You need a separate bank account to hold and distribute the estate's money

An estate account is a dedicated bank account opened in the name of the estate itself, not in your personal name. It holds money that belonged to the deceased — proceeds from selling property, life insurance payouts, retirement account distributions, and other assets — until those funds are distributed to heirs or used to pay debts and taxes. The account keeps estate money separate from your own finances and creates a clear record for the probate court and the IRS.

You cannot simply deposit estate money into your personal checking account, even if you are the executor or the sole heir. Doing so can trigger tax problems, make it harder to prove you handled money correctly, and expose you personally to liability if something goes wrong. A separate account protects both the estate and you.

Key Takeaways

  • You will need the death certificate, a court order naming you as executor (or a small estate affidavit if the estate is small), and an EIN from the IRS before most banks will open an estate account.
  • The account is opened in the name of the estate, not your personal name — for example, "Estate of John Smith" — and requires its own tax ID number.
  • Banks vary in how quickly they process estate accounts; some take a few days, others take two to three weeks, so contact your bank early to ask what documents they need.
  • You must file a Form 56 with the IRS to notify them that you are managing the estate's tax matters, and you will need to file an estate tax return if the estate exceeds certain thresholds.

Get an EIN for the estate from the IRS

Before you open the account, you need an Employer Identification Number (EIN) for the estate itself. This is a nine-digit tax ID that works like a Social Security number for the estate. The IRS uses it to track estate income and tax filings. You can obtain one free of charge.

Apply online at the IRS website using Form SS-4. You can complete it immediately and receive your EIN the same day. You will need the deceased's Social Security number, the date of death, and the state where the estate is being administered. If you prefer to apply by phone or mail, the process takes longer — phone applications are processed immediately but require calling during business hours, and mail applications take about four weeks.

Once you have the EIN, write it down and keep it with your estate documents. You will provide it to the bank when you open the account, and you will use it on all estate tax filings and financial documents going forward.

Gather the documents the bank will ask for

Different banks have different requirements, but most will ask for the same core documents. Call your bank or visit in person and ask specifically what they need for an estate account — do not assume all banks follow the same process.

Standard documents include a certified copy of the death certificate (order several copies from the vital records office in the county where the deceased died), proof that you have authority to manage the estate (usually a court-certified copy of the Letters Testamentary or Letters of Administration if the estate is in probate, or a small estate affidavit if the estate qualifies for simplified administration), your government-issued photo ID, and the EIN you just obtained. Some banks also ask for a copy of the will or a statement explaining why you are opening the account. A few banks require a letter from an attorney confirming your authority, though this is less common.

If the estate is very small and does not go through probate, you may be able to use a small estate affidavit instead of a court order. The requirements vary by state — some states allow small estate procedures for estates under $10,000, others allow them up to $100,000 or more. Check your state's probate court website or ask a local probate attorney what threshold applies where you are.

Open the account in the estate's name, not your own

The account must be titled in the name of the estate. The standard format is "Estate of [Deceased Person's Full Name]" or "[Deceased Person's Name], Deceased Estate." Do not open it as "John Smith Estate" or use your own name as the account holder. The bank will use the EIN as the tax ID for the account, not your Social Security number.

You will be the authorized signer on the account — the person who can withdraw money and make deposits — but the account itself belongs to the estate, not to you personally. This distinction matters for taxes, for court oversight, and for protecting you if questions arise later about how money was handled.

Ask the bank whether they offer a money market account or savings account for estates, as these sometimes earn slightly higher interest than a checking account. If the estate will hold money for several months before distribution, even a small interest rate can add a few dollars to what goes to the heirs. However, prioritize ease of access and low fees over interest rate — you need to be able to move money quickly when bills come due or distributions are ready to be made.

File Form 56 with the IRS to notify them of the estate

Within a reasonable time after opening the account — ideally within the first month — file Form 56 (Notice Concerning Fiduciary Relationship) with the IRS. This form tells the IRS that you are now managing the estate's tax matters and that all future correspondence about the estate should go to you, not to the deceased's address.

You can file Form 56 by mail to the IRS address listed in the form's instructions, or you can file it electronically if you have a tax professional's account. Include the estate's EIN, the deceased's name and Social Security number, the date of death, and your name and contact information. Keep a copy for your records.

Filing Form 56 does not trigger an audit or any special scrutiny — it is a routine notification. However, failing to file it can cause delays if the IRS tries to contact the estate later, because they may still send notices to the deceased's last known address.

Understand what happens to the account after distributions are made

Once all debts, taxes, and administrative costs have been paid, and all distributions to heirs have been made, the account will be empty. At that point, you close it. The bank will ask you to confirm that the estate is fully settled before they process the closure.

Keep the account open as long as the estate is active — even if it is just sitting with a small balance. Do not close it early to avoid fees or because you think you are done. If a bill arrives after you close the account, or if an heir later disputes a distribution, you will need the account and its records to prove what happened. Most estates remain open for at least six months to a year, and some remain open longer if there are complications or if the will is contested.

When you do close the account, request a final statement showing all transactions from the date it was opened to the date it was closed. This becomes part of your final accounting to the probate court (if the estate went through probate) and your records for the IRS.

What to do if the bank refuses to open an account

Some banks, particularly smaller community banks, may decline to open an estate account if they are unfamiliar with the process or if they have internal policies against it. If this happens, try another bank — larger national banks and banks with dedicated trust or estate departments are usually more experienced and more willing.

If you encounter repeated refusals, contact your state bar association's lawyer referral service or a local probate attorney. An attorney can sometimes write a letter to the bank explaining your authority and the legal requirement to maintain a separate estate account, which often resolves the issue. This usually costs between $100 and $300 for a single letter, but it can save you months of frustration.

In rare cases, if no bank in your area will open an account, you may be able to petition the probate court for guidance. The court can issue an order directing a specific bank to open the account or can suggest alternative arrangements. This is uncommon and should be a last resort after you have tried multiple banks.

Frequently Asked Questions

Can I use my personal bank account temporarily until the estate account is ready?

No. Depositing estate money into your personal account, even temporarily, creates tax and legal problems. The IRS may view it as income to you personally, and the probate court may question whether you handled the money correctly. Open the estate account first, then deposit the money there.

Do I need a lawyer to open an estate account?

No. You can open an estate account on your own if you have the required documents — the death certificate, proof of your authority as executor, and the EIN. However, if the bank asks for an attorney's letter or if you are unsure whether you have the right documents, consulting a probate attorney can save time and prevent mistakes.

What if the estate has no money yet because assets are still being sold?

Open the account anyway. You can open it with a small initial deposit (as little as $25 at many banks) and leave it empty until money arrives. Having the account ready means you can deposit funds immediately when they come in, rather than scrambling to open an account while managing other estate tasks.

How long can I keep the estate account open?

Keep it open as long as the estate is active — typically six months to two years, depending on the complexity of the estate and how quickly assets are sold and distributed. Some estates remain open longer if there are disputes or if certain assets take time to transfer. Close it only after all debts, taxes, and distributions are complete and the probate court (if applicable) has approved your final accounting.

Do I have to pay taxes on money in the estate account?

The estate itself may owe taxes on income it earns — interest from the account, rental income from property, or gains from selling assets. You will report this on Form 1041 (U.S. Income Tax Return for Estates and Trusts), which you file using the estate's EIN. Money that simply passes through the account to heirs is not taxable income to you, but income earned by the estate is taxable to the estate.