Trying to plan your North Carolina estate? Get the answers you need to protect your family.

Ultimately, it depends on the nature of the Estate and your goals. We find that there are few truly “simple” estates—and those that are “simple” are generally ones that have less than $50,000 in total assets (including the value of the home). The more assets that are at stake, the more work there is to do, the more legal requirements involved, and the more decisions that need to be made.

Most people have little to no experience with settling an Estate, which results in a “you don’t know what you don’t know” hazard. Unfortunately, the Estate Administration process is fraught with potential landmines for the ill-informed and the Executor or Trustee is held personally liable for complying with the law—meaning that if you make a mistake, you could be held responsible by a Court to correct the error, and if such error caused financial harm to the Estate, you would have to reimburse the Estate from your personal savings to correct the error. Therefore, many Executors and Trustees hire a law firm to assist them with the Estate Administration process. By hiring a reputable law firm to assist you, you limit your liability exposure by shifting your liability to the law firm’s professional malpractice liability.

In addition, the role of Executor or Trustee can be incredibly time-consuming. Even a modest estate can require 10-20 hours per week of your attention, depending on what phase of Estate Administration you are in. This is a lot of work and responsibility to take on—particularly at a time while you are grieving the loss of your loved one and trying to meet your other day-to-day responsibilities such as family obligations and “day job” requirements.

We often find that when an Estate has more than $50,000 in total assets, the costs of hiring professional legal assistance are worth the savings in time, energy, hassle, headaches, and liability protection. In some instances, your attorney may even be able to spot monetary savings to the Estate, such as tax savings opportunities or opportunities to negotiate a discount on settling claims of the Estate.

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: How Much Will It Cost To Administer My Loved One’s North Carolina Estate? How Long Does Probate & Estate Administration Take In North Carolina? When Is Probate Required In North Carolina?

 

During the probate process, the executor will be reimbursed for legitimate out-of-pocket expenses resulting from the probate process and the management and administration of the deceased’s estate. 

Unless the Will provides otherwise, under North Carolina law, Executors or Administrators may claim a commission of up to 5% of the Estate assets and receipts, as approved by the Clerk of Court.

Trusts should provide specific guidance regarding compensation. Frequently, the Trust might state that the Trustee is entitled to “reasonable compensation” for their work in serving as Trustee.

If the Trust does not provide any instruction regarding compensation, then the North Carolina Uniform Trust Code provides guidance regarding trustee compensation and reimbursement of expenses.

A Few Caveats To Being Paid as an Executor

It is important to understand that any such commission or compensation received is taxable income to you that you will be required to report on your personal tax return.

If you hire a professional to complete most of the work, then it may not be appropriate for you to claim a commission or compensation, or at the very least, the amount of such commission or compensation should be reduced accordingly.

Given that (1) most Executors or Trustees are family members and are also Beneficiaries of the Estate, (2) most Executors or Trustees hire professional legal assistance; and (3) any such commission or compensation must be reported as taxable income, we find that many Executors or Trustees opt to waive commission or compensation.  However, each situation is unique. Your attorney can provide you with guidance as to whether it may be prudent to claim a commission or compensation.

Losing a Loved One is Hard - We Can Help

The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: What Legal Duties Does An Executor Or Personal Representative Have In North Carolina? Do I Need To Hire A Probate Lawyer To Help Me With Estate Administration? How Long Does Probate & Estate Administration Take In North Carolina?

 

When a loved one dies, a common question is along these lines: “My mother just died and I’m the Executor. I’m flying to North Carolina with my wife and children, and my sister and her family are coming too. Can I pay for all the travel, lodging, food, and similar expenses from the Estate or from my mother’s checking account? That’s what she would have wanted.”

While this might sound like a reasonable request, as Executor, you must proceed with caution. As Executor or Personal Representative, you are personally liable for the proper management and spending of the estate assets—meaning that if you make a mistake, it comes out of your own pocket to fix it.

An Executor or Trustee can be reimbursed for reasonable travel expenses incurred to properly administer the Estate including to clean up the Decedent’s home. This also includes costs associated with final arrangements such as burial or cremation, and a funeral or reception. However, unless the Will or Trust has a specific clause indicating otherwise, paying for other family members’ travel expenses from the Estate is generally not permitted.

 

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: What To Do Right Away When A Loved One Dies In North Carolina Will I Get Paid For Serving As Executor or Trustee? Can We Distribute My Loved One's Furniture & Household Effects After the Funeral?

 

When a married Decedent dies, his or her surviving spouse has a right to claim a portion of the Estate. It is referred to as the “Elective Share” because the surviving spouse must elect to claim such share by proper filing of a claim for elective share within six months of the Decedent’s death.

Effective October 1, 2013, the Elective Share amount in North Carolina is based upon the length of the marriage:

• If the surviving spouse was married to the Decedent for less than 5 years, the elective share amount is 15%;
• If the surviving spouse was married to the Decedent for at least 5 years, but less than 10 years, the elective share amount is 25%;
• If the surviving spouse was married to the Decedent for at least 10 years, but less than 15 years, the elective share amount is 33%;
• If the surviving spouse was married to the Decedent for 15 years or more, the elective share amount is 50%.

The Elective Share laws also include very specific definitions for determining which assets count as part of the “Estate” for purposes of the calculation.

If you are a surviving spouse who is contemplating filing for an Elective Share, or if you are an Executor facing such a claim by a surviving spouse, we strongly encourage you to hire legal assistance.

 

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

 

Related Links: What Is The Spousal Allowance Or Dependent Allowance In North Carolina? Is Probate And/Or Estate Administration Necessary For My Loved One’s Estate? Lost Original Will: What If I Can’t Find The Will Or Trust?

 

The death of a spouse can be one of the hardest losses a person can experience. And as if it weren't already hard enough, there's the added stress of sorting out the estate and financial matters. As a surviving spouse, it's important to understand what your rights are, including understanding the Spousal Allowance, the Dependent Allowance, and the Elective Share.

What is the Year's Allowance? What Is The Spousal Year's Allowance?

North Carolina law provides for a year’s allowance for the surviving spouse and dependent children of a deceased individual.

Under North Carolina law, the surviving spouse of the Decedent is entitled to the first $60,000 (this was increased from $30,000 beginning on January 1, 2019) of the estate. Similarly, a dependent child of the Decedent may be entitled to a $5,000 allowance from the estate. 

In some instances, the surviving spouse may apply for a higher spousal allowance based on the income of the deceased spouse. The maximum spousal year's allowance is one half of the average annual net income of the deceased spouse for the three years immediately prior to the deceased spouse's death. Net income means the deceased spouse's take-home pay after taxes. 

Both the year's allowance for dependent children and the spousal year's allowance are available regardless of whether the deceased spouse had a will or not.

The Court has specific forms for claiming the Year’s Allowance. A Surviving Spouse can also renounce the Spousal Allowance if he or she does not wish to claim it.

Wondering why these laws exist? The laws were originally created to protect widows and children of a decedent and provide them with some assets to meet their needs while the rest of the estate was being administered. 

What Assets Are Available to Pay the Year's Allowance and Spousal Year's Allowance?

The spousal allowance is paid using personal property such as money in bank accounts, automobiles the deceased spouse owned, or similar. Unless there is a secured lien against an asset, the spousal year's allowance gets priority before claims against the estate, meaning that the spousal allowance gets paid before other debts or claims. An example of a secured lien would be a car loan against a car. If there is a secured lien, the value of the lien will be subtracted from the value of the asset first. For example, if the deceased spouse owned a vehicle worth $20,000 that was subject to a car loan lien of $15,000, then only $5,000 of the car's value can be applied towards the spousal allowance.

Real estate such as land or buildings cannot be used to satisfy the spousal year's allowance.

If initially there is not enough personal property available to cover the entire $60,000 spousal allowance, the clerk of court will enter a deficiency judgment in the estate. Thus, if additional assets are later found, those assets can be used to pay the remainder of the spousal allowance to satisfy the deficiency judgment.

How Long Does A Surviving Spouse Have to Claim the Spousal Allowance?

Generally, the personal representative of the estate (often called an executor or administrator) is responsible for assigning the spousal allowance to the surviving spouse so long as the spouse applies for the spousal allowance within one year of the deceased spouse's death.

If there is no personal representative, or if the personal representative fails to assign the spousal allowance, the surviving spouse or their attorney can apply directly to the clerk of court using Spousal Allowance Form and submitting the filing fee with the form.

If the surviving spouse wishes to apply for more than the minimum spousal allowance of $60,000, the surviving spouse will need to file a petition for a special proceeding before the clerk of court. This filing must show that the spouse is entitled to the greater amount and that the estate is worth more than $60,000.

Can A Surviving Spouse Be Disqualified From Receiving the Spousal Allowance?

A surviving spouse may be disqualified from receiving the spousal allowance if:

• The surviving spouse waives his or her right to the year's spousal allowance.
• The surviving spouse waived his or her right to the spousal allowance in a valid prenuptial or postnuptial agreement.
• The surviving spouse is determined to be a "slayer" under the North Carolina slayer statutes because they plead or are found guilty of killing the deceased spouse.
• If the deceased spouse and the surviving spouse were legally separated at the time of the deceased spouse's death.
• If the surviving spouse was living in adultery at the time of the deceased spouse's death.
• If the surviving spouse is deemed to have "willfully abandoned" the deceased spouse prior to the deceased spouse's death.
• If the marriage between the deceased spouse and the surviving spouse is determined to be invalid.

What Other Claims May A Surviving Spouse Have Against the Estate?

A surviving spouse may also be entitled to claim additional assets under the North Carolina Elective Share rules which you can read more about here.

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: What Is The Surviving Spouse “Elective Share” In North Carolina? Is Probate And/Or Estate Administration Necessary For My Loved One’s Estate? Lost Original Will: What If I Can’t Find The Will Or Trust?

 

The main estate proceeding, referred to as the Domiciliary Estate Administration, will take place in the county in which the Decedent resided at death. However, if the Decedent owned property in another state, then it is possible that an Ancillary Administration may be needed in the other state. The Ancillary Administration will be based upon the laws of the state where the out-of-state property is located. Similarly, if the Decedent owned property in another country, it will be handled in accordance with the laws of the other country.

It is important to note that although the property may be owned in another state or country, the property generally still needs to be included in the accounting of the North Carolina Estate and on the North Carolina and Federal tax returns of the Estate.

 

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: Do I Need To Hire A Probate Lawyer To Help Me With The North Carolina Estate Administration? When Is Probate Required In North Carolina? An Overview Of The Process Of Settling An Estate

 

If the person is residing in the home pursuant to a valid lease agreement, then you must abide by the terms of the lease agreement. Otherwise, if the home is part of the Estate, the Executor has the authority to determine who may reside in the home. If the home is part of the Trust Estate, then the Trustee has the legal authority to determine who may reside in the home. It is important to note that if the Executor or Trustee does authorize someone to live in the Estate home, even if it is a family member, the family member should pay fair market rent to the Estate, unless all Beneficiaries of the Estate agree otherwise.

If the person is residing in the home without the proper authority of the Executor or Trustee, then they can be evicted using the same process by which a landlord might evict a squatting tenant. The eviction process is handled through a different division of the Court from the Estate proceeding.

 

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: Do I Need To Hire A Probate Lawyer To Help Me With The North Carolina Estate Administration? What Legal Duties Does An Executor Or Personal Representative Have In North Carolina? What To Expect When You Call Us For Probate Help

 

Many of our Wake County clients have family that lives all over the country and the world. Their family may have traveled from near and far to attend the funeral, which often raises the question: while everyone is here, can we meet at the house to distribute the household furnishings and personal possessions?

Unfortunately, the answer is almost always, No. Only a legally appointed Executor or Trustee has the authority to manage and distribute assets of the Decedent. Until the Executor has been formally appointed by the Court or the Successor Trustee has been legally recognized, none of the Decedent’s possessions should be distributed.

Even once you have been appointed as Executor or Trustee, you should proceed with caution. Often, household furnishings and personal possessions come with huge sentimental attachments and are one of the most common sources of family fighting when settling an estate.

The Will, Trust, or Personal Property Memorandum of the Decedent may include specific instructions regarding the proper distribution of household furnishings and possessions. As Executor or Trustee you can be held personally liable for improperly safeguarding and distributing the personal property, furnishings, and possessions.

 

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: What To Do Right Away When A Loved One Dies In North Carolina How Do We Pay For My Loved One’s Funeral Or Cremation In North Carolina? Can I Be Reimbursed From The Estate For Travel Or Other Expenses Relating To My Loved One’s Funeral?

 

If the Decedent had a safe deposit box at a local bank, it is important that you do not remove any contents of the safe deposit box.  After the death of an owner, a safe deposit box must be properly inventoried by the Executor or Personal Representative according to specific procedures that generally include the presence of the Clerk of Court, a Deputy Clerk, or other Qualified Person as defined by law.

Many are under the impression that if they just add their adult children to their safety deposit box that this eliminates the need for an inventory of probate after their death, but this is not true. Just because you may have a key to the safe deposit box does not authorize you to access the contents of the safe deposit box.

If you are a lessee, co-tenant, or deputy of the decedent’s safe deposit box, then you may have legal authority to access the safe deposit box without the presence of the clerk of court. However, the safe deposit box still must be properly inventoried and accounted for by the Executor or Personal Representative as part of the probate and estate administration process.

If you believe your loved one may have had a safe deposit box but do not know where it is located, try contacting all financial institutions where your loved held accounts, ask family members, and ask your loved one’s attorney.

 

Losing a loved one is hard. The days and weeks after a loss are often fraught with grief, questions, and unfortunately, family complications. It’s a terrible time to try to think through a legal process clearly. It’s often a challenge just to know where to start. Maybe you’re not even sure what questions to ask and whom to ask. How do you know you’re getting good advice and doing it right? You could probably use some help. Our Understanding Estate Administration guide can help. This guide will give you an overview of the probate and estate administration process in plain English. Request your free copy here.

Related Links: What To Do Right Away When A Loved One Dies In North Carolina Should I Notify The Bank Or Close The Decedent’s Bank Accounts? Is It Okay If The Family Meets At The House After The Funeral To Distribute Household Furniture And Possessions?

In a previous FAQ, What Happens If I Die Without A Will?, I discussed North Carolina intestacy law and who would receive your property if you were to die without a will. 

Distribution of your estate without an estate plan is probably not what you would want to happen. The following are my Top 9 Reasons Why You Probably Shouldn't Rely On the North Carolina Intestacy Statues to Carry Out Your Wishes When You Die.

#1 If You Have Minor Children, the Intestacy Laws Do Not Provide a Means of Appointing a Guardian to Care For Your Children

When it comes to your children, I’m sure you take precautions as to who cares for them.  You ask around for recommendations of a reputable babysitter.  You research their school districts, teachers, coaches, etc.  So why would you want to leave it to the courts to decide who cares for your children after your death?

#2 If You Have Minor Children, I Do Not Recommend You Leave Property To Your Children Outright

Under North Carolina law, children are not allowed to own property.  As such, if property passes to a child directly, either under a will or under the intestacy laws, the courts will appoint someone to manage the property on behalf of your child.  This process can be time consuming, frustrating and costly.  The person appointed must file an annual accounting each year reporting (to the penny) all money into and out of the children’s accounts.  While this might seem like a reasonable protection, the result is that it often binds the hands of a surviving spouse or guardian that is caring for the children, for example, making it difficult to handle such day to day responsibilities such as paying mortgage, utilities, educational expenses, etc.  It is instead recommended that you include a trust for minors in your will or have a separate trust agreement to provide for the management of the children’s property.  Such a document can be drafted to protect your children while still allowing flexibility to the surviving spouse or guardian.

#3 Problems Frequently Arise In Blended Families

In families with step-parents or step-children, certain family members that you do or do not want to be included may not receive the treatment you would like.  For example, if you are a step-parent that would like some of your property to pass to your step-children but you have not legally adopted the step-children, the step-children will not receive anything via intestacy.

#4 Couples Who Don't Have Children Usually Want Their Spouse To Receive Everything

In my experience, most married clients without children want to leave everything to their spouse.  However, under the intestacy laws, their parents would actually receive a substantial share of their possessions.

#5 Unmarried People May Not Wish to Leave Everything To Their Parents

Again, in many instances, unmarried persons would instead prefer to leave assets to their siblings, nieces and nephews, a friend, or a charity. Please note: North Carolina State Law does not recognize the concept of a "common law" marriage.

#6 The Intestacy Distribution Scheme Does Not Include Charitable Gifts

Many clients, even if it is only a small amount, like to leave a gift to charity.  The intestacy distribution scheme does not allow for such.

#7 Heirlooms and Sentimental Possessions May Be Sold

Often people have special family heirlooms, family vacation homes or other sentimental possessions, that they want to ensure remain in the family and are not sold upon their death.  If the property passes through intestacy, there is a greater likelihood that such property may be sold.  Having a valid will can ensure property treatment of such sentimental property.

#8 Equal May Not Be “Fair”

The intestacy statutes lean towards equal division of property to those within the same generation.   For example, equal division among parents if you property passes to your parents, or equal division among children if your property passes to your children.  The reality, for many, is that an equal distribution may not be a “fair” distribution.  For example, parents with adult children often use wills to leave unequal amounts to their children due to particular circumstances.  The parents may choose an unequal distribution because during lifetime they spent disproportionally more money putting one child through graduate school.  Another common reason is that one child may have stayed close to home and taken on the caretaker role as the parents aged.

#9 Special Circumstances Will Not Be Factored In

There are many, many reasons why intestacy will not fit most people’s wishes.  Intestacy statutes are drafted with a “one size fits all” mindset, and just like one size fits all T-shirts, the intestacy laws often end up fitting very few people properly.  The laws cannot take into account each person’s particular circumstances, so special situations will not be adequately resolved under the intestacy laws.  Such special circumstances might include the need to provide for a special needs child, a pet, a business ownership interest, a close friend, charity, and so on.

You Can Do Better!

Every day we are working with families in the Raleigh-Durham-Cary area to put together plans that preemptively address not only who gets what stuff, but how to carry on your values when you no longer can through services including:

• Asset Protection to help protect the inheritance your heirs receive from potential divorce, lawsuits, or creditors;
• Long-term care planning, to make sure you and your spouse can have the best life possible in your later years;
• Children's Safeguard Planning, if you have minor children, to make sure they don't end up in Child Protective Services if something happens to you unexpectedly; and
• Special Needs Planning, to make sure your loved ones are cared for when you no longer can provide for them.

With Estate Planning, things can go very right... or they can go very wrong. For more information on how Carolina Family Estate Planning can help you get it right, call our office at 919-443-3035 to discuss next steps, contact us online, or reserve your seat at an upcoming seminar.