How to Cash an Estate Check

By Fraser Sherman
It, the estate's money, the check
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Even after someone dies, she may still be earning money. Rental income, royalty checks, final paychecks and other income may flow into the estate or the decedent's trust. It's the job of the fiduciary -- the trustee or executor -- to manage this process, including depositing any checks that come in. As a result, one of the executor's first jobs is to set up a bank account for the estate.

Endorsing Checks

Checks to the decedent still need an endorsement, despite that fact that the beneficiary of those checks obviously is unable to provide one. Federal financial regulations say the executor can legally endorse checks redeemable for cash, or written to pay for goods or services. A typical endorsement would be "John Smith by Fred Jones, executor of John Smith's estate." For a trust, the Credit Union National Association says, it would be on the lines of "John Smith Trust, Fred Jones Trustee."

Handling Checks

Depositing the check is one thing, but cashing it is more difficult. Even though the fiduciary has the authority to manage the money, the bank may object to the executor seeking to cash checks made out to the deceased. If the executor takes out cash, it's much harder for anyone to track how it's spent. That makes it easier for the executor or trustee to breach his fiduciary duty, and the bank may be wary about its own risks under such a scenario.

Separating Funds

Cashing a check and pocketing it isn't in the fiduciary's best interest either, even if the check is made out to the executor or trustee. One of the worst mistakes a fiduciary can make is to commingle funds, mixing her own money with the estate or trust's. Even if there's no fraud, it may look very bad to the beneficiaries, and to the probate court. The Richard Whitney law firm recommends that all checks go into the estate account, even if that requires keeping them stashed somewhere until the account is open.

Opening an Account

An executor must file with the IRS to give the estate a tax-identification number. He'll need this number to open the bank account. The Collier Law Firm says a successor trustee does the same thing when assuming control of the trust. The account should be a checking account so the fiduciary can draw on it to pay expenses. It's best to open the account in the decedent's home state rather than your own. Otherwise, if the estate account earns income you may have to file state tax returns for both locations.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.