The moment someone dies, most of what he owns becomes part of an estate. This can include bank accounts, real estate, stocks and any uncashed checks he had on hand or that arrive after his death. Usually, the only person who can cash the checks is the executor or administrator.
Executors, Personal Representatives or Administrators
When someone writes a will, she can name someone -- such as a spouse, child or parent — to execute her wishes after death. The executor, called a personal representative in some states, manages the decedent's assets until the estate finally closes. If the decedent doesn't name an executor, the probate court will appoint an administrator based on whatever selection rules state law imposes. Even an executor named in the will must report to the probate court to receive the judge's approval.
The executor manages the decedent's assets. One of the first steps is to set up an account for the estate. The executor uses this account to pay the decedent's bills and to receive any payments to the decedent or her estate. This account is where the executor deposits checks payable to the deceased. The executor or co-executors are the only ones who can access the account.
An executor has to do his job with the highest ethical standards. Drawing any of the estate's funds for his own use, even if he replaces it later, is a violation of his duty. In some cases it can leave him liable to a lawsuit or even criminal penalties.
Going Through Probate
State law may exempt an estate from probate if the decedent's assets fall below a legal threshold. In California, for instance, estates under $150,000 are small enough to avoid probate.
If the estate must go through probate, the process may run for weeks, months or even years if the decedent's affairs are complex enough or one of the heirs contests the will. During this period, the executor controls the estate assets. If checks turn up that haven't been cashed and belong to the estate, the executor handles them.
An executor endorses checks before depositing them, but not under his own name. Instead he endorses them as "Fred Smith by Dan Jenkins, executor for the estate of Fred Smith."
This situation continues until the executor closes the estate out. This happens after all debts and taxes the deceased owed have been paid, so that the rest of his assets can be given to the heirs. Any checks or other assets the deceased owns should have been deposited or collected. At this point the executor, with the probate court's approval, distributes the decedent's assets according to the will and makes a final report to the court.
Newly Discovered Checks
Even if the executor does her best to track down extra assets, it's possible that assets will turn up after the estate is closed. State law decides what happens next. In Nevada, for example, an unclaimed check or other asset would require a new probate process. The checks are added to the value of the original estate. If, for example, the original estate was worth $150,000 and a $3,000 tax refund check payable to the deceased is discovered, the second hearing treats the estate as worth $153,000, not $3,000.
If a check is made out to the deceased and someone else, such as his spouse, it requires an endorsement from both the decedent's executor and the second party. A check made out to "John Jones or Mary Jones" can be cashed by the surviving spouse.