When should I set up an estate bank account, and how do I keep estate funds separate from my personal accounts? - Pennsylvania
The Short Answer
In Pennsylvania probate, you generally should set up an estate bank account as soon as you expect the estate to receive or pay money (for example, rent, refunds, sale proceeds, creditor payments, or ongoing bills). Keeping estate funds separate from your personal money is a core fiduciary responsibility and helps you document every receipt and payment for the required inventory and later accounting.
What Pennsylvania Law Says
As the administrator (personal representative), you are responsible for identifying estate assets, collecting and safeguarding them, and being able to report them accurately to the court and interested parties. Pennsylvania law specifically requires a verified inventory of the decedent’s estate assets, and that obligation is much easier (and far safer) to meet when all estate cash flow runs through a dedicated estate account rather than being mixed with personal funds.
The Statute
The primary law governing this issue is 20 Pa.C.S. § 3301.
This statute establishes that the personal representative must file a verified inventory of the decedent’s real and personal estate (with timing rules and the ability for interested parties/court to demand it earlier), which makes clean, traceable financial records essential during administration.
Also, Pennsylvania requires the personal representative to advertise the grant of letters and request that creditors present claims—an administration step that often triggers incoming bills and negotiated payoffs that should be paid from estate funds, not personal funds. See 20 Pa.C.S. § 3162.
Related reading: executor accounting disputes and missing estate funds in Pennsylvania and whether distributions can be made without routing proceeds through an estate account.
Why You Should Speak with an Attorney
While the general rule is straightforward—separate estate money from personal money—applying it to a real administration (especially one involving a house sale, mortgage payoff, medical bills, and an out-of-state heir) is rarely simple. Legal outcomes often depend on:
- Strict Deadlines: Pennsylvania imposes inventory timing requirements, and interested parties can demand an earlier inventory under 20 Pa.C.S. § 3301. If funds are commingled, producing reliable backup for the inventory and later accounting can become difficult and expensive.
- Burden of Proof: If anyone questions transactions (for example, reimbursements to you, payments to creditors, or property-sale proceeds), you may have to prove each receipt and disbursement was proper. A dedicated estate account creates a clean paper trail.
- Exceptions and Risk Areas: Not every asset belongs in probate (some accounts pass by beneficiary designation or joint ownership), and real-estate sale proceeds must be handled carefully to ensure liens, taxes, and approved expenses are paid before distributions. Mistakes can trigger objections, surcharge claims, or delays in closing the estate.
Trying to “work around” an estate account or using personal accounts—even temporarily—can create avoidable disputes and can put you personally at risk as a fiduciary.
Get Connected with a Pennsylvania Attorney
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Disclaimer: This article provides general information under Pennsylvania law and does not create an attorney-client relationship. Laws change frequently. For legal advice specific to your situation, please consult with a licensed attorney.