Detailed Answer
When someone dies, their money and property that remain in their name must be transferred and managed through the estate. Banks generally will not allow continuing use of the decedent’s personal accounts. To collect, protect, and distribute estate funds, you usually open an estate bank account using an Employer Identification Number (EIN) issued to the estate. Below is a clear, step-by-step explanation of how to set up that estate account in South Dakota, what documents you need, and when you may be able to avoid full probate.
1) Who must open the estate account?
The person with legal authority to administer the estate—usually the personal representative (executor named in a will or administrator appointed by the probate court)—should open the estate account. In South Dakota, a personal representative is appointed by the probate court under the South Dakota Probate Code (see SDCL Title 29A). For basic information on South Dakota probate procedures, see the Unified Judicial System probate page: https://ujs.sd.gov/Court_Services/Probate.aspx. For statute-level reference, see SDCL Title 29A: https://sdlegislature.gov/Statutes/Codified_Laws/DisplayTitle.aspx?Title=29A.
2) Do you always need probate first?
Not always. If the estate is small or the decedent’s assets pass by beneficiary designation (payable-on-death accounts, joint accounts, life insurance, retirement accounts), you may not need full probate. South Dakota provides summary procedures for small estates and other simplified processes. Check the local probate court or SDCL Title 29A to determine if a simplified procedure applies in your situation: SDCL Title 29A. If the estate requires probate, you must be appointed as personal representative (often called Letters Testamentary or Letters of Administration) before major banks will allow you to open a true estate account.
3) Get the estate EIN from the IRS
The estate uses an EIN (instead of the decedent’s Social Security number) for banking and tax reporting. The IRS requires an EIN for an estate that will file an income tax return (Form 1041), pay certain debts, or open an account in the estate’s name. Apply for the EIN online or by mail:
- Online (fastest): IRS – Apply for an EIN Online. The online application is available to applicants with a U.S. taxpayer identification number.
- By mail/fax: use Form SS-4 and follow the instructions: Form SS-4.
When completing the EIN application, indicate that the applicant is an estate and follow IRS instructions for estates of deceased persons. After the EIN is issued you will receive an EIN confirmation (CP 575 or confirmation letter) that many banks accept as proof of the estate’s tax ID.
4) Documents banks commonly require
Different banks have different rules, but a typical checklist includes:
- Certified copy of the death certificate.
- Letters Testamentary or Letters of Administration issued by the South Dakota probate court (proof of your authority). If the bank accepts a nominated executor’s affidavit in small estate cases, confirm directly with the bank.
- The estate’s EIN confirmation letter from the IRS (or a printed EIN confirmation from your online application).
- Personal identification for the personal representative (government photo ID).
- Copy of the will, if applicable (some banks request it).
Call the branch ahead of time. Many banks have an estate-account procedure and may require the court documents be certified by the clerk.
5) How to name the account (common formats)
Banks prefer a clear account title showing the account belongs to the estate and who is authorized to manage it. Typical examples:
- “Estate of [Decedent Name], [EIN#], John Doe, Personal Representative”
- “[Decedent Name] Estate (John Doe, Personal Representative)”
Use the estate’s EIN rather than the decedent’s SSN when the bank asks for a tax ID for the account.
6) Tax and reporting matters
An estate that generates income after death (interest, dividends, rent) may need to file Form 1041 (U.S. Income Tax Return for Estates and Trusts). See IRS guidance: About Form 1041. The estate EIN is used on that return. The estate may also need the EIN to report and withhold taxes when distributing certain assets.
7) If you don’t have Letters yet — temporary options
Some banks will accept a certified copy of the will plus a death certificate and an affidavit for a short-term limited account. Others will refuse and require formal probate appointment paperwork. If property must be secured immediately (e.g., to pay funeral bills or preserve an asset), consult the probate clerk or an attorney about obtaining an emergency appointment or temporary letters from the court.
8) Practical illustrative example
Hypothetical: Jane Smith dies owning a checking account at Bank A and a house. Jane’s will names her son, Mark, as executor. Mark files the will with the county probate court and requests appointment. The court issues Letters Testamentary. Mark applies for the estate EIN online using Form SS-4 procedures and receives the EIN confirmation. Mark goes to Bank A with the certified death certificate, Letters Testamentary, his photo ID, and the EIN confirmation. Bank A opens an estate account titled “Estate of Jane Smith, EIN XX-XXXXXXX, Mark Smith, Personal Representative” and transfers funds from Jane’s old checking account into the estate account so Mark can pay final bills and file any necessary tax returns.
Key statutory and official resources
- South Dakota Probate information (Unified Judicial System): https://ujs.sd.gov/Court_Services/Probate.aspx
- South Dakota Codified Laws, Title 29A (Probate and decedents’ estates): https://sdlegislature.gov/Statutes/Codified_Laws/DisplayTitle.aspx?Title=29A
- IRS: Apply for an EIN online: https://www.irs.gov/
- IRS: About Form SS-4 (EIN application): https://www.irs.gov/forms-pubs/about-form-ss-4
- IRS: About Form 1041 (estate income tax return): https://www.irs.gov/forms-pubs/about-form-1041
Disclaimer: This article is for general informational purposes only and is not legal advice. Laws vary by situation. For advice tailored to your circumstances, consult a licensed South Dakota attorney or the probate court.
Helpful Hints
- Call the bank branch first to confirm exactly which documents they require to open an estate account.
- Obtain multiple certified copies of the death certificate; banks and other institutions commonly require originals or certified copies.
- Keep all estate financial activity separate from your personal accounts. Use the estate account for estate income and payments only.
- Get the estate EIN early. You can obtain it before the bank appointment in many cases, but have the court appointment paperwork if the bank requires it.
- Keep detailed records and receipts for every estate transaction. These are essential for accounting, creditor claims, and filing Form 1041 if needed.
- If the estate has little property or you face only small bills, check South Dakota’s simplified or small estate procedures before starting a full probate—this can save time and cost.
- When in doubt about tax filing or creditor claims, contact a South Dakota probate attorney or the county probate clerk. Complex estates, business ownership, out-of-state property, or disputes are situations where legal help is often essential.