Estate planning and probate processes can be daunting, especially during a time of loss. One of the most common questions people in North Carolina ask is, “When is probate required?”
Understanding the circumstances under which probate becomes necessary can help you prepare for what lies ahead and make the process feel less overwhelming.
So let’s break down the key factors that determine whether probate is required in North Carolina, so you can make informed decisions for yourself and your loved ones.
When is Probate NOT Required for North Carolinians?
In North Carolina, the probate court plays a crucial role in estate management after a person passes away. The court oversees the administration of a deceased person’s estate, including the validation of their will.
While probate is often a necessary step in the estate administration process, there are situations where it may not be necessary. Let’s look at those potential situations now.
An estate may avoid probate if there is one of the following situations:
- All estate assets are in a trust
- The decedent left everything to their surviving spouse. The spouse can ask for a simpler court process called “summary administration.” You can do this at the court in the county where the person who died lived.
However, you can’t use this simpler process if the will says you can’t, or if the property is left to the surviving spouse in a special way, like in a trust.
- If you and your spouse both lived in North Carolina, you have the right to petition the court to receive $60,000 from their personal belongings. This money is meant to help support you for one year after they pass away. This is true whether or not your spouse had a will, and whether or not you’ve asked for a share of their estate in court.
This $60,000 has legal protection and creditors can’t take it to pay off any debts or court judgments against your deceased spouse. If your spouse had a will, this $60,000 will come from whatever you were supposed to receive according to the will.
- If the decedent left behind personal belongings worth less than $20,000, you can skip the full probate process. Instead, you can file an affidavit with the clerk of court in the county where the person lived. This lets you collect the person’s belongings without going through the whole court process for the decedent’s estate. If the spouse is the only heir or beneficiary, the asset limit is raised to $30,000.
Understanding these exceptions helps you know what to expect during the administration of an estate, potentially saving your family time and resources.
When Do You Need to Go Through Probate?
The probating of the will and estate administration is how the court ensures the validity of a decedent’s will and that their belongings go to the right people.
The personal representative, appointed by the court or named in the will, works with the court in the estate administration process. The entire process is public and anyone may pull records related to financial occurrences or the will.
A family will likely need to go through the probate court if there are assets which require someone with legal authority to step into the shoes of the deceased person in order to convey, such as if there is a car or bank accounts with no designated beneficiary.
Many individuals plan with their estate planning attorneys, using legal tools to avoid probate court proceedings for their families. We’ll look at these legal ways to avoid probate court in a moment.
The Probate Process
If you find out that an estate needs to go through probate, you might be wondering what exactly that involves. Don’t worry; we’ll walk you through it step-by-step.
First off, someone needs to be in charge of handling the will and the estate before the court. This person is usually called the executor if there’s a will, or an administrator if there is no will. This personal representative has the job of working with the court to settle the estate.
Next, let’s talk about timing. Probate isn’t usually a quick process. And because the process is public, others may contest (dispute the validity) the will. After that, the whole process can take several months, sometimes even years, depending on how complicated the estate is.
Now, what about paperwork? The personal representative must file several documents with the court to get the probate process started. This usually includes the original will, a petition for probate, and an inventory of the deceased person’s assets. They’ll also need to notify anyone who might have a claim against the estate, like creditors.
Last but not least, let’s talk about money. Probate can be expensive. There are court fees, and you might also need to pay for an attorney to help you through the process. Sometimes, these costs can come out of the estate assets, but it’s something you’ll definitely want to plan for.
Does Property Pass Through a Probate Court Proceeding in North Carolina?
In North Carolina, there are several ways you can own property, especially when it comes to real estate.
Here are some of the most common types:
One person owns the property.
Tenants in Common
Two or more people own the property, but they don’t have to own equal shares. When one owner dies, their share goes to their heirs, not the other owners.
Joint Tenants with Right of Survivorship
Two or more people own the property in a way where the last surviving owner owns the entire property. When one owner dies, their share automatically goes to the surviving owners. In many states, the interests have to be equally owned by all owners, but in NC, the owners can have unequal interests. For example, sometimes people will give 1% of their home to their adult child and own it with the child with a right of survivorship. This is a common technique for avoiding Medicaid Estate Recovery being able to use the person’s primary residence to pay themselves back for costs they advanced for a person’s care when they were still living.
Tenancy by the Entirety
This is a special form of ownership for married couples. Both spouses own the property equally, and it automatically goes to the surviving spouse when one dies.
How Real Estate Property Passes Between Spouses in North Carolina
In North Carolina, couples owning property as “tenancy by the entirety,” leave a surviving spouse as the sole owner when the other spouse dies. This happens without going through probate court.
It’s a way to ensure that the spouse can stay in the family home without any legal hassle. There are also significant creditor protections associated with this form of ownership.
How Real Estate Property Passes Between Joint Owners in North Carolina
If someone owns property as “joint tenants with right of survivorship,” the surviving owners automatically get the share of the owner who died. This also happens without going through the probate process.
So, if you and a friend own a vacation home this way, and your friend passes away, you’d become the sole owner of that home.
Tenants in Common: Property Share Goes to the Person Named in the Will
On the other hand, if you own real estate property as “tenants in common,” the share of the owner who died doesn’t automatically go to the surviving owners. Instead, it goes to whoever is named in that person’s will.
If there’s no will, property passes in a probate proceeding (according to state intestate laws) to their closest relatives.
Understanding these types of ownership and how property passes can help you plan better for the future and make informed decisions.
Assets that Avoid The Probate Process (Non Probate Assets)
Not all assets have to go through probate when someone dies. Some types of property and accounts can go directly to the people named as beneficiaries, without any court involvement. Knowing which assets can avoid probate can help an individual plan better for the future.
Here are some common types of assets that typically don’t have to go through probate:
With a life insurance policy, the money will go directly to the named beneficiary. It isn’t part of the probate estate unless there isn’t a direct beneficiary named.
Accounts like 401(k)s and IRAs usually have named beneficiaries. Just like with life insurance, these accounts go directly to named beneficiaries without going through probate.
Some bank accounts and certificates of deposit let a person name a “payable-on-death” or “POD” beneficiary. Upon death, these accounts go straight to the named beneficiary. For securities, the designation is referred to as “Transfer-on-Death” or “TOD.”
Jointly Owned Property
If someone owns property as joint tenants with the right of survivorship or as tenants by the entirety, the property automatically goes to the surviving owner(s) upon death.
If real or personal property is in a living trust, it can pass directly to the beneficiaries you’ve named in the trust document. This happens outside of probate.
Anything that a person gives away in anticipation of death is not part of a probate estate unless it is needed to pay debts. These are called “Gifts Causa Mortis” or gifts made in the last illness of a person. However, there are often tax benefits to inheriting property rather than being gifted it, so gifting appreciated property, such as stock or real estate, can be problematic.
In North Carolina, if the total value of your personal property is less than $20,000, your heirs can potentially avoid the lengthier estate administration process by going through an expedited process using special affidavits.
Understanding which assets can avoid probate saves a family time and money. It can also give peace of mind to the person with well-thought-out estate plans. They can know that certain assets will go directly to the people they’ve chosen.
Our Experienced Estate Administration Attorneys Can Help
At Hopler, Wilms, and Hanna, we understand that dealing with probate can be overwhelming, especially during a time of loss. Our experienced team of estate administration attorneys can guide you through every step of the process.
Whether you’re trying to figure out if probate is necessary, need help with filing the right documents, or want to understand how to best protect your assets, we’ve got you covered.
We take the time to understand your unique situation and tailor our services to meet your specific needs. Our goal is to make the estate administration and probate process as smooth as possible for you and your loved ones.
You don’t have to face the legal complexities of probate alone. With our help, you can focus on what truly matters, knowing that the legal details are in capable hands.
Reach out to Hopler, Wilms, and Hanna today for the dedicated legal support you need.