More information from my 2008 presentation on probate in California is pasted below. This section is on managing the estate cash responsibily. Failure to do so can make you personally liable so be careful!
For more information contact me directly or visit our website at www.californiaprobate.info
- Managing the Estate Cash Responsibly
- As stated in the Duties and Liabilities of PR form the PR must manage the estate assets with the care of a prudent person dealing with someone else’s property. The PR must be cautious and may not make any speculative investments.
- As soon as possible following appointment, the PR should take possession of the decedent’s bank and other financial accounts. All estate funds must be kept separate from the PR’s own funds of course.
- Estate accounts should be opened in the name of the PR as Executor/Administrator of the estate of John Doe. Additionally the PR, usually with the help of their attorney or CPA, should get a tax id (TIN or EIN) number for the estate and should use that for all new financial accounts opened.
- It is important that the PR be aware of the insurance rules at the financial institution where the money is being held and should consider multiple institutions if the total balances of the account(s) would exceed the insurance limits.
- All cash should be invested in interest-bearing accounts or other investments authorized by law. It should be noted that different banks pay substantially different interest rates so consider looking around at different banks! Also, note that certain type of money fund accounts are NOT guaranteed cash as our standard checking and savings accounts. Double check with your banker!
- If you have a bond where you the attorney agree to a “joint control account” make sure the account really is JOINT control.
PRACTICE POINTER: I generally advise PR’s to sell all marketable securities. Though a portfolio of Ford, AT&T and IBM may be good old blue chip companies what happens if the market goes down 10% in one day? Might a beneficiary decide to bring an action against the PR? There generally is little or no tax consequence since most assets receive a full step-up in basis at death. Thus the transaction fees are likely the only cost and they are generally not significant.