Disclaimer: This is not legal advice. This article is for educational purposes only.
Detailed Answer
Under Delaware law, a personal representative acts as a fiduciary and must safeguard the assets of the decedent’s estate. One of the best ways to comply with this duty is to open a dedicated estate bank account. This practice helps separate estate funds from personal finances, ensuring clear records, protecting the estate from unauthorized transactions, and minimizing the risk of claims by creditors or beneficiaries.
Statutory Guidance: Delaware Code Title 12, Chapter 19, Subchapter II requires personal representatives to file receipts and disbursements to the Register of Wills. See 12 Del. C. Ch. 19, Subchapter II. Although the statute does not explicitly mandate a separate bank account, segregating estate funds aligns with the fiduciary rule in Delaware Uniform Trust Code § 3303 (“Separation of fiduciary property”), which applies similar principles to estate administration. For more, see 12 Del. C. § 3303.
Opening an estate account under the estate’s federal Employer Identification Number (EIN) ensures that all incoming assets—such as bank balances, dividends, and rents—flow through the account. From this account, the personal representative pays valid debts, taxes, administrative fees, and distributions to beneficiaries. This approach provides an auditable paper trail if the Register of Wills or beneficiaries seek an accounting.
Failing to separate funds may lead to charges of breach of fiduciary duty and personal liability. Courts generally view commingling as a serious violation. By opening a dedicated estate account, the personal representative demonstrates transparency and fulfills their statutory and equitable obligations.
Helpful Hints
- Obtain an EIN for the estate from the IRS before opening the account.
- Use a bank that insures accounts through the FDIC and offers fiduciary or trust services.
- Keep accurate records of all deposits, disbursements, and transfers.
- Label checks and account statements clearly with “Estate of [Decedent’s Name], by [Personal Representative’s Name], Personal Representative.”
- Review estate bank statements monthly to catch errors or unauthorized transactions early.
- When distributing funds, document beneficiary approval or court authorization.