Although an estate account functions similarly to a traditional checking or savings account, it serves a specific function: It keeps estate assets centralized and separated from outside assets. This separation isn’t just practical; it’s legally required.
This system benefits not only executors but also beneficiaries and heirs. If questions emerge about how their loved one’s estate is being handled — or if there’s suspicion of administrator or executor misconduct — bank statements can provide a clear paper trail of financial activity. This transparency is key to minimizing disputes.
That said, simply opening an estate account isn’t enough to guarantee responsible use. Unfortunately, mismanagement and misappropriation can and do happen.
For instance, an executor might document a withdrawal to pay a real estate agent for listing an estate property, but inflate fees in their accounting to pocket the excess. In another example, an administrator might sell estate property without notifying beneficiaries or the court, and then fail to deposit the proceeds into the estate account, essentially causing those funds to “disappear.”
This is why estate account misuse can be grounds for legal action. Executors and administrators (called personal representatives) are fiduciaries — and as such, they’re legally bound to act in the best interest of the estate and its beneficiaries. That includes abiding by strict guidelines about how estate funds can be used and properly accounting for them.
If you’re a personal representative and unsure what counts as proper use of an estate account, or if you’re a beneficiary concerned about questionable omissions or withdrawals, a probate attorney can help.
How Does an Estate Account Work?
Estate accounts function similarly to regular checking or savings accounts — the personal representative can deposit and withdraw funds. However, the account must be used only for estate-related purposes.
Typical deposits may include the decedent’s remaining bank funds and proceeds from the sale of assets. Withdrawals may be limited to expenses like funeral costs, last illness costs, debts, taxes and, eventually, distributions to estate beneficiaries — all of which could require court approval, depending on the situation and personal representative’s authority.
Even though banks automatically generate monthly statements for estate accounts, personal representatives are expected to keep their own detailed records. This includes tracking all deposits, withdrawals and changes in the assets of the estate.
Personal representatives generally must provide an annual accounting to beneficiaries and a final accounting before the estate is closed. Interested parties may also informally request information about the estate account at any time.
A personal representative’s accounting should aim to document:
- The initial inventory of estate funds
- All income received by the estate
- All expenses paid by the estate
- Any changes in the estate’s value
- Distributions made to beneficiaries
When in doubt, it’s better to over-document than under-document. Transparency helps protect the personal representative from liability and minimizes the risk of disputes with beneficiaries and heirs.
Keep in mind that an estate account is not the same as a deceased person’s bank account. Whereas an estate account is opened after death and once the probate process is initiated to temporarily hold estate funds, a deceased person’s bank account is opened during the lifetime of the deceased and may be temporarily frozen until the account transfers outside probate via beneficiary designations or trusts, or through probate if no designation exists.
Do I Have to Open an Estate Account?
While an estate account isn’t always legally required, it is necessary when assets are subject to the formal probate process, and the estate contains cash.
Estate accounts simplify the administration of an estate by consolidating funds in one place. This not only makes it easier to pay expenses and distribute assets but also helps the personal representative avoid accidentally mixing their own funds with estate funds — a mistake that can lead to personal liability.
That said, there are situations where an estate account may not be necessary:
- Small estates: In California, if the total value of personal property in an estate is less than $208,850 (as of 2025), a simplified probate procedure known as a small estate affidavit may be available, and an estate account may not be required.
- Non-probate transfers: If most assets pass via beneficiary designations or rights of survivorship (e.g., retirement accounts, life insurance, joint accounts), they generally bypass probate and don’t need to be funneled through an estate account.
Before deciding against opening an estate account, consult a qualified probate attorney. While probate rules can feel tedious, they exist to protect both the estate and the fiduciary charged with managing it.
How to Open an Estate Account
Unlike a standard checking account, opening an estate account involves several key steps. The process is described in detail below.
1. Initiate Probate
Before you can open an estate account, you will need to launch the probate process by filing a petition for probate, the decedent’s original will (if one exists and is valid) and a certified copy of the death certificate with the court. A probate hearing will then be set to confirm your appointment.
Once formally appointed, you’ll be provided Letters Testamentary (if there is a will) or Letters of Administration (if there is no will). These documents authorize you to act on behalf of the estate — and banks won’t typically permit you to set up an estate account without them.
It’s important to note that you cannot manage or even access estate assets until the court officially appoints you to serve as executor or administrator.
2. Obtain an EIN for the Estate
An Employer Identification Number (EIN) is required to set up an estate account. This number functions like a Social Security Number for the estate and is issued by the IRS. Most banks won’t open an estate account without it.
You can apply for an EIN online by submitting IRS Form SS-4. In this form, you’ll need to provide:
- The decedent’s full name, SSN and date of death
- Your name, SSN, contact information and mailing address
- The county and state of the probate case
This process is free and can be completed instantly through the IRS website.
3. Gather Required Documents
Banks typically require more documentation to open an estate account than they do for personal accounts. Be prepared to provide:
- A certified copy of the decedent’s death certificate
- Letters Testamentary or Letters of Administration
- EIN confirmation from the IRS
- Your proof of identity
- A copy of the will (if applicable)
- Any court orders related to estate transactions or distributions
Before visiting the bank, call ahead to confirm its estate account requirements to avoid unnecessary trips.
4. Open the Estate Account
Once you have all the necessary documents, you can open the estate account at the financial institution of your choice.
After opening the account, deposit estate funds into it and begin using it to pay estate-related expenses. Be sure to make copies of all checks, invoices and receipts related to the account and maintain meticulous records for your required annual and final accountings.
Can I Open an Estate Account Without Probate?
You cannot open an estate account without initiating probate, as banks typically require Letters Testamentary (for estates with wills) or Letters of Administration (for estates without wills) for setting up estate accounts. These documents serve as official proof of the personal representative’s authority to act on behalf of the estate.
Because bank policies vary, always contact the bank directly to confirm what its policies are around opening an estate account without probate.
How Much Does It Cost to Open an Estate Account?
Most banks do not charge a fee to open a basic estate checking account. However, there may be related costs, such as:
- Monthly maintenance or account service fees
- Check printing or wire transfer fees
- Additional charges for premium features or overdraft protection
Because fees vary by institution, it’s best to contact the bank directly to get a clear picture of any potential charges associated with managing an estate account.
Important Estate Account Rules to Know
Before opening and using an estate account, it’s critical to understand the legal responsibilities that come with doing so. Personal representatives serve as fiduciaries, which means they are legally obligated to act in the best interests of the estate and its beneficiaries. Misusing, mismanaging, or misappropriating funds from an estate account may result in serious legal consequences, including personal liability.
The following are key rules every personal representative should follow to avoid disputes and legal action.
Only the Personal Representative Can Access the Estate Account
Only the court-appointed personal representative has legal authority to open and access an estate account. Even if another person assists with estate administration (e.g., a CPA or attorney), that person cannot be added to the account or granted access.
Any attempt to allow access to another party — whether intentionally or accidentally — can result in fiduciary liability for the personal representative and possible legal consequences for the bank.
Suppose a CPA is hired to assist with accounting. While they can serve in an advisory role and guide financial decisions, they should not handle the estate account directly. All transactions must be conducted by the personal representative, and the personal representative alone.
Beneficiaries and heirs cannot have access to the estate account either, but they have a legal right to receive information and updates about it. If the administrator or executor refuses to communicate or provide records upon request, beneficiaries can petition the court to compel an accounting or information, or even seek removal of the representative.
The Commingling of Estate Funds is Strictly Prohibited
Commingling occurs when a personal representative mixes estate funds with their own money or other outside assets. This is not just discouraged; it is legally forbidden.
Keeping estate assets separate ensures accurate records and protects the estate from mismanagement and misconduct. Commingling can obscure ownership, raise red flags and expose the personal representative to personal liability.
Suppose an executor deposits their personal paychecks into the estate account for convenience. Eventually, it becomes difficult to distinguish personal funds from estate funds, requiring the services of a forensic accountant. This may lead the estate to incur unnecessary costs, which the executor may be personally required to reimburse.
Avoiding commingling from the start is essential in preventing disputes, protecting the estate and safeguarding the personal representative from financial penalties and removal.
All Deposits and Withdrawals Must Be Documented
Every transaction involving the estate account must be clearly documented by the personal representative. This includes:
- The date and time of each deposit or withdrawal
- The amount of the transaction
- The purpose of the transaction
While bank statements and receipts are useful, personal representatives are usually required to prepare formal accountings each year the estate remains open and again before the final distribution.
Beneficiaries and heirs may waive the right to a formal accounting, but if they don’t — or if they request one informally — the personal representative must be prepared to deliver a detailed record of all estate-related transactions.
Estate Accounts Can Only Be Used for Estate-Related Transactions
Estate funds must only be used for legitimate estate-related expenses. Using the account for any other purpose — no matter how small — can be considered a misuse of estate assets.
5 Authorized Uses of Estate Accounts
The following are common and lawful uses of estate account funds. Note that depending on the estate, other authorized uses may apply. If in doubt, consult a probate attorney.
1. Paying Taxes
Estate funds can be used to pay any federal or state income taxes owed by the decedent or the estate. These must be settled before distributions to beneficiaries are made.
2. Paying Creditors
The personal representative is responsible for identifying and paying all valid debts before making distributions to beneficiaries, and they can use the estate account to fulfill this obligation.
Creditors typically have four months from the date probate is opened or 60 days from the date notice of administration is mailed — whichever is later — to file a creditor’s claim. If a claim is not filed within this statutory timeframe, it may be permanently barred.
3. Maintaining or Preserving Estate Property
Preserving estate assets is part of the personal representative’s fiduciary duties. Expenses like real estate maintenance, property insurance or professional services (e.g., landscapers, realtors, cleaners) can be paid using estate funds, provided they benefit the estate and are not prohibited by the will.
4. Paying Probate Fees
Probate fees — such as court filing costs, executor compensation, attorney fees and appraisal expenses — can typically be paid from the estate account. However, the personal representative must obtain court approval before using estate funds to pay these fees.
A full breakdown of probate fees can be found in California Probate Code section 10810.
5. Making Distributions to Beneficiaries or Heirs
Once the estate is ready for final distribution, the personal representative can use the estate account to transfer funds to beneficiaries. But this cannot happen until the court approves a final accounting and issues an order for distribution.
How to Handle Mismanagement of an Estate Account
If you suspect the personal representative is mishandling or misappropriating funds from the estate account, it’s critical to act quickly to protect your inheritance.
Red flags suggesting mismanagement of estate funds may include:
- Estate accountings that are inconsistent with bank statements and receipts
- Excessive payments to third-party professionals who performed little to no work
- Large, unexplained withdrawals
- Missing funds with no documentation
- Commingled estate funds
Whatever the issue, don’t ignore it. These concerns deserve further investigation. When it comes to your inheritance, it’s far better to be cautious than complacent. If something feels off, trust your instincts and take the following steps.
Document the Suspected Executor Misconduct
Start by carefully documenting any suspected wrongdoing by the executor or administrator. Should legal action become necessary, this evidence can help support your claims.
You may wish to document the following:
- Suspicious withdrawals — note the date, amount and any corresponding explanation (or lack thereof)
- Discrepancies between accountings, bank statements and receipts
- Lack of communication — keep records of any unanswered requests for estate updates or documentation
It’s crucial that you save copies of bank statements, emails, letters and other relevant correspondence. Courts rely on facts, not speculation, so a clear paper trail can be the difference between proving misconduct and having your claim dismissed.
Review Estate Accountings
Estate accountings are some of the best tools for detecting mismanagement, as they can reveal key insights about estate account transactions.
Comb through estate accountings line by line, searching for:
- Transactions that don’t make sense
- Excessive or duplicate payments
- Vague or missing explanations for expenses
- Distributions that stray from the terms of the will or intestate succession laws
If you’re uncertain what to look for, that’s normal: Estate accountings can be complex and technical. In most cases, it’s ideal to consult a probate attorney, who is trained to spot irregularities, assess whether the accounting is accurate and advise you on your rights to challenge it.
If misconduct is evident, the court may allow you to challenge the accounting and request the personal representative’s removal and a surcharge (i.e., a financial penalty).
Address Concerns with the Executor
Before taking legal action, it’s usually best to attempt direct communication with the personal representative. This can be done in person, over the phone or in writing — though written communication is preferable since it creates a clear log of correspondence.
Outline your concerns respectfully, ask for clarification and request any supporting documents you believe are missing or inaccurate. If the executor is cooperative, this may resolve the issue without further conflict. However, if they refuse to respond or continue to avoid accountability, it may be time to escalate the matter to the probate court.
Consult a Fiduciary Misconduct Attorney
If your informal efforts to resolve the conflict with the personal representative fail — or if the suspected wrongdoing is serious — speaking with an attorney who specializes in fiduciary misconduct may be your best course of action.
A skilled fiduciary misconduct attorney can help you:
- Prepare a petition detailing your allegations against the personal representative.
- Request or challenge a formal accounting (if one hasn’t been provided or the provided accounting is inaccurate).
- Identify and seek legal remedies, such as removal, surcharge or even damages.
While some cases may proceed to trial, most will resolve at mediation — where the executor may agree to step down or settle the matter in exchange for avoiding litigation.
Your attorney will evaluate your case, explain your legal options and develop a strategy that aligns with your legal goals and budget.
Estate Account FAQs
Do you still have questions about estate accounts? The frequently asked questions below may help provide clarity.
Can I open an estate account online?
It depends on the bank. Many require you to open the account in person to verify documents like the death certificate and Letters Testamentary or Letters of Administration. However, some banks do allow online or hybrid processes. Call the bank in advance to confirm its policies and requirements.
What is the difference between an estate account and a trust account?
An estate account holds funds during probate, while a trust account holds funds during trust administration.
Both account types require a fiduciary to manage them responsibly and maintain accurate records.
Can you deposit an estate check into a personal account?
No, depositing an estate check into a personal account would be considered commingling, which is a breach of fiduciary duty. It can lead to legal consequences and personal liability for the personal representative.
What is a probate bank account?
A probate bank account is another name for an estate account. It is used to collect and manage estate assets during the probate process.
What is a passing account?
A passing account (or pass-through account) is an informal term for an estate account used to temporarily hold estate funds before distribution.
Are estate accounts taxed?
Yes, estate accounts can be taxed under certain circumstances.
If the total value of an estate exceeds the federal estate tax exemption (which is $13.99 million as of 2025), the estate may owe federal estate taxes.
Additionally, any income earned by the estate — such as rental income, business income or interest generated in the estate account — is generally subject to income tax.
As for other funds in an estate account, such as wages and savings, they were previously taxed, so paying taxes on them again is not necessary.
It’s recommended for the executor to consult a probate attorney or accountant to ensure proper reporting and payment of any taxes owed.
Still have questions about estate account rules?
Estate account rules can be confusing — even for experienced executors and administrators. Unfortunately, even small mistakes can result in serious legal consequences.
Whether you’re a personal representative trying to comply with your duties or a beneficiary protecting your inheritance, it’s important to have legal guidance. A probate attorney can help ensure funds are managed properly, accountings are accurate and your rights are protected every step of the way.
Call our firm today to learn how we can assist with any estate account issue you’re facing.
