Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed Indiana attorney for guidance specific to your situation.
Detailed Answer
Under Indiana law, a personal representative (also called an executor or administrator) must safeguard and manage the decedent’s assets. Opening a separate estate bank account is a common best practice. It helps you track income, pay bills, and maintain clear records.
Legal Authority: Indiana Code § 29-1-7-5 authorizes a personal representative to deposit estate funds in one or more bank accounts and to invest surplus cash. See Ind. Code § 29-1-7-5.
Why a Separate Account Matters:
- Prevent Commingling: Separating estate funds from personal funds avoids confusion and protects you from personal liability.
- Recordkeeping: A dedicated account makes it easier to document all deposits, disbursements, and investments for court filings.
- Fiduciary Duty: As a fiduciary, you must act in the estate’s best interest at all times. Indiana Code § 29-1-8-1 outlines your duty to preserve and distribute assets properly. See Ind. Code § 29-1-8-1.
Without a separate account, you risk mixing estate money with personal funds. That can lead to accounting errors, delays in distribution, or challenges from beneficiaries. Courts expect transparent management of estate property.
Steps to Open an Estate Account:
- Obtain certified letters of appointment from the probate court.
- Visit a bank that offers fiduciary or estate accounts.
- Provide the bank with your appointment documents and taxpayer identification number for the estate.
- Deposit all estate checks and transfer funds into the new account.
- Use this account exclusively for estate income and expenses.
Helpful Hints
- Keep detailed monthly statements to simplify court reporting.
- Label checks and withdrawals with estate references (e.g., “Estate of John Doe”).
- Regularly update beneficiaries on account activity to build trust.
- Consult an accountant familiar with probate accounting when needed.
- Close the account only after all debts, taxes, and distributions are complete and approved by the court.