Trying to plan your North Carolina estate? Get the answers you need to protect your family.
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Are family members responsible for the deceased’s credit card bills?
With possible exception of a surviving spouse, generally no. Notify the credit card company of the executor’s or trustee’s address so that you will receive statements and can handle them while administering the other debts and expenses of the estate.
If the credit card was a joint account with a surviving spouse, then the surviving spouse should consider paying the credit card bill so that his or her credit rating is not impacted. If the expense belong to the decedent, the surviving spouse can later be repaid by the estate. The surviving spouse should then stop using the joint credit card and instead arrange to have a card in his or her name only.
Generally, unless it was a joint account or another family member signed off as a guarantor on the account, the family is not responsible for the debt. Further, credit cards are “unsecured debt,” meaning that they are relatively low on the list of order of priority in which debts are paid (though if there are sufficient assets in the deceased’s estate, they do have to be paid).
We have read and heard stories of credit cards companies using tactics that borderline on harassment, to pressure executors, trustees or family members to pay the credit card debt or roll it over into their own name. If you are at all uncertain as to whether you are obligated to pay the debt, consult with your attorney first before making any payments.
If I’m named as the executor or personal representative in the will can I start administering the estate?
No. You must first file the will with the probate court, establish the will’s validity, and be formally appointed as executor or personal representative. Before rushing off to the court house, you should be sure that you have the correct will. Sometimes a family member will find a will, assume it’s the right one and head on down to the court house only to later discover that there is a more recent will or trust that replaced the revoked the prior will.
What’s the difference between an administrator, a personal representative, and an executor?
All of these titles essentially refer to a person appointed by the court to administer the deceased’s estate.
Executor (or executrix if female) is the traditional term for the person named in a will (and subsequently appointed by the probate court) to oversee the estate of a person who has died with a will. Some states have now adopted statutes that replace the term “executor” with “personal representative” so the terms are often used interchangeably.
An administrator or administratrix is the person appointed by the probate court to administer the estate of a person who has died without a will (intestate).
Read Our Guide, Understanding Estate Administration to Learn More
As explained in our guide, Understanding Estate Administration, the appointment of the executor, administrator, or personal representative is addressed during the Legal Authority phase of an estate administration. Request your copy to learn more about the estate administration process in North Carolina.
If you are personally involved in a North Carolina probate or estate administration, or if you want to make sure your own estate is protected, please call us at (919)443-3035 or contact us online. We will help you identify the next steps to take, and we'll connect you with resources that can help.
If the deceased had a fully-funded living trust, do I need to do anything?
Yes. A common misconception is that because a fully-funded living trust can be used to avoid probate, there is nothing to be done. However, while the added work of a formal probate process is not needed, there are still tasks to be completed, such as obtaining a taxpayer identification number for the trust, updating the titling of assets, settling any final debts and expenses of the estate, and final tax returns. The trust agreement will then include provisions on what should be done with the assets next—such as outright distributions or distributions to certain sub-trusts.
What is probate? What is estate administration?
These terms often are used interchangeably. Technically, probate is the court process of proving the validity of and then overseeing that the instructions provided in the wills are followed properly and the estate is correctly administered. When there is no will, the process is simply referred to as estate administration.
The tasks to be completed during the probate process can vary depending upon the circumstances, but generally they involve:
- Filing a petition with the probate court
- Providing proper notice to the heirs named under the will (or by statute if the deceased died without a will)
- Petition the probate court to be appointed as executor or administrator
- File an inventory of the estates assets
- Pay legitimate debts of the estate
- Filing and payment of estate taxes, if applicable
- If needed, sale of some or all estate assets
- Final accounting to the court and distribution of remaining assets to the heirs
How much does probate cost? How long does probate take?
Both the cost and length of time required for a probate can vary dramatically. Factors that may impact the cost and duration include the size and complexity of the estate, the types of assets involved in the estate, whether a will existed, and whether any will contests are alleged.
There are a variety of fees that arise during the probate process including executor's fees or commission, attorney and legal fees, appraisal fees, cost costs, accounting feeds and bond fees. When added up, these fees frequently wind up costing between 2% to 7% or more of the total value of the estate and the entire probate process generally takes between 9 and 18 months in North Carolina (assuming that there is not any litigation involved).
It’s also important to understand that if there is out-of-state real estate, that real estate must be probated in the state within which it is located—this is referred to as an ancillary administration. This can significantly increase the work and cost involved during the probate process.
Does an executor get paid? How much can an executor charge to probate an estate 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.
In addition, unless otherwise provided for in the will, an executor is entitled to be paid a commission for his or her service of up to 5% as deemed reasonable by the probate court.
How much are attorney fees to handle a North Carolina probate? How much are fees to handle a North Carolina trust administration?
Attorney fees for the administration of a North Carolina estate will vary from one estate to another and the capacity in which the attorney is working. If the responsibilities of the attorney are limited to assisting the executor with the estate administration process, then the North Carolina statutory law provides that the attorney’s fees must be reasonable and not exceed 5% of the estate. Furthermore, the fees will offset the executor’s commission. So, for example, if the executor hires an attorney to do the majority of the work, the executor’s commission will be relatively low to offset the attorney’s fees for handling the administration.
However, if the attorney provides legal services that are beyond routine estate administration, there is no cap on the amount of attorneys’ fees. They must simply be reasonable under the circumstances. This might include handling a will contest or estate litigation, lawsuits brought by creditors, wrongful death lawsuits, and similar services.
While there aren’t many statistics available on the subject, anecdotally, attorneys’ fees tend to average between 1% to 7% of the estate. Proportionally, smaller estates tend to pay a higher percentage in attorneys’ fees because there is a certain base amount of work that must be done no matter the size of the estate.
Most trust and estate lawyers either bill on an hourly basis or some sort of flat fee arrangement. With hourly billing, a set hourly rate will be established for the lawyers' time as well as any other staff members times who may work on the case. Generally, you will be invoiced separately for additional expenses such as postage, photocopying, filing fees and the like.
Other attorneys may agree to work on a flat fee basis, sometimes calculated as a percentage of the value of the estate. Again, there aren’t many statistics available, but anecdotally, if the trust has been funded properly, attorneys’ fees tend to range between .5% to 2% of the estate, with smaller estates being more likely to be towards the higher end of the range.
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.
Are assets “frozen” during the probate process?
Sometimes. In certain cases, assets are somewhat “frozen” until the probate process is finished. The issue is that the deceased’s creditors have first priority before heirs receive distributions. And if the executor or administrator does not properly administer the estate and settle the debts and liabilities correct, he or she may be personally liable for any mismanagement.
North Carolina law does permit certain statutory allowances for a surviving spouse or depending children, but these allowances are relatively small in comparison to today’s cost of living. Currently, a surviving spouse has the right to a one-time allowance of up $20,000. Dependent children have a right to a $2,000 allowance.
For purposes of the allowance, North Carolina defines a dependent child as any child that is under the age of 18 years (including an adopted child), or a child under the age 22 years that is a full-time student, or a child under the age of 21 years that has been declared mentally incompetent, or a child under the age of 21 years who is totally disabled, or any other child under the age of 18 years for whom the deceased or the surviving spouse served in loco parentis (meaning “in place of a parent”).
These allowances are referred to as the “Years Allowance” and during the probate process, they take priority over creditor claims and other heirs or beneficiaries of the estate.
I’m worried about how the cost of a nursing home or long term care will impact my family and assets, should I be?
Yes, it’s a valid concern. A recent study by the University of California noted that about 70% of individuals the live to the age of 65 will wind up needing long term care during their remaining lifetimes. And on average, women require an average of 3.7 years of care and men require an average of 2.2 years of care. Further, it's estimated that about 20% of individuals that live to the age of 65 will wind up needing long term care for 5 years or longer!
Currently, the average cost of nursing home care exceeds $75,000 per year in North Carolina. Even home care or assisted living facilities can average $45,000 per year or higher. Thus, nursing home and long term care costs can rapidly deplete one’s assets.