Why Does a Florida Estate Need Its Own Bank Account?
Something that often confuses people about Florida probate administration is the need to open a separate bank account for a deceased individual’s estate. For example, let’s say your grandmother recently passed away and you were named personal representative for her estate. She had several outstanding bills at the time of her death that still need to be paid. Your first thought might be to pay those bills out of her personal checking account, which has more than enough funds to cover those expenses.
But this is not the correct course of action. What you need to do instead is close the personal account and open a new one specifically for the estate. Or to be more precise, you need to open an account in your name as the personal representative of the estate. From this new account you can then pay any of your grandmother’s outstanding bills and estate-related expenses.
Most Florida estates are opened less than a year. So a basic checking account will generally suffice for an estate. In more complex estates, such as those that have a large number of stocks or other securities, it may make more sense to open a brokerage account that combines cash and securities. In some situations it might even be a good idea to open an interest-bearing savings account.
Another reason it is imperative to have an estate checking account is that so you can easily consolidate an estate’s assets. Let’s say your grandmother had four different bank accounts stretched across three different banks. Simply from a record-keeping perspective, it is much easier to close all of these accounts and deposit the funds into a single estate account you can more easily keep track of.
One thing to keep in mind, however, is that not all of a deceased person’s bank accounts may belong to the estate. For instance, if an account is listed as “payable on death” (POD), then there is a named beneficiary who automatically assumes ownership upon the owner’s death. Similarly, if there is a joint account, the surviving owner takes full ownership. The personal representative has no right to touch these accounts.
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Once an estate account is opened, the personal representative must keep careful records of all money coming in or out. And one thing a personal representative should never do is mix their own funds with that of the estate. If for some reason the personal representative needs to pay a particular estate expense out-of-pocket, they should keep a receipt and reimburse themselves from the estate checking account as appropriate.
This is just a brief overview of estate checking accounts and their role in the probate administration process. An experienced Fort Myers estate & probate administration attorney can give you more specific advice tailored to your situation. Contact the Kuhn Law Firm, P.A., at 239-333-4529 today if you need advice or assistance in administering a Florida probate estate.