If You're The Executor of an Estate in Maryland, Baltimore
Please note: I am not an attorney and I am not offering legal advice. This is for informational purposes only. For detailed information, please seek the advice of an attorney.
You should maintain proper financial records for an estate. Document absolutely everything. The greater the detail the better. It is always easier to document and describe a transaction when it occurs than at a later date when someone is questioning the transaction.
Selecting a Bank:
Many executors simply continue to bank where they have had their personal bank accounts or where the decedent maintained bank accounts. Although this may be adequate, there may be no compelling reason to continue using either institution for the estate. Evaluate the estate's banking and financial needs and interview not only previously used institutions but others as well. Estate financial matters create different needs and can benefit from different services and departments than personal banking needs. Inquire as to what specific trust and estate services various institutions offer, how they price them and what specifically they can do to assist you in handling the estate. Many larger institutions have extremely sophisticated trust departments that can assist you in arranging financing, consolidating accounts, investment management and so forth. These services may help you hold down legal and other fees.
Accounts in Estate Name:
All transactions should be run through the estate's name and under the estate's tax identification number. Other than minor exceptions for necessary initial expenditures by you prior to the estate account being opened (each of which should be carefully documented) never commingle estate funds with your personal funds, beneficiary funds and so on. Safety checksPurchase safety checks for all estate payments. These checks have a carbonless check voucher attached. Each time you write out a check a carbonless second sheet records the transaction. Take this second sheet (called voucher copy of the check) and staple the bills or other documents supporting the payment to them. Then file these in check number order.
Document all Cash Payments:
If you choose to advance your own funds to cover an estate expense, make a copy of the check and attach copies of the supporting documents (e.g., the bill). When the estate checking account is open, you can then reimburse yourself and use the previously assembled backup to support the check. Run all financial transactions through one estate checking account. You can vastly simplify the record keeping for the estate by running all payments and deposits through a central or single estate checking account and brokerage account. Any proceeds of any nature received should be deposited in one estate checking account. Each deposit slip should be saved and the source and nature of the deposit clearly explained. Even if the estate receives a large settlement that you will invest pending distribution, first deposit it in the central estate checking account and thereafter transfer it to the estate brokerage account for investment. All investments should likewise be made in street name in a single brokerage account (unless the estate is so substantial that the insurance limits on the account will be exceeded). All payments should be made from the same account. Similarly, each check should clearly document the purpose of the check. Carefully describe every deposit, check, credit/debit memo or other transaction. Detailed descriptions will make it much easier for you, or your professionals, to identify transactions, prepare accountings and complete tax returns.
