How to Pay Bills from an Estate
Obtain an employer identification number (EIN) for the estate., Open a checking account for the estate., Order checks for the estate’s account with “Estate of ” printed as the account holder., Collect the assets of the estate and deposit them into...
Step-by-Step Guide
-
Step 1: Obtain an employer identification number (EIN) for the estate.
This is requires because any income earned by the decedent after the date of death will be attributed to the estate, which makes the estate a taxpaying entity.
As such, the Internal Revenue Service requires it to have an EIN.
You may apply online for an EIN for the estate at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN by following the instructions provided on the site.
You will need the decedent’s name, date of death, and social security number.
The website will provide you with an EIN instantly and will mail an official statement of your EIN to the address you provided.
You can use the EIN in place of a social security number for any business you transact on behalf of the estate; think of it as the estate’s social security number. -
Step 2: Open a checking account for the estate.
List the name on the account as “Estate of ”, and use the estate’s EIN in place of a social security number.
You may open the account at the bank or credit union of your choosing, however, the decedent’s bank may be the best choice, as the employees there will be familiar with the decedent’s assets, and can offer assistance with transferring and collecting them. , Beside or above the signature line, have printed, “by , as ”.
That way, when you sign a check, you can simply sign your name.
In order to determine if you are an Administrator or an Executor, check the Letters issued to you by the Court.
If the decedent had a Will, you will have Testamentary Letters, and will be an Executor.
If the decedent did not have a Will, you will have Letters of Administration, and will be an Administrator. , Each company you do business with, while collecting the assets, will need to see your Letters of Administration or Testamentary Letters issued by the Court.
Visit each bank where the decedent had an account.
Close the account(s), and have the bank issue a check payable to the estate for the remaining balance.
Contact any brokerage firms holding IRA or retirement accounts, which will not be transferred directly to an heir, and close them, having a check payable to the estate issued.
Collect any checks you have received which are payable to the decedent or the estate.
If the decedent received social security benefits, contact your local social security office to determine the amount due to the estate, and request the proper forms for claiming it.
Determine if there are any stocks or bonds, which will not be transferred directly to an heir, and have them cashed out and a check payable to the estate issued.
Collect the proceeds from any real or personal property that is sold during the administration of the estate, and deposit them in the estate account.
Determine if there are any life insurance policies, which do not designate a beneficiary, and request that they be paid to the estate.
Deposit the funds in the estate account. , Report any expenses you believe are not legitimate to your attorney, and do not pay them.
Expenses which are not legitimate may include car or health insurance premiums incurred after the date of death, debt discharged in a bankruptcy, or any bills which were incurred after the date of death. , If there are not enough assets to pay all of the bills, or you are unsure if you will have enough to pay all of the bills, do not pay any bills, and talk to your attorney about declaring the estate insolvent.
If there is enough money to pay all of the bills, you may pay them from the estate checking account as they become due.
Keep in mind that additional expenses will become due during estate administration, such as attorney and other professional fees, Court costs, etc. , A final accounting will need to be filed with the probate Court, and accurate records will help with the preparation of the accounting.
You will need to be able to show the Court who you paid, when you paid them, how much you paid them, and why you paid them.
Make and keep a copy of each bill you pay from the estate account and every check you deposit into the account.
Save all deposit and withdraw receipts, copies of cleared checks, and bank statements.
Track all payments and deposits in a spreadsheet or using software capable of printing to a spreadsheet.
This will help ensure that the final accounting can be prepared quickly and accurately.
Keep monthly statements with the corresponding month’s bill and check copies and receipts. -
Step 3: Order checks for the estate’s account with “Estate of ” printed as the account holder.
-
Step 4: Collect the assets of the estate and deposit them into the estate account.
-
Step 5: Collect all the estate’s bills and determine if they are legitimate expenses.
-
Step 6: Add up all legitimate bills to determine if there is enough money to pay all of them in full.
-
Step 7: Keep accurate records of every bill paid and every deposit made.
Detailed Guide
This is requires because any income earned by the decedent after the date of death will be attributed to the estate, which makes the estate a taxpaying entity.
As such, the Internal Revenue Service requires it to have an EIN.
You may apply online for an EIN for the estate at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN by following the instructions provided on the site.
You will need the decedent’s name, date of death, and social security number.
The website will provide you with an EIN instantly and will mail an official statement of your EIN to the address you provided.
You can use the EIN in place of a social security number for any business you transact on behalf of the estate; think of it as the estate’s social security number.
List the name on the account as “Estate of ”, and use the estate’s EIN in place of a social security number.
You may open the account at the bank or credit union of your choosing, however, the decedent’s bank may be the best choice, as the employees there will be familiar with the decedent’s assets, and can offer assistance with transferring and collecting them. , Beside or above the signature line, have printed, “by , as ”.
That way, when you sign a check, you can simply sign your name.
In order to determine if you are an Administrator or an Executor, check the Letters issued to you by the Court.
If the decedent had a Will, you will have Testamentary Letters, and will be an Executor.
If the decedent did not have a Will, you will have Letters of Administration, and will be an Administrator. , Each company you do business with, while collecting the assets, will need to see your Letters of Administration or Testamentary Letters issued by the Court.
Visit each bank where the decedent had an account.
Close the account(s), and have the bank issue a check payable to the estate for the remaining balance.
Contact any brokerage firms holding IRA or retirement accounts, which will not be transferred directly to an heir, and close them, having a check payable to the estate issued.
Collect any checks you have received which are payable to the decedent or the estate.
If the decedent received social security benefits, contact your local social security office to determine the amount due to the estate, and request the proper forms for claiming it.
Determine if there are any stocks or bonds, which will not be transferred directly to an heir, and have them cashed out and a check payable to the estate issued.
Collect the proceeds from any real or personal property that is sold during the administration of the estate, and deposit them in the estate account.
Determine if there are any life insurance policies, which do not designate a beneficiary, and request that they be paid to the estate.
Deposit the funds in the estate account. , Report any expenses you believe are not legitimate to your attorney, and do not pay them.
Expenses which are not legitimate may include car or health insurance premiums incurred after the date of death, debt discharged in a bankruptcy, or any bills which were incurred after the date of death. , If there are not enough assets to pay all of the bills, or you are unsure if you will have enough to pay all of the bills, do not pay any bills, and talk to your attorney about declaring the estate insolvent.
If there is enough money to pay all of the bills, you may pay them from the estate checking account as they become due.
Keep in mind that additional expenses will become due during estate administration, such as attorney and other professional fees, Court costs, etc. , A final accounting will need to be filed with the probate Court, and accurate records will help with the preparation of the accounting.
You will need to be able to show the Court who you paid, when you paid them, how much you paid them, and why you paid them.
Make and keep a copy of each bill you pay from the estate account and every check you deposit into the account.
Save all deposit and withdraw receipts, copies of cleared checks, and bank statements.
Track all payments and deposits in a spreadsheet or using software capable of printing to a spreadsheet.
This will help ensure that the final accounting can be prepared quickly and accurately.
Keep monthly statements with the corresponding month’s bill and check copies and receipts.
About the Author
Mary Thomas
Mary Thomas specializes in educational content and has been creating helpful content for over 1 years. Mary is committed to helping readers learn new skills and improve their lives.
Rate This Guide
How helpful was this guide? Click to rate: