debts.
Can an executor use a deceased person’s credit card?
An executor cannot use a deceased person’s credit card under any circumstance, even if they are planning to use it to pay valid estate-related expenses.
When the owner of a credit card dies, their credit card becomes invalid by default. Any transactions made using the credit card thereafter could be considered fraud.
Suppose the executor of a deceased person’s estate is their spouse, who also happens to be an authorized user on their credit card. Even in this instance, the executor should not use the deceased person’s credit card.
Can an executor decide who gets what?
Our clients often ask us out of concern: Can an executor decide who gets what?
We then have to assure them that an executor cannot decide which beneficiaries get what. They are obligated to follow the terms of the deceased person’s will when making distributions to beneficiaries. Straying from the terms of the will generally would be considered a breach of their duties.
Administrators of intestate estates also cannot decide which heirs get what. California’s intestate succession laws, which can be found in Probate Code sections 6400 - 6455, are unambiguous in describing how the estate of someone who died without a will must be distributed. Administrators, likewise, cannot generally stray from intestate succession laws when making distributions to heirs.
Does an executor have to show accounting to beneficiaries?
If executors are not properly communicating with beneficiaries, beneficiaries may be wondering: Does an executor have to show accounting to beneficiaries?
Yes, executors do generally have to show accounting to beneficiaries once a year for every year the estate stays open. That said, beneficiaries can waive their right to accountings to relieve executors of this obligation.
Why would beneficiaries wish to waive their right to an accounting? Accountings take time for the executor to prepare — time for which they can charge the estate. In the same vein, preparing accountings often requires the executor to enlist the help of third-party professionals, such as probate attorneys or CPAs. This also will cost the estate.
Beneficiaries waiving their right to accountings, therefore, can save the estate considerable money, which could potentially result in larger inheritances for them.
Administrators also are required to show heirs an accounting at least once a year for every year the estate remains open, though heirs also can waive their right to an accounting.
Have questions about a personal representative’s right to access a deceased person’s bank account or estate account? We are standing by to help.
The rules governing deceased persons’ bank accounts aren’t always the same as the rules governing the assets in deceased persons’ estates. As a result, you need a legal team guiding you who understands the complexities surrounding these special types of assets.
Whether you are a personal representative with questions about your rights and limitations surrounding a deceased person’s bank accounts, or you are a beneficiary or heir with concerns about whether a deceased person’s bank accounts are being used properly, our talented probate attorneys can help.
Call us today to request a free consultation.
Elder Financial Abuse Stopped in Its Tracks
The swift action taken by Keystone’s attorneys to invalidate the QPRT and suspend the client’s son as trustee helped the client to retain her source of income during retirement. Without our attorneys’ efficient handling of this case, our client could have struggled to retire and to exercise any control over her finances, given that most of her assets were tied up in the QPRT. Our work also stopped the son from perpetrating more financial abuse against our client. While the client resided overseas, we worked hand-in-hand with the successor trustee to administer the trust and close it out.
My son, who I’d put through medical school was about to spend my entire life savings and sell my house. I had given him the legal authority to do so. He was challenging my ability to think for myself and retain legal counsel. He was playing dirty. I was lucky to have Verlan on my side. She really fought for me and eventually got the judge to void the document. Believe me when I say there is not a case Verlan can’t win