Detailed Answer
Under Vermont law, a personal representative (also called an executor or administrator) must collect, manage, and distribute estate assets in an orderly and transparent way. Opening a dedicated estate account is a best practice—and in many cases the only practical way—to avoid commingling estate funds with your personal money, ensure proper record-keeping, and protect yourself from creditor or beneficiary claims.
Vermont law grants a personal representative broad powers to manage estate assets, including the power to open bank accounts in the name of the estate. See 14 V.S.A. § 277. While the statute does not explicitly require a separate estate account, it does require you to handle estate property in your fiduciary capacity and maintain accurate accounts.
Key reasons to open an estate account:
- Prevent commingling. Mixing your funds with estate assets can expose you to personal liability and allegations of mismanagement.
- Track income and expenses. A dedicated account simplifies bookkeeping, makes it easier to reconcile bank statements, and helps you prepare the final accounting for the court and heirs.
- Pay estate obligations. Creditors must be paid from estate funds, not your personal account. Using a single account ensures you draw checks against the right funds.
- Collect interest and dividends. If the estate holds cash, you may earn interest that belongs to the estate. A separate account ensures all earnings are properly credited.
Steps to open and maintain an estate account in Vermont:
- Obtain Letters of Administration or Letters Testamentary from the probate court. These court-issued letters authorize you to act on behalf of the estate.
- Gather necessary documentation: certified copy of Letters, the decedent’s death certificate, and the estate’s taxpayer identification number (EIN) from the IRS.
- Visit a bank or credit union. Open an account titled “Estate of [Decedent Name], by [Your Name], Personal Representative.”
- Deposit all estate receipts: insurance proceeds, bank account balances, sales proceeds, and other assets.
- Use the account exclusively for estate transactions. Pay funeral expenses, taxes, debts, and distributions from this account.
- Keep detailed records of every deposit and withdrawal. Save bank statements, canceled checks, and a ledger or spreadsheet.
- Prepare and file a final accounting with the probate court once estate administration is complete.
Helpful Hints
- Choose a bank familiar with probate accounts to avoid delays.
- Use check memos or online labels to note the purpose of each transaction.
- Retain original receipts for estate expenses (funeral, debts, taxes).
- Notify beneficiaries regularly and provide interim accountings to maintain transparency.
- Consult the Vermont Probate Division website for forms and filing requirements: probate.vermont.gov.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney in Vermont before taking any action regarding estate administration.