Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult a qualified attorney regarding your specific situation.
Detailed Answer
When you serve as a personal representative (PR) in Massachusetts, you step into a fiduciary role. Your duties include collecting assets, paying debts, and distributing property according to the will or state law. Opening a dedicated estate bank account helps you meet those duties efficiently and transparently.
Why open an estate account?
- Segregation of assets: Keeping estate funds separate from your personal or business accounts reduces the risk of commingling and protects you against accusations of mismanagement.
- Clear accounting: A single account for all estate receipts and disbursements simplifies bookkeeping. You can easily track income (e.g., rents, dividends) and expenses (e.g., funeral costs, creditor payments).
- Fiduciary compliance: Under Massachusetts General Laws Chapter 190B § 5.01 (M.G.L. c.190B § 5.01), a PR has broad powers to collect and manage estate property. An estate account demonstrates that you are fulfilling your duty to handle assets lawfully.
How to open the account:
- Obtain your Letters Testamentary or Letters of Administration from the Probate and Family Court. These documents prove your authority to act on behalf of the estate.
- Apply to the IRS for an Employer Identification Number (EIN) for the estate. You can file online at IRS.gov.
- Visit a bank that offers fiduciary or estate accounts. Present your letters and EIN. Request that the account be titled in the estate’s name, for example: “Estate of Jane Doe, John Smith, Personal Representative.”
- Deposit all estate funds—proceeds from insurance policies, bank accounts, investments—into this dedicated account. Use it exclusively for estate-related expenses and distributions.
Helpful Hints
- File the probate petition promptly. Delays can hold up your ability to collect assets and open the account.
- Keep detailed records: retain bank statements, canceled checks, and receipts for every transaction.
- Reconcile the estate account monthly to catch errors or unauthorized withdrawals early.
- Limit distributions until all creditor claims are resolved. Massachusetts law sets a three-month creditor notice period under M.G.L. c.190B § 3.705 (M.G.L. c.190B § 3.705)).
- If complex assets or disputes arise, consider hiring a probate attorney or accountant to assist with accounting and compliance.