The loss of a spouse is one of the most difficult things a person can endure and dealing with Estate and financial issues can make it harder. The “Year’s Allowance” is designed to make the financial burden easier for North Carolina families in the short term by providing quick access to funds without the time and expense of the Probate process.
What Is the Year’s Allowance?
Under North Carolina law, when a married person passes away, their surviving spouse is entitled to receive up to $60,000 (as of 2021) from the Estate in order to help support them for the first year of their transition, regardless of whether they died testate (with a Will) or intestate (without a Will).
In some cases, the law provides for a higher amount of support based on the income of the deceased spouse. This amount is calculated based on the average annual income of the deceased spouse in the three years immediately prior to their death. This amount is also calculated on net (take-home) income, not gross (pre-tax) income.
Do Children Get Anything for A Year’s Allowance?
In addition to the support provided from the Estate for the spouse, children can be provided with $5,000 each under the same structure as the spousal Year’s Allowance given, they meet the following criteria:
- Under the age of 18 years old, OR
- Under the age of 22 years old and attending a higher education institution, OR
- Under the age of 21 years old and declared mentally incompetent or totally disabled
A child can also be excluded from eligibility if the child is born out of wedlock, except in one of the following cases:
- The deceased father has recognized the paternity of the child by deed, will, or other writing, OR
- The deceased father died prior to the child’s birth or within a year of their birth and is established to be the father of the child by DNA testing
This support is available for biological children, adopted children, and even children where the spouse is pregnant at the time of the decedent’s death. Since children cannot receive real property in a Will until they reach the age of 18, the funds from this are paid to the surviving spouse for the benefit of the child.
If the child does not reside with a surviving spouse or parent when the allowance is paid, the allowance will be paid to the child’s general guardian or guardian of the Estate, if any, and if none to the clerk of the superior court who will receive and disburse the allowance for the benefit of the child.
How Are the Funds Disbursed?
The court has a specific form that can be completed to claim the Year’s Allowance here: https://www.nccourts.gov/documents/forms/application-and-assignment-years-allowance
Generally, the Executor of the Estate is responsible for providing the Year’s Allowance to the surviving spouse and children as long as the surviving spouse applies for it within one year of the deceased spouse’s death. If the Executor fails to act within 10 days, or if the deceased spouse died Intestate, the surviving spouse or their attorney can apply directly to the clerk of court using the form above.
What Assets Can Be Used to Pay the Year’s Allowance?
The Year’s Allowance for a surviving spouse and children can be paid using almost any available personal property to the Estate, including bank accounts, cars, property, and other assets, as long as there is not a secured lien against the asset.
This allowance gets precedence over any other claims against the Estate, except for secured liens. In the case of a secured lien, such as a car loan, the value would be calculated as the value of the asset minus the outstanding amount of the lien.
Can A Spouse Lose Their Qualification for The Allowance?
Yes, but those ways are fairly limited. The surviving spouse can waive their rights to the allowance if they do not want or need it either by making the decision after the death of their spouse or by prenuptial or postnuptial agreement, or they can be disqualified in one of the following ways:
- If the surviving spouse pleads or is found guilty of killing the deceased spouse.
- If the surviving spouse and deceased spouse were legally separated at the time of the deceased spouse’s death.
- If the surviving spouse was living in adultery or deemed to have “willfully abandoned” the deceased spouse at the time of the deceased spouse’s death.
- If the marriage between the deceased spouse and the surviving spouse is determined to be invalid.
Contact Our North Carolina Estate Planning Team
The Year’s Allowance is a useful tool to help a surviving spouse and children weather the first year after a loved one’s death and is a great option as a part of a larger Estate Plan. The team at McCollum Law helps families of all shapes and sizes craft an Estate Plan to protect their loved ones after a family member passes away. Contact us today at 919-861-4120 or www.mccollumlawpc.com to schedule a consultation and get started with protecting your family’s future!