Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Detailed Answer
Under Tennessee law, a personal representative owes a fiduciary duty to manage estate assets prudently and avoid mixing them with personal funds. Opening a separate estate bank account is the most reliable way to meet these obligations. Tennessee Code Annotated (T.C.A.) § 30-2-301 outlines a personal representative’s general duties, including preserving estate property and accounting for all receipts and disbursements (T.C.A. § 30-2-301).
Though personal representatives are not trustees, the Uniform Trust Code provisions in Title 35 emphasize the importance of segregation. T.C.A. § 35-1-204 directs a fiduciary to keep funds in a separate account when the aggregate exceeds $1,000 (T.C.A. § 35-1-204). Moreover, T.C.A. § 35-8-302 requires a trustee to hold trust property apart from personal assets (T.C.A. § 35-8-302). Courts extend the same principle to estate administration. Keeping estate funds in a dedicated account avoids commingling, simplifies accounting, and protects the personal representative from allegations of mismanagement.
Practically, opening an estate account also ensures that any interest earned benefits the estate and its beneficiaries. Many banks offer estate or fiduciary accounts with competitive interest rates and low fees. Before opening the account, obtain certified letters testamentary or letters of administration from the probate court. The bank will require these documents as proof of your authority to act for the estate.
If the estate qualifies for summary administration under T.C.A. § 30-2-701 (small estate affidavit), formal administration may not be necessary. However, if you are appointed personal representative through probate, opening an estate account remains best practice.
Helpful Hints
- Obtain certified letters of administration before contacting a bank.
- Label the account clearly (e.g., “Estate of Jane Doe, John Smith, Personal Representative”).
- Choose a bank familiar with fiduciary accounts to minimize fees.
- Keep detailed records of all deposits and withdrawals.
- Avoid depositing any personal funds into the estate account.
- Review the probate court’s inventory and accounting requirements for deadlines.
- Consult an attorney if the estate involves complex assets or creditor claims.