December 2003

Estate Bank Accounts - Tips

A primary duty of an executor or administrator after qualifying with the Court on a decedent's estate is identifying and taking possession and control of the assets of the estate.

Some of the assets will likely include savings, checking and money market bank accounts. The decedent may also have made certain payments in advance resulting in cash refunds to the estate.

These accounts and other liquid assets should be closed and the funds placed in one or more estate bank brokerage accounts established by the executor or administrator. Before opening an estate account, there are a few things to consider.

Tax Identification Number

Most banks will require a tax identification number when opening an account. A social security number is used as the tax identification number of an individual.

Estates, though, are considered separate taxable entities and in most cases a tax identification number (often referred to as employer identification number or EIN for companies) must be obtained from the IRS.

The tax identification number is important for income tax purposes. Income from estate accounts will be reported to the IRS based on the tax identification number for the estate. Fiduciary income tax returns (Form 1041) will be prepared using the tax identification number, if taxes are due.

Supporting Documentation

During the administration of an estate, executors and administrators must file with the Commissioner of Accounts an inventory of estate assets within four months of qualification. Annual accountings showing all receipts, gains and losses from asset sales, adjustments, disbursements and distributions must also be filed.
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Supporting documents must be submitted with the accountings, to allow the Commissioner to audit the account transactions. These documents will include bank statements for the accounting period and original canceled checks (copies of canceled checks may be supplied in lieu of originals if original bank statements are provided).

Therefore, when deciding upon a financial institution for the estate account it is important from an executor or administrator to choose an institution that provides original bank statements and canceled checks.

Today, many banks don't provide canceled checks with bank statements. Some even encourage customers to handle all their banking on-line, including paperless bank statements.

Although on-line banking is certainly efficient and convenient, it may not provide the supporting documents that the Commissioner by law must require when auditing estate accounts.

In some cases, bank representatives will indicate that copies of canceled checks can requested if needed, but often there will be a cost for each requested copy.

In evaluating banking options for estate accounts executors and administrators should determine up front what documents the bank will provide and all costs associated with obtaining these documents. Although it may require a little investigation, it is worth finding a bank that will provide necessary supporting documents for estate accounts without additional charge.

Visit for more information on handling decedents' estates in Virginia. - information about probate and administration of decedents' estate in Virginia.

Provided by Edward R. Stolle, a Partner with the Virginia law firm of Kaufman & Canoles.

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The information provided in this newsletter is not legal advice, nor is it intended to establish an attorney-client relationship. If you would like to inquire about legal services please contact Ed Stolle.

Edward R. Stolle
Kaufman & Canoles, P.C.
2101 Parks Avenue, Suite 700
Virginia Beach, VA 23451
(757) 491-4033

© Edward R. Stolle and Kaufman & Canoles, P.C. 2003





© Edward R. Stolle and Kaufman & Canoles, P.C. 2003