Do I need probate when the bank issued cheques to "the estate of..."?

Legal procedures are not familiar to most people, and can be really confusing if you aren't working with a lawyer. Recently a reader sent me this question asking about whether he needed to get probate to access the deceased's bank accounts. I think this situation is one that several readers will find interesting, because it describes a useful alternative to going through probate. Read on:

"My brother recently passed away. He left a will naming my sister and me. My sister is named as the executor and I'm the 2nd executor. He only had money in 2 bank accounts which upon proof of death, notarized will, notarized I.D., notarized indemnity and notarized letter of direction they released the cheques in the estate of. Do we need to probate this account as we are both the beneficiaries and the executors?"

The process you have described is one that many banks use in some instances instead of requiring you to go through the probate process. They offer this when the deceased didn't have other assets outside the bank and where the accounts are small enough that paying probate and legal fees would pretty much wipe them out. The process essentially replaces probate for the bank's purposes.

Depending on the facts of the case, a bank might offer to do this in order to help the beneficiaries avoid losing the entire estate to fees. The fact that the two of you are the only beneficiaries and the only executors would make the bank's decision easier, because there is not much risk that there is anyone else out there expecting to inherit the money.

If you had applied for probate, the probate order would have required the bank to release the accounts to the executor. Since they have already released them, applying for probate is not going to be of any help to you with respect to these accounts.

Your next step should be to open up an executor's bank account. This account is in the name of the estate, so you will be able to deposit the funds you described above. The notarized will should be enough for you to prove that you are authorized to operate such an account, especially if you open it in the bank where they have all of your paperwork already on file. Because you and your sister are the executors, you will have full access to the funds and the legal right to spend them.

Remember that as executors, you are legally bound to ensure that any debts owed by your brother or by his estate are paid in full before you take out any of the money for yourselves. If you skip that step and simply take the funds without paying bills, you shouldn't be surprised if a creditor decides to sue you in the future for an unpaid bill. You will be personally liable for any such unpaid bills or liabilities.