Those chosen to administer a person’s estate after his or her passing have a big responsibility. Estate executors must wrap up all financial affairs of the decedent and handle myriad other issues before the estate can pass through probate and officially close. When it comes to financial affairs, the executor must open an estate account from which to pay any remaining creditors and taxes and distribute funds to beneficiaries.
Why an estate account?
Establishing a separate estate account is important for many reasons. One, the decedent’s accounts will be tied to his or her Social Security number, which will become invalid upon that person’s passing. Two, it allows the executor to merge all of the decedent’s accounts into one place, which can make administration easier. Third, the decedent may receive income, through pay, annuities, etc., which should be funneled into the new account for administration purposes.
Since the decedent’s Social Security number will no longer be valid, the executor must obtain a unique tax identification number from the IRS to open the account. From that account, he or she can then pay all remaining creditors and any estate-related taxes and distribute funds to beneficiaries afterwards. Finally, the executor can close the account after the court and all beneficiaries have approved the executor’s accounting.
Avoiding issues during estate administration
By properly opening and administering an estate account, the executor can avoid many problems associated with the administration process. Many times, those named as executors are members of the decedent’s family, which can cause issues among other family members and place an added burden on a loved one who is already in mourning. Those charged with administering a decedent’s estate should work directly with an experienced estate planning and probate attorney for invaluable counsel and assistance during the process.