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Detailed Answer

Under Maryland law, a personal representative must open a separate estate account to manage and protect estate funds. Segregating estate assets ensures transparency, prevents commingling, and simplifies accounting. The requirement to maintain a distinct bank account arises from the fiduciary duties imposed on personal representatives under the Maryland Estates and Trusts Article.

1. Why Open an Estate Account?

• Maintain Clear Records: A dedicated account creates an auditable trail of deposits and disbursements.
• Protect Beneficiaries: Separate funds prevent misuse and reduce disputes among heirs.
• Fulfill Fiduciary Duty: Courts expect personal representatives to act prudently and transparently.

2. Statutory Authority

Maryland law grants personal representatives authority and imposes obligations to handle estate money responsibly:

• Estates & Trusts § 7-201(b)(11): Authorizes deposit of estate funds in separate accounts distinct from the representative’s personal funds.
• Estates & Trusts § 7-403: Requires the personal representative to inventory, manage, and account for all estate assets.

3. How to Open the Account

1. Obtain Letters Testamentary or Letters of Administration from the Orphans’ Court.
2. Visit a financial institution and present a certified copy of the letters.
3. Name the account “Estate of [Decedent Name],” listing the personal representative as trustee or fiduciary.
4. Deposit all liquid assets—bank accounts, investment proceeds, cash—into this estate account.

4. Consequences of Not Opening an Estate Account

Failing to segregate funds may lead to:

• Personal liability for losses due to commingling.
• Court surcharges or removal as personal representative.
• Delays in estate administration and distribution.

Helpful Hints

• Open the estate account promptly after appointment to avoid commingling.
• Choose a bank familiar with fiduciary accounts; fees and requirements vary.
• Retain all deposit slips, checks, and statements for your accounting report.
• Use accounting software or spreadsheets to track transactions separately for each asset.
• Provide periodic receipts to beneficiaries to maintain trust and transparency.
• Reconcile the estate account monthly with bank statements.
• Consult your bond company if you secured a fiduciary bond; they may require proof of segregation.
• Keep personal expenses strictly separate—never withdraw funds for personal use.
• Include all interest income earned in the estate’s final accounting.

Disclaimer: This article is for educational purposes only and does not constitute legal advice. You should consult a licensed attorney in your jurisdiction for advice tailored to your situation.