Withdrawing Cash From an Estate Account

Gabriel Katzner - April 11, 2024 - Estate Planning

Faced with the responsibilities of being an executor for an estate, you may wonder whether you, as an executor, can withdraw cash from an estate account. One of the many responsibilities of an executor is to manage an estate’s financial affairs. This includes paying the estate’s debts and taxes. An executor will also be in charge of distributing the estate assets to the beneficiaries. To complete these tasks, an executor must be able to withdraw money from an estate account, but there are specific conditions and limitations on this privilege.

What is an executor?

An executor is an individual or an institution appointed by the deceased person in their last will and testament to manage their estate’s assets during the probate process. In the absence of a will, the probate court will appoint an administrator for the estate. This person or institution serves the same function as an executor.

The executor will be responsible for the following tasks:

  • Filing paperwork in probate court
  • Identifying and securing the deceased’s assets
  • Paying off debts and taxes
  • Distributing assets to the beneficiaries according to the instructions in the will or by following state law

Executors must act in the best interests of the estate. They must ensure that all the estate’s financial responsibilities have been met before distributing assets to the beneficiaries.

How do you get appointed as an executor?

Being named the executor in a decedent’s will is not enough. The surrogate court must officially appoint the executor. To secure an appointment as the executor entails filing a probate petition with the probate court, along with all necessary probate documents. These documents are filed in the probate court where the deceased lived or owned real estate. Your estate planning attorney can help you with the probate process.

Once the probate papers have been filed and the file is complete, they are sent to the probate judge for review and to receive a final seal of approval. When your letters of testamentary are issued, you are officially the personal representative of the estate and have the authority to deal with all aspects of closing the estate.

How do you open an estate bank account?

The executor will need to open a bank account for the estate to manage the cash, cash equivalents, or assets that can be converted to cash in the estate. The executor will not open this bank account in their own name. It is the estate’s bank account.

Since they are opening the bank account for the estate, the executor will need to apply for an Employer Identification Number (EIN) from the Internal Revenue Service to open the bank account. An EIN is equivalent to a social security number. In order to ensure the estate receives proper tax treatment, it is important to identify the entity as an estate when completing the EIN application.

Once the executor has the EIN, letters of testamentary, and the death certificate, they can open the estate’s bank account.

Withdrawing Cash From an Estate Account: Can an executor withdraw cash from an estate account?

Yes, an executor can withdraw money from an estate account since their primary responsibility is to collect assets, pay debts, and distribute the estate assets to their rightful beneficiaries. The executor will need to pay any monthly mortgage payments, maintenance fees, utilities, junk removal, debts, taxes, legal fees, and other expenses. The executor can also pay themselves for their time invested as an executor. To receive payment, an executor must document their duties and hours spent in the role of executor and submit the request to the probate court for approval.

The executor is dispersing the estate’s monies, not their own, so they must keep careful records of all transactions. To maintain the transparency of all transactions, the executor should avoid paying in cash whenever possible. It is essential to maintain meticulous and complete records of all transactions made on behalf of the estate.

If the executor withdraws money from an estate account that is not for the purpose of acting on behalf of the estate, the court will force the executor to return the money. The executor will be removed as executor by the probate judge, the court may charge the executor attorney and other fees, and the executor may even be criminally prosecuted for stealing.

If you are uncomfortable acting in the role of executor or are unsure of your rights and responsibilities, contact your estate attorney for guidance. Your estate attorney can help you ensure that all and only legitimate debts are paid.

Final Thoughts

As an executor, you have a fiduciary duty to manage the estate responsibly and in the best interest of the beneficiaries. Withdrawing funds from an estate account without proper documentation or court approval could result in disputes with the beneficiaries or legal action. Contact your estate attorney for help and legal guidance.

Speak to a trusted advisor to help you develop and manage your estate plan. Contact us and schedule a call with us at 855.631.3457 to learn more about how to protect those most important to you.

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