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Court and Authority

Blocked Account

blocked ac·count

Also called Restricted Account

Short Definition

An account holding estate money that cannot be withdrawn from without an order of the court. Courts sometimes require one in place of a bond, or where the proceeds of a sale need protecting until the distribution has been approved.

In a Sale

What This Means When the House Is Being Sold

Where a blocked account is ordered, escrow needs to know before closing rather than at signing. The proceeds are wired into an account set up under specific terms, and the escrow officer needs both the account details and the order requiring it. Discovering this on the day of funding creates a delay at exactly the wrong moment.

The second effect lands afterward. Money in a blocked account is not available for estate expenses without going back to the court, so property taxes, insurance on remaining assets, and administration costs have to be planned around it rather than paid out of the proceeds as they arise.

Sequence

What Usually Happens

  1. 1The court orders that proceeds be deposited into a blocked account
  2. 2The account is opened on the terms the order sets, and the bank acknowledges the restriction
  3. 3Escrow is given the account details before closing
  4. 4Any later withdrawal requires a court order

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Not to Be Confused With

What Tells Them Apart

A bond is insurance that pays the estate if the personal representative mishandles it. A blocked account prevents the mishandling instead, by making the money unreachable without a court order. A waiver of bond removes the bond requirement altogether, and a court that accepts one sometimes orders a blocked account in its place. Which applies comes from the order appointing the representative.

Questions

Questions People Ask

Why does the court want sale proceeds in a blocked account?

It is a control on the money rather than a judgment about any person. Where a representative serves without a bond, or where the estate is large relative to the oversight, a blocked account keeps proceeds from moving without the court seeing it. The order appointing the representative sets the requirement.

Can estate bills be paid from a blocked account?

Generally not without a court order, which is the point of the arrangement. Estates subject to one usually plan for taxes, insurance, and administration expenses to be handled another way, and the attorney handling the estate will map that out before closing rather than after.

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