Why Open a Separate Estate Account?
When you serve as a personal representative (PR) in Colorado, you collect and distribute the decedent’s assets. Under C.R.S. § 15-12-804, you must safeguard estate funds by keeping them distinct from your personal finances (C.R.S. 15-12-804). Mixing funds can lead to allegations of mismanagement and breach of fiduciary duty.
Colorado Statute Requirements
Colorado’s Probate Code sets clear guidelines for handling estate money:
- Deposit of Funds: C.R.S. § 15-12-804 requires PRs to deposit estate funds in an account titled in the estate’s name (link).
- Signature Authorization: Use the court-approved form under C.R.S. § 15-12-805 for bank signature authorization (link).
- Record Keeping: Maintain detailed receipts and a ledger per C.R.S. § 15-12-801(link).
Steps to Open and Manage the Account
- Obtain an Employer Identification Number (EIN) from the IRS for the estate.
• Visit IRS.gov/EIN. - Present your court letters of appointment and the EIN to a bank.
• Request a separate “Estate of [Decedent Name], by [Your Name], Personal Representative” account. - Use the account exclusively for estate receipts (rent, dividends) and disbursements (funeral expenses, creditor claims).
- Within 90 days of appointment, file your inventory of estate assets with the probate court under C.R.S. § 15-12-703 (link).
- Include bank statements in any required accountings or reports.
Maintaining Accurate Records
Good record-keeping protects you from liability. Create a simple ledger spreadsheet listing:
- Date of transaction
- Description (e.g., rent, utility bill)
- Check or deposit number
- Amount
- Remaining balance
Retain originals of invoices, bills and receipts. If the court or beneficiaries request an accounting, you’ll have documentation ready.
Disclaimer: This article provides general information about Colorado probate procedures. It is not legal advice. For advice specific to your situation, consult a licensed attorney in Colorado.
Helpful Hints
- Open the estate account promptly after court appointment to avoid co-mingling funds.
- Choose an interest-bearing account; interest is estate income.
- Notify the bank that only you, as PR, may sign checks.
- Keep separate petty cash (under $100) for small estate expenses.
- Consider digital bookkeeping tools for automated transaction tracking.
- Review bank statements monthly to catch errors or unauthorized charges.