When a loved one passes away in North Carolina, the process of managing their estate can seem daunting, especially when it comes to understanding probate. Probate is the legal process of administering a deceased person’s estate, including the validation of their will. But do you have to go through probate if you have a will?
In this article, we’ll explore the intricacies of North Carolina probate law, the role of wills, and when probate is necessary, even if a valid will exists. Understanding these details can help you navigate the complexities of estate management with confidence.
What Is the Probate Process in North Carolina?
Understanding Probate
Probate in North Carolina is a legal process where the court validates a deceased person’s will and oversees the distribution of their assets. This process ensures that debts are paid and remaining assets are distributed according to the will or state law if there’s no will.
When Probate Is Necessary
You might wonder, “Do you have to go through probate if you have a will?” In most cases, yes.
Even with a will, probate is often required to transfer ownership of the deceased person’s assets legally. However, not all wills require probate.
For example, if all assets are jointly owned or have designated beneficiaries, such as life insurance policies or retirement accounts, they can often bypass probate.
Steps in the Probate Process
- Filing the Will: The executor files the will with the probate court in the county where the deceased lived. If there’s no will, the court appoints an administrator.
- Notifying Heirs and Creditors: The court requires that heirs, beneficiaries, and creditors are notified of the probate proceedings.
- Inventory of Assets: The personal representative, also known as the executor, must list all probate assets, including bank accounts, personal property, and investment accounts.
- Paying Debts and Taxes: The estate pays any outstanding debts, taxes, and probate costs. This can include filing fees, attorney fees, and court fees.
- Distributing Assets: After debts and taxes are paid, the remaining assets are distributed to the heirs as outlined in the will or by state laws in the case of intestate succession.
The probate process can be lengthy, costly, and public, which is why many people seek ways to avoid it. Next, let’s explore various methods to bypass probate and ensure your assets transfer smoothly to your heirs.
Using Trusts to Avoid Probate
One of the most effective ways to avoid probate is by setting up a trust. When you place assets into a trust, they are no longer considered part of your estate upon your death and thus do not go through probate. Here’s how different types of trusts can help:
Revocable Living Trusts
A revocable living trust allows you to place your assets into the trust while still retaining control over them during your lifetime. You can amend or revoke the trust at any time.
Upon your death, the assets in the trust are managed by the successor trustee you name. They distribute your assets to your beneficiaries without going through probate. This can include real estate, bank accounts, investment accounts, and personal property.
Irrevocable Trusts
An irrevocable trust cannot be altered or revoked once it is established. This type of trust can be used to remove assets from your estate, potentially reducing estate taxes and protecting the assets from creditors.
Like a living trust, assets in an irrevocable trust bypass probate.
Testamentary Trusts
A testamentary trust is established through your will and takes effect upon your death. While the assets in a testamentary trust will go through probate, the trust can provide ongoing management and distribution of assets for your beneficiaries.
This management can be especially beneficial for minors or individuals with special needs.
Non-Probate Assets: Joint Ownership and Designated Beneficiaries
Another straightforward way to avoid probate is through joint ownership and beneficiary designations. Here’s how these methods work:
Joint Tenancy with Right of Survivorship
Joint tenancy allows two or more individuals to own property jointly. When there is a right of survivorship, upon the death of one owner, the surviving owner automatically inherits the deceased person’s share of the property. The real estate does not go through probate. This is commonly used for real estate and bank accounts.
Tenancy by the Entirety
This form of joint ownership is available only to married couples in North Carolina. It provides the same probate-avoiding benefits as joint tenancy with the added protection that creditors of one spouse cannot claim the property.
Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts
For bank accounts and investment accounts, you can name a beneficiary to inherit the account through a POD or TOD designation. These accounts transfer directly to the beneficiary upon your death, bypassing probate.
Beneficiary Designations on Retirement Accounts and Life Insurance Policies
Retirement accounts, such as 401(k)s and IRAs, as well as life insurance policies, allow you to name beneficiaries. Upon your death, these assets transfer directly to the designated beneficiaries, avoiding probate.
Small Estate Administration in North Carolina
North Carolina offers a simplified probate process for small estates, which can save time and reduce costs.
Here’s how it works:
Affidavit for Collection of Personal Property
If the total value of the deceased person’s estate is $20,000 or less ($30,000 if the surviving spouse is the sole heir), you can use an affidavit for collection of personal property to avoid formal probate.
This process involves filing a simple form with the court, allowing you to collect and distribute the estate’s assets without a full probate proceeding. You can easily download your e203B Form straight from the NC Courts at https://www.nccourts.gov/assets/documents/forms/e203b.pdf
If you need help filling out your affidavit, see our detailed blog, “NC Small Estate Affidavit Form With Step-by-Step Instructions.”
Summary Administration
North Carolina allows summary administration for estates if the surviving spouse is the sole heir. This process requires filing a petition with the court and can quickly transfer assets to the surviving spouse.
Summary administration is possible whether there is a last will or not. However, it is unavailable if your spouse’s last will explicitly states that summary administration is not an option for you. It is also not a possibility for you if your inheritance is in trust rather than an outright inheritance. (1)
To start a Summary Administration, a surviving spouse must file a petition with the Clerk in the county where the decedent lived at the time of death.
- Intestate Petition for Summary Administration in North Carolina
- Testate Petition for Summary Administration in North Carolina
Once the Clerk reviews the petition and supporting evidence, they may enter an order for Summary Administration. The Clerk’s order is recorded on AOC-E-904M (Order of Summary Administration) and certifies the surviving spouse’s authority to handle the decedent’s estate.
See our blog on Summary Administration: Simplified Estate Process for Spouses for more answers.
Using Gifting to Reduce Probate Assets
Reducing the size of your estate through gifting can help you avoid probate. Here are some strategies:
Annual Gift Tax Exclusion
You can give up to $18,000 per year (as of 2024) to any number of individuals without incurring gift taxes. By gifting assets during your lifetime, you reduce the size of your estate, potentially avoiding probate for those assets.
Lifetime Gift Tax Exemption
In addition to the annual exclusion, the lifetime gift tax exemption allows you to give up to $13.61 million (as of 2024) without paying federal gift taxes. This can significantly reduce the size of your estate and the assets subject to probate.
Summing Up
Avoiding probate can save your heirs time, money, and stress. By using trusts, joint ownership, beneficiary designations, small estate procedures, and gifting strategies, you can ensure your assets are distributed according to your wishes without the need for a lengthy and costly probate process.
Planning ahead and consulting with a probate attorney or estate planning professional can help you create an effective estate plan tailored to your unique circumstances.
Whether you’re considering a trust, joint ownership, or other probate-avoidance strategies, taking these steps now can provide peace of mind and ease the burden on your loved ones in the future.
Experienced Guidance through Probate and Estate Administration
At Hopler Wilms, and Hanna, our experienced estate administration and probate attorneys are here to help you navigate the complex probate process.
We understand how overwhelming it can be when a loved one passes away, and we’re committed to making the legal procedures as smooth as possible for you.
Simplifying the Probate Process
Whether you’re dealing with a large estate or small estates, we can assist with every aspect of the probate court process. From filing the necessary paperwork to representing you in probate court, we ensure that all legal requirements are met.
Our goal is to help you distribute assets according to the will or, in the absence of a will, through intestate succession.
Reducing Probate Costs and Legal Fees
Probate costs can add up quickly, with legal fees, probate bonds, and court fees. Our team is dedicated to minimizing these expenses.
We can guide you in identifying non-probate assets, such as joint ownership properties and designated beneficiary accounts, which can help avoid probate court and reduce overall costs.
Personalized Estate Planning
Avoiding probate starts with effective estate planning. We offer comprehensive estate planning tools and services, including the creation of trusts, joint tenancy arrangements, and designations of beneficiaries.
Our attorneys work with you to develop an estate plan that ensures your assets are distributed according to your wishes while minimizing the need for probate proceedings.
Handling Complex Situations
Probate laws vary, and each case is unique. Whether you’re dealing with intestate estates or legal claims against the estate, we provide the experience needed to address these challenges.
Our attorneys are well-versed in North Carolina’s probate laws and can handle everything from standard probate proceedings to expedited probate processes.
Support for Surviving Family Members
We understand that this is a difficult time for surviving family members. Our compassionate approach ensures that you receive the support and guidance you need.
We help you manage personal property, life insurance proceeds, and individual retirement accounts, ensuring a smooth transition and peace of mind.
Contact Us Today
If you need assistance with probate or estate administration, don’t hesitate to reach out. At Hopler Wilms, and Hanna, we’re here to help you every step of the way.
Contact us today to schedule a consultation and learn more about how we can support you through the entire process. Together, we can ensure that your loved one’s wishes are honored and that their estate is managed with experienced and careful hands.