Detailed Answer
If you are handling a deceased parent’s finances in Vermont, you will often need to open a bank account in the estate’s name to collect assets, pay bills, and distribute funds. This account uses an IRS Employer Identification Number (EIN) assigned to the estate, not the decedent’s Social Security number. Below is a clear, step‑by‑step explanation of how that process typically works under Vermont law and practical tips to complete it.
Who may open an estate bank account?
A personal representative (executor named in the will, or an administrator appointed by the probate court) has authority to open and operate an estate account. If no personal representative has been appointed yet, banks generally will not open a formal estate account; they may, however, allow temporary access to pay urgent bills (subject to their policies).
For information on Vermont probate and appointment of personal representatives, see Vermont statutes on probate and fiduciary law: 14 V.S.A. (Probate, Trusts and Fiduciaries) and the Vermont Judiciary probate information: Vermont Judiciary.
When does an estate need an EIN?
Obtain an EIN for the estate when the estate will have income after death (bank interest, dividends, retirement distributions), when the estate will file a federal estate tax return, or when the personal representative needs to open a bank account in the estate’s name. The estate EIN is used on estate tax returns (Form 1041) and by banks to distinguish the estate from the decedent’s personal accounts. See the IRS guidance for applying for an EIN: Apply for an EIN (IRS).
Step-by-step process
- Confirm authority to act. If you are the named executor, gather the will and proof of appointment. If not yet appointed, apply to the Vermont probate court to be appointed as administrator. The probate court issues Letters Testamentary or Letters of Administration showing your authority. See Vermont probate resources at the Vermont Judiciary: Vermont Judiciary and the state probate statutes: 14 V.S.A..
- Get certified death certificates. Banks will require a certified copy of the death certificate. Order multiple certified copies from the Vermont Vital Records office or the town clerk where the death occurred.
- Apply for the estate EIN. As the personal representative, you can apply for the estate’s EIN from the IRS online (if you are in the U.S.), by phone (international applicants), or by mailing/faxing Form SS‑4. Keep the official EIN confirmation (IRS CP 575 or the online confirmation) to present to the bank. IRS EIN info: https://www.irs.gov/….
- Assemble bank-required documents. Typical documents banks require include:
- Certified death certificate
- Letters Testamentary or Letters of Administration issued by the Vermont probate court
- Copy of the will (if applicable)
- Your government-issued photo ID
- Estate EIN confirmation letter from the IRS
- Open the estate account. Visit the bank with the documents. Ask for an account titled in the estate’s name (for example, “Estate of [Decedent Name], [Personal Representative Name], Personal Representative”). Keep estate funds separate from your personal accounts—do not commingle.
- Use the account for estate business only. Deposit estate proceeds (proceeds from sales, closing accounts, final paychecks if payable to estate) and use that account to pay estate debts, taxes, and distributions to beneficiaries per the will or Vermont intestacy law.
- Keep clear records and provide accounting to beneficiaries. Maintain detailed records of deposits, withdrawals, receipts, and invoices. Vermont law requires fiduciaries to act prudently and account to beneficiaries—see relevant fiduciary rules at 14 V.S.A..
Special situations
- Small estates and transfers outside probate. Some assets pass outside probate by beneficiary designation (life insurance, retirement accounts) or by survivorship/joint tenancy. Vermont has procedures for small estates that may avoid a full probate administration; check the Vermont statutes and local probate court for the small estate process: 14 V.S.A..
- No appointment yet. If urgent bills arise before you get letters, contact the bank and the probate court. Some banks accept a short affidavit or court order in emergency situations, but policies vary by institution.
- Bank refuses to open an estate account. Ask which specific document they require—many banks will require court-issued letters. If you cannot obtain those documents, consult the probate court clerk or an attorney for next steps.
Tax implications
Once you have an EIN, the estate may have to file a federal income tax return (Form 1041) if the estate generates income after death. The estate may also have a final individual income tax return for the decedent. IRS guidance on estate income tax: Form 1041 (U.S. Income Tax Return for Estates and Trusts). State tax filing obligations may also apply—consult Vermont tax guidance or a tax professional.
When to consult a lawyer
Consider consulting a Vermont probate attorney if the estate is complex, if parties dispute the will or administration, if you face unusual tax issues, or if a bank or third party refuses to follow the probate court’s orders. The probate court clerk can also explain court procedures and required forms.
Disclaimer: This information is educational and general in nature and does not constitute legal advice. Laws change and each situation is different. Contact the Vermont probate court or a licensed attorney in Vermont for advice about your specific situation.
Helpful Hints
- Start by calling the Vermont probate court where your parent lived to learn local filing procedures and required documents.
- Order several certified death certificates—banks and other institutions all request originals.
- Bring the EIN confirmation (IRS letter) to the bank; some banks will also accept a printed online EIN confirmation.
- Do not use the decedent’s Social Security number for estate transactions once an EIN is obtained.
- Open the estate account in the exact name the probate court recommends to avoid paperwork delays.
- Keep all estate receipts and bank statements. Good records simplify reporting to beneficiaries and preparing tax returns.
- If an account is jointly held or has a beneficiary/POD designation, it may pass outside probate—verify ownership before moving assets into the estate account.
- If you cannot access funds for urgent expenses, ask the probate court about interim authority or emergency orders.