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Navigating Probate Court In North Carolina

The probate refers to the process of administering someone’s estate through the North Carolina court system. It is typically confusing, stressful, time-consuming and expensive – all in the immediate aftermath of having lost a loved one. Salem Law, founded in 2010 and led by attorney Daniel Umlauf, provides legal guidance and support regarding the probate court process to clients in the Winston-Salem communities.

What Is The Probate Process?

Probate is the process by which a deceased person’s property, known as the “estate,” is passed to their heirs and beneficiaries (people named in the will). The entire process, supervised by the North Carolina probate court, may be finished in less time but often takes about a year. In cases where real estate is owned in another state or there are other unique assets, it is likely to take longer than a year. However, substantial distributions from the estate can be made in the interim.

What Property Is Subject To Probate?

An “estate” for federal and state tax purposes is different than a “probate estate”. Certain kinds of property, such as some property owned jointly with a right of survivorship (not all property that is owned “jointly” includes a right of survivorship), life insurance proceeds and retirement accounts if the estate is not named as a beneficiary, and property held in trust, are not part of the probate estate and are usually not subject to the probate process. However, for instance, whether they are jointly owned with a right of survivorship or not, personal property such as bank and investment accounts, CDs, stocks and bonds, etc. still must be listed, inventoried, and changes in value accounted for on probate filings because they are available to creditors should they be needed. Because inherited retirement accounts are available to creditors since a 2015 Supreme Court ruling, their existence must be noted on probate filings.

Similarly, real estate in North Carolina is considered to go directly to the beneficiaries outside of probate but that is subject to the personal representative having the power to pull it back into the estate for almost any reason although primarily to creditor claims. This can leave beneficiaries in limbo and may cause trouble procuring bank loans or having title insured until the estate is closed.

Finally, as mentioned previously, while your North Carolina “probate estate” only includes property that is subject to the probate process per North Carolina law, your “estate” or “taxable estate” for federal and state tax purposes includes everything you owned or had control over at your death. State and federal income tax filings for both the decedent as an individual and the estate of the decedent must be filed by the personal representative, and there are many special rules that apply at death especially concerning capital gains taxes. Even if no Federal Estate Tax is due, there may be reasons to file a federal estate tax form. The knowledgeable and experienced staff of Salem Law can advise you as to the desirability of making such a filing.

How Is The Probate Process Started?

First, an “application” for probate must be filed by the named executor or personal representative with the probate court, along with the original will, a certified copy of the death certificate, and a preliminary inventory of the decedent’s assets. Notice must be mailed to all of the heirs at law (usually the surviving spouse, children, and children of any deceased children), to those named as beneficiaries in the will, and the Department of Social Services if the applicant received Medicaid. If no one objects and the will is found to be properly executed and drafted, the named personal representative will be issued Letters Testamentary which will endow them with the requisite legal authority to collect the decedent’s property and implement their wishes as specified in the will.

What Does The Personal Representative Do?

The personal representative is responsible for collecting the probate property and for paying any debts of the estate. The personal representative must file with the probate court an itemized list, known as a “final inventory” within ninety (90) days of their appointment with an exact date-of-death of all property passing through probate and as well as all jointly owned property even if it will not pass through probate. Jointly owned property must be listed because it will be available to creditors if necessary. The personal representative is responsible for filing and paying any federal or state taxes that may be due including income tax forms for the decedents individually as well as estate tax forms if necessary. Note that there may be reasons to file estate tax forms even if no taxes are due. Our office can advise you as to the desirability of such filings.

Notice of the death must be published in the paper and sent to any known creditors who will then have ninety (90) days to submit a claim against the estate. Creditor claims are ranked in an order of priority much like bankruptcy before they are paid. Finally, after the time period for creditors to submit a claim has passed and claims have been paid, distributions may be made according to the terms of the will and the final duty of the personal representative is to file a final accounting with the probate court showing every transaction, expenditure, and change in value of property reflected on the final inventory. Once this is approved by the court, the personal representative will be discharged from their duty.

Attend A Workshop Or Schedule A Consultation

At Salem Law, we regularly offer complimentary estate planning workshops. Attendees can learn more about the services we offer and how we can assist. To find out more about our probate services or schedule a consultation, contact us at 336-715-1311 or send us an email through our website.