North Carolina Estate Administration
What Is Estate Administration?
Losing a loved one is devastating, whether the loss occurs unexpectedly, or after a prolonged illness. Once the formalities associated with the immediate loss, funeral and burial are complete, the legal process of dealing with the assets of your loved one must begin. Whether your loved one dies with an estate plan or not, their estate must still be handled in accordance with North Carolina law.
In general, this means you have to inventory their assets, determine what outstanding financial obligations they may have, and file a final tax return for the estate. This process can be confusing and is fraught with issues if you are uncertain about the process.
Dying Without A Will In North Carolina
Oftentimes, people who have modest estates and incomes put off drafting a will. Should they die without a will, this is referred to as dying “intestate”. For the family, this means they have to undergo a rigorous process with the probate court and the assets of the decedent are distributed in accordance with North Carolina’s Intestate Succession Act. Contrary to what most people believe, this does not mean the surviving spouse automatically inherits 100 percent of their spouse’s estate.
Once it is determined a decedent has no will, the surviving spouse, parents, or other rightful heirs can apply to the court to be named administrator of the estate. This may require the assistance of an estate administration lawyer to guide you through the process. The Clerk of Superior Court will issue Letters of Administration and the administrator will be responsible for carrying out payment of debts, liquidation or distribution of assets, and filing the final tax returns.
Property division is then determined by law by the court and the beneficiaries include surviving spouses, parents, and children of the decedent. There are exceptions to this rule, such as life insurance policies or retirement accounts which have named beneficiaries.
When a Will or Trust Has Been Provided by Decedent
When a person has a will or trust in place prior to death, this is called “testate”. Should the person have a will, there is a person named as Executor of the Estate. The executor is responsible for carrying out the wishes of the decedent which are spelled out in the will. However, this is not always as straightforward as it may initially appear.
The first step in administering a will is filing the will with the Clerk of Courts in the county where the decedent resided at the time of their death. Assuming there are no immediate disputes, the Court will then certify the will, issue Letters of Testamentary, and the Executor must then continue the process. A typical process looks like this:
- Gather and Inventory — the first responsibility of the Executor or Administrator is to gather and inventory the assets of the decedent. A full report must be made to the court of all assets including personal belongings, real estate, and automobiles. Some assets may need to be liquidated, in which case you would open a separate account to hold the proceeds. An estate administration attorney can assist you with this process.
- Value Inventory — as the person responsible for the estate, you will have to obtain values on real property. For example, if the decedent owned a home, car, or artwork, a qualified appraiser would have to provide values. This is where it is most helpful to have an experienced attorney who is familiar with these processes.
- Notifications Required — there are legal notification requirements which must be adhered to in North Carolina. Creditors and potential heirs are entitled to put claims in against the estate, even when the decedent has a will in place. Your estate administration attorney can help you with these requirements.
- Pay Outstanding Debts — all legal debts and taxes of the decedent must be paid on behalf of the estate. Remember, all outstanding debts may be challenged, if need be, since any shortfall could mean you, as administrator or executor of the estate could wind up responsible for any debt where there is insufficient money to pay the debts.
- Final Tax Filings — unless an estate is sizable, there may be no need for an estate tax filing. You should speak with a lawyer who has experience with estates to determine whether you need to file an estate return. However, you do need to file a final tax return for the decedent. Until you know the final tax obligations, you should not be distributing assets as taxes must be paid first.
- Distribution of Assets — executors and administrators are responsible for the final distribution of assets of the estate. This includes cash and any personal property. When there is a will, the distribution is done in accordance with the final wishes of the decedent. If there was no will, it is done in accordance with North Carolina laws. Receipts should be obtained from beneficiaries.
- Filing Final Reports — the final step in this process is a report to the court showing all income, expenses, and distributions which were made on behalf of the estate. This report must be filed in all cases where the courts have either verified an executor or appointed an administrator.
Administration Cases With Trust Agreements
When a person dies without a will but has a trust in place, there is a different process required to handle the administration of their estate. First, unlike a will, the trust need not be administered through the courts. Trusts generally have a successor trustee appointed by the trust maker and that successor trustee will be required to carry out their wishes at the time of their death. Should you learn you were appointed as a successor trustee, it is important you understand your legal obligations to fulfill the terms of the trust agreement.
Contact Our North Carolina Estate Administration Attorneys
Losing a loved one means your life is in turmoil and you may feel at a loss regarding what steps you need to take to resolve their estate. This is why it is always a good idea to reach out to an experienced estate administration attorney. There are several legal hurdles which may have to be overcome to successfully close an estate. Many steps are complicated and have specific guidelines and deadlines – let the professionals at McCollum Law help you and your family navigate this process. Call us today for a consultation!