Probate Process in North Carolina
The Probate Process in North Carolina
Probate in North Carolina is a fairly straightforward process. The state court system provides many fill-in-the-blanks forms online, and the process is relatively informal. The superior court clerk, an elected county official, acts as the probate judge. (Clerks are often referred to as “ex officio” probate judges, which just means that they are judges because they hold the office of clerk).
The personal representative must:
collect and inventory the deceased person's assets, and keep them safe
have assets professionally appraised, if necessary
sell some assets, if necessary
pay valid debts and taxes, and
give out the remaining property as the will (or if there's no will, state law) directs.
Marshaling Assets
The personal representative has authority over all assets of the deceased person that go through probate; these assets make up the “probate estate.” Probate assets typically include vehicles, real estate, bank and brokerage accounts, and personal belongings such as jewelry, furniture, art, and collections.
Usually, the personal representative opens a bank account for the estate, and deposits money from existing cash accounts into the estate account. Amounts paid to the estate (for example, wages owed to the deceased person, refunds, and other miscellaneous payments) also go into the estate account, and its funds are used to pay estate expenses.
A personal representative who wants to sell any real estate in the estate—for example, if it’s necessary to raise cash to pay debts—must first get permission from the court clerk unless the will directs the executor to sell the property.
Paying Debts and Taxes
One of the first jobs of the personal representative is to publish a notice of the probate proceeding in a local newspaper, once a week for four weeks. (If there isn’t a printed newspaper in the county, the notice can be posted at the courthouse and other public places; the clerk’s office will have information on what to do.) This alerts creditors that they should come forward with any claims against the estate within three months after the date of first publication of the notice.
The personal representative must also deliver or mail a notice to creditors about how, when, and where they can file claims against the estate. Notice must be sent to all creditors the PR knows about or can discover with a reasonable amount of investigation. If the PR has already paid a claim, or will pay it, a mailed notice isn’t necessary.
If there isn’t enough money in the estate to pay all the debts, state law sets a priority. Assets that have liens (legal claims) attached to them have first priority; after that come funeral and burial expense (up to $5,000), taxes, and then other expenses.
The executor must file final state and federal income tax returns for the deceased person. These returns are generally due by April 15 of the year following the year of death. Income tax returns may also be required for the estate itself, if it receives income.
State and federal estate tax returns will be required only if the taxable estate is very large—for deaths in 2015, more than $5.43 million. The vast majority of estates—more than 99.7%--do not owe federal estate tax. North Carolina repealed its state estate tax in 2013.
Distributing Assets and Closing the Estate
When debts and taxes have been paid, the personal representative can distribute the property to the people who inherit it. The personal representative must follow the directions in the will, or if there is no will, give property to the closest surviving relatives, as state law directs.
Before the estate can be closed, the personal representative must file a final accounting with the court. The accounting is a statement showing all the transactions the personal representative entered into on behalf of the estate. (If the estate stays open more than a year, an accounting must be filed annually). The accounting must be accompanied by evidence of all transactions, such as cancelled checks, receipts, and bank statements.
