Estate Planning & Probate Specialists

Estate Planning & Probate Specialists

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Executor duties series: Consolidating estate funds

In the second installment of our Executor Duties series, we are going to discuss consolidating estate funds. Our first post determined that the first responsibility of the executor of an estate is to locate and secure physical assets owned by a decedent. Bank accounts, retirement accounts and other sources of funds of a deceased person are considered non-physical assets. It is also an executor’s duty to locate and consolidate these. However, there is a process that must be followed in order to accomplish this task.

After a petition for probate has been filed in the proper county, a probate Judge will set a required bond amount for an executor based on the reasonably assessed value of an estate. The purpose of requiring the executor to obtain a fiduciary bond is to insure that he or she will follow through with all duties and distributions as requested in a decedent’s will.

The executor will receive a copy of the bond order from the probate court or estate attorney. He or she must then present the document to an insurance company who will determine worthiness, underwrite and issue a fiduciary bond. Upon receipt, that bond must then be filed back into the court record, and an official order appointing that party as executor will be issued.

Upon official appointment, the executor should take the Order to the bank where the decedent’s accounts are located and have them closed out. Then, a new checking account should be opened for the estate at a bank of the executor’s choosing. All funds from closed out bank accounts, retirement funds, proceeds from sales of assets or any money pertaining to the estate must pass through the estate account.

Most banks are familiar with this process and can guide an executor on the best type of account to obtain. All creditors of an estate should be paid from this account, as well as expenses for legal fees, court costs and maintenance of assets. At the end of the probate period, disbursements will also be made to the heirs and beneficiaries of an estate from it. The executor will also be required to file a final accounting that should include a final bank account statement.

The opening of an estate account is a fiduciary requirement of any executor. He or she are never allowed to co-mingle estate and personal funds in any way and may face penalties for doing so.