Probate Law North Carolina

PROBATE LAW- NORTH CAROLINA
 

The law relating to probate in North Carolina is governed by Chapters 28, 31 and 47 of North Carolina General Statute.

The probate in the state is also known as estate administration through a court process after a person's death that determines how the person's "probate assets" will be distributed.

DISTRIBUTABLE AND NON- DISTRIBUTABLE ASSETS

All assets are not subject to probate. As per the probate law of the State assets with a beneficiary designation is not subject to probate; but all other assets are subject to probate.

Categorically assets that are not subject to probate include:

  1. assets held as joint tenants with right of survivorship,
  2. assets held as tenants by the entirety between husband and wife,
  3. life insurance proceeds and retirement plans and IRA proceeds, unless the estate is named as the beneficiary.

These above mentioned types of assets are always designate the beneficiary at the death of the owner and therefore probate is not necessary to determine the new owner or to make a transfer of the assets.

PROBATE PROCEDURE

A probate may be obtained by filing petition with the District court in civil division. The Steps involved in a Probate proceedings are

  1. Locate Will and Qualify Executor
The probate process begins with determining whether or not the decedent wrote a will, and if there is a will to locating the same. If there is a will, the person named as the executor or personal representative in the will must qualify with the court in order to be officially named as executor. If there is no will, a state statute determines who can qualify with the court as executor of the estate.
 
Generally, the decedent's spouse or family members will most likely qualify as the administrator. Upon qualification of the executor/administrator, the court, will issue "letters" to the executor/administrator which will be used by the executor/administrator during the estate's administration to prove the executor's/administraor's authority to administer the estate.
 
If the decedent died with a will that names an executor or personal representative a non-resident of North Carolina , the decedent's estate will be required to request the appointment of a resident process agent who will agree to notify the non-resident personal representative of all citations, notices and processes served on the process agent.
 
If there is no provision in the will waiving the requirement of a bond for the personal representative, a non-resident personal representative will be required to post a bond.
  1. Conduct Estate Inventory

The executor shall file an inventory statement with the court that lists every asset owned by the decedent at death. The value of listed assets on the date of the decedent's death of the inventory statement, must also be provided by the executor. This document, as well as all other documents filed with the court, will be available to anyone who visits the courthouse and requests to see the probate file on the decedent. In other words, anyone can ascertain the value of the decedent's probate estate and the names of the decedent's beneficiaries.

  1. Notify Creditors
Prior to any distribution from the estate (for bequests, debts, taxes, or other reasons), the executor must publish a legal notice in the newspaper for four consecutive weeks notifying all persons, firms, and corporations who may have any claim against the estate ("creditors") to give the executor notice of those claims.
 
The executor must give these creditors at least three-months from the date of the first publication of the notice to present their claims and should not make any payments from the estate before that time. Further, the executor must mail notice of the estate administration to those creditors of the decedent and estate of whom the executor is actually aware.
  1. Pay Creditors

Once all creditor claims have been submitted to the executor, the executor will pay all valid claims. If the estate does not have assets sufficient to pay all valid claims, the executor must prioritize claims for payment, and in that case, beneficiaries named in the will may not inherit anything.

  1. Filing of Tax Returns

The executor will also file all relevant tax returns for the decedent's estate and pay all taxes due. Those returns include the federal estate tax return, the state inheritance tax return, the federal and state gift and income tax returns, and the state intangibles tax return.

  1. Preparing Annual Accounts

If the probate takes longer than one year, the executor must file an annual account with the court each year. The annual account will detail all of the receipts and expenditures of the estate during the year of the account.

  1. Distribute to Beneficiaries
After the appropriate time periods have expired for payment of creditor claims and taxes, and after paying all valid debts and taxes of the estate, the executor is responsible for distributing any remaining estate assets to the beneficiaries of the estate.
 
If the decedent had written a valid will, the executor will distribute the assets to the persons named in the will. If the decedent had not written a valid will, the executor will distribute the assets to the persons designated by statute in the proportions designated in the statute.
  1. Prepare Final Account

After the executor has completed all of his or her responsibilities, the executor will file a final account with the court in order to close the estate. The final account will detail all of the receipts and expenditures of the estate since the last annual account, or if the estate is closed within one year, during the entire probate process.

COST OF PROBATE

In North Carolina, probate fees are 40ยข per $100.00 of property subject to court costs of probate are limited by statute to $6,000. In addition to court costs, however, are costs of executor fees, attorney fees, and fees of other professionals involved in the estate administration. Although these other fees are not limited by statute, the probate court will review the fees to determine whether they are excessive.
 
TIME FOR PROBATE PROCESS
 
At a minimum, an estate administration will take three months (to allow for all creditors to submit their claims). If estate and inheritance taxes are payable, the length of the administration process will significantly increase, usually to more than one year.
 
SMALL ESTATES' PROBATE OF
 
A small estate is one in which the net value of the decedent's probate assets does not exceed $10,000 or $20,000 if the surviving spouse is entitled to the entire estate. The probate on such estate may be obtained either by
  1. administration by affidavit, or
  2. summary administration
  1. Administration By Affidavit

Administration by Affidavit is a simplified and less expensive alternative to normal probate and administration. For these purposes, net value is defined as gross value of the decedent's personal property, less any liens or encumbrances against such personal property, general obligations and any year's allowances paid to the surviving spouse.

  1. Summary Administration

Summary Administration may be used where the entire probate estate passes to a surviving spouse. This procedure is commenced by filing of a Petition for Summary Administration and can often be completed in one day. However, there is one significant draw-back to use of this procedure: the surviving spouse agrees to assume all liabilities of the decedent.