If you have been appointed as the Executor or Administrator of someone’s estate after his or her death, you may have several questions about the probate or estate administration process in North Carolina. This page is designed to answer some of those questions and provide guidance to those who are tasked with this responsibility.
The Clerk of Superior Court serves as the judge of probate and cannot practice law or give legal advice. Neither the Clerk, nor the Clerk’s staff, can assist you with preparing accounts or advise you on the completion of forms or any legal issue. It is highly recommended that you consult with an attorney at the outset of the administration and especially before disbursement of any funds from the estate to ensure that you have met your fiduciary duties as the Executor or Administrator.
When a person dies with a Last Will and Testament, he or she is said to have died testate. When a person dies without a Last Will and Testament, he or she is said to have died intestate.
If a person dies testate, the person appointed to administer the estate in the decedent’s Last Will and Testament is called an Executor or Executrix. The Executor submits the Last Will and Testament, the Death Certificate and an Application For Probate and Letters to the Clerk of Court to begin the estate administration. The Clerk of Court will then issue Letters Testamentary to the Executor which give the Executor the authority to act on behalf of the estate.
If a person dies intestate, the person appointed by the Clerk of Court to administer the decedent’s estate is called the Administrator or Administratrix. In order to administer the decedent’s estate, a qualified person must submit the Death Certificate and Application For Letters of Administration to the Clerk of Court to begin the estate administration. The Administrator is given Letters of Administration which give the Administrator the authority to act on behalf of the estate.
Both the Executor and the Administrator are also known as the Personal Representative.
If the decedent did not name an Executor in his or her will, the Clerk of Court will grant Letters of Administration to a person who applies and is qualified to serve, in the following order:
- The surviving spouse of the decedent;
- Anyone who is to receive property as indicated by the will of the decedent;
- Anyone who is entitled to receive property of the decedent by law in the absence of a will;
- Any next of kin;
- Any creditor to whom the decedent became obligated prior to death;
- Any person of good character residing in the county who applies with the clerk of superior court.
Some people are disqualified to serve as the Administrator. These people include anyone who:
- Is under 18 years of age;
- Has been adjudged incompetent by the court and remains under such disability;
- Is a convicted felon whose citizenship has not been restored;
- Is a nonresident of this state who has not appointed a resident of the state to accept service of process in all actions or proceedings with respect to the estate;
- Is a corporation not authorized to act as a personal representative in this state;
- Has committed acts which by law constitute a forfeiture of the right to serve;
- Is illiterate;
- Is a person whom the clerk of superior court finds otherwise unsuitable;
- Was previously designated as executor of the estate but has renounced that office or otherwise chose not to carry out the duties of the personal representative.
If the decedent did not have a Last Will and Testament or if the decedent’s Last Will and Testament does not waive the requirement of bond, the Personal Representative is required to furnish a bond unless certain exceptions apply.
After Letters are issued, the Personal Representative must publish a Notice to Creditors in a newspaper “qualified to publish legal advertisements.” The Personal Representative must also personally deliver or send by first class mail a copy of the Notice to Creditors to any known creditors of the decedent.
Within three months from the date that the estate is opened, the Personal Representative must file an Inventory For Decedent’s Estate with the Clerk of Court. This inventory must give an accurate accounting of all of the decedent’s property which he or she owned as of the date of death. In addition, there are certain fees which must be paid to the Clerk of Court. Currently, the fee that must be paid at the time the Inventory is filed is $4 for every $1,000 of property subject to administration, with a minimum fee of $15 and a maximum fee of $6,000.
If the decedent was survived by a spouse or by dependent children, an Application and Assignment of Year’s Allowance may be filed within one year of the decedent’s death. This allowance takes priority over other claims of the decedent’s estate. Spouses can receive $20,000 from the decedent’s cash or personal property and each surviving child under the age of 18 or otherwise qualified can receive $2,000 from the decedent’s cash or personal property.
Real estate which has not been willed to the estate vests in the heirs at death. Rents from those properties are not income to the estate and estate funds cannot be used to pay expenses on the real estate such as mortgages, taxes, insurance or utilities. The heir who receives the property takes the property subject to any encumbrances and must pay those expenses out of his or her own funds. In some instances, if there is a mortgage on the property, the lender may attempt to collect the entire balance due on the loan from either the heir or the estate, claiming that the “due on sale clause” has been triggered or that the loan is otherwise in default because of the decedent’s death. If this happens, it is important that the Personal Representative and/or the heir receiving the property speak with an attorney. There are federal protections under the Garn St. Germain Act which may apply. Under federal law, a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety is exempt from a due on sale clause.
The Personal Representative must determine which claims are valid claims against the estate of the decedent and must pay those claims which he or she determines are valid. If the estate has insufficient funds to pay all of the valid claims, state law determines the order of payment of claims. It is very important to get the advice of an attorney before paying any claims against the estate if there are not sufficient funds. The Personal Representative may be held liable for funds which are paid incorrectly.
Income tax returns (Form 1040) must be filed for the decedent for the year in which the death occurred. If the estate receives a certain amount of income, the estate may also have to file an income tax return (Form 1041). In some instances, federal and state estate tax returns (Form 706) may also be required. Estate tax returns must be filed within 9 months of date of death.
Detailed records should be kept of all expenses paid from the estate. Within one year from the date of qualification, the Personal Representative must file a Final Account with the Clerk of Court. The final account lists all property which the Personal Representative received and all payments that were made from the estate funds. The Personal Representative must provide proof of payments in the form of canceled checks or receipts. In some instances, the estate may need to remain open for longer than a year. If that is the case, the Personal Representative must file an Annual Account, which includes the same information as the final account.
The Personal Representative may hire an attorney to assist him or her in the administration of the estate and may petition the Clerk of Court to allow payment of the attorneys fees from the estate.
After payment of all expenses and claims of creditors, the Personal Representative must distribute the remaining property pursuant to the decedent’s Last Will and Testament or, if none, according to North Carolina’s Intestate Succession Act. The Personal Representative should have those persons receiving property from the estate sign a receipt for the property.
Depending on the size of the estate and the assets held in the estate, there may be other duties of the Personal Representative which are not covered in this general summary. In some cases, a full estate administration may not be necessary. Our office can help you with the entire estate administration process from start to finish. If you would like assistance with an estate administration, please contact us at (919) 869-3074 to schedule an appointment.
In addition, if you would be interested in learning how your heirs can avoid the hassle and expense of probate, please contact our office to discuss if a Living Trust may be right for you. You can also find out more information about Living Trusts by clicking here.