When planning for your estate’s future, you may wonder, “Do I need probate if I have a will?” The answer is yes; in North Carolina, your estate still requires involvement from probate court regardless of whether or not you have a written last will and testament. But don’t worry – there are ways to rest easy knowing that your loved ones won’t face the additional probate court paperwork and cost. Learn about two methods to keep your estate out of court and spare your family the time and expense. Read on to find out more!
Do You Need Probate If You Have a Will In North Carolina?
The simple answer is yes – even if you have a will, you still need to go through the probate process in North Carolina. (Unless you know the two ways to opt out of the entire probate process)
Probate is a court-supervised legal process that helps transfer ownership of your estate assets from you to your beneficiaries, following the terms and conditions of your will. Probate court appoints a representative to ensure the proper management of all assets according to state law.
Most estates involve the court system because individuals don’t realize there are ways to avoid probate court.
How Does Probate Court Work?
Probate is a legal process that pays creditors and transfers ownership of a decedent’s estate assets to their heirs. Below is a step-by-step guide to the probate process that your loved ones will need to go through when you pass away -unless you bypass probate court entirely!
Filing a Petition:
The first step is to file a petition with the probate court in the county where the deceased person lived. The court opens a probate case and appoints someone to administer the estate. The judge then probates the will (determines its validity) and appoints the executor or personal representative of the estate.
Notifying Heirs and Creditors:
After the court opens the probate case, the estate representative notifies all potential heirs and creditors. This process includes publishing a notice in a local newspaper and sending notifications to all known creditors.
Inventory an Appraisal of Assets:
The personal representative takes an inventory of all assets belonging to the estate. This inventory includes real estate, bank accounts, investments, personal property, and other assets. The representative may need to get appraisals for certain assets, such as real estate, to determine the estate’s value.
Paying Debts and Taxes:
Before the representative can distribute assets to heirs, the estate must pay off any outstanding debts and taxes. Expenses may include taxes, funeral expenses, medical bills, and other outstanding debts.
Distributing Assets:
After paying debts and taxes, the administrator can distribute the remaining assets to the heirs according to the terms of the will. If there is no will, the representative will distribute assets according to state laws regarding intestacy.
Final Accounting and Closing the Estate:
The administrator must provide a final accounting of the estate to the probate court. This account includes a detailed report of all income, expenses, and distributions made during the probate process. Once the probate court approves the final accounting, the court declares the estate closed. The court then releases the representative from their duties, and the heirs take possession of their inheritance.
The complex probate process is time-consuming and costly, with court costs, legal fees, and possible attorney fees. It’s also a matter of public record, which can bring on fraudulent creditors and will contests. In addition, many families do not want to go through unwanted court supervision with the required reports necessary for probate.
What Assets Bypass Probate?
The probate estate does not include non-probate assets. Instead, these assets skip probate. The will also does not determine who these assets go to.
Rather, the named beneficiary on the account or joint owner of the bank account or deed receives the inheritance.
Retirement Accounts:
The decedent’s accounts, such as IRAs, 401(k)s, and other investment retirement accounts, typically have a designated beneficiary or joint owner listed on the account. These assets transfer directly to the named beneficiary upon death and do not go through probate.
Life Insurance Policies:
The life insurance policy proceeds go directly to the named beneficiary listed on the policy. The passing to the named beneficiaries happens regardless of the will. So if the will says that life insurance proceeds go to siblings, but the policies state they go to children, the life insurance policies go to the children.
Property Owned Jointly with Right of Survivorship or Transfer on Death (TOD) Deeds
Jointly owned real estate with the right of survivorship will pass directly to the other owner upon death. So any property held by joint tenants through a joint tenancy with the right of survivorship immediately passes to the surviving owner.
With TOD transfer on death deeds, one can designate a beneficiary who will receive the property upon death.
POD Bank Accounts, Stocks, and Bonds
Payable-on-death or transfer-on-death accounts allow you to choose a beneficiary who will receive the assets on your death. With careful planning, avoiding probate for your bank accounts is easy. Designating beneficiaries ensures bank accounts will go to the heirs you name.
Two Ways to Avoid Probate Court for Your Loved Ones
1- Affidavit: Simplified Process With No Probate
In North Carolina, a simplified small estate affidavit is an alternative to the formal probate process for small estates. In this process, the deceased person’s estate does not go through a full probate process. However, the simplified process is only available under certain conditions, such as when the estate’s value is less than $20,000 ($30,000 for a couple) with no real property involved.
To initiate this process, the person entitled to receive the deceased’s property must complete an affidavit and submit it to the appropriate court. The affidavit must include certain specific details, such as the date of the deceased individual’s death, the names and addresses of the known heirs and beneficiaries, and a list of all assets and debts of the estate.
Once you file the affidavit, the court reviews the information provided and determines whether or not the estate qualifies for the simplified process. If it does, the court will issue an order, and the heirs will receive the assets without going through formal probate.
One of the most significant advantages of the small estate process is that it is much faster and less expensive than formal probate. In addition, it is a private process, which means that the details of the estate do not become public records.
However, it is important to note that the small estate affidavit process may not be appropriate for every situation. For example, if there are disputes among the heirs, the formal probate process may be necessary to resolve those disputes.
Overall, the small estate affidavit process is a helpful alternative for those dealing with small, straightforward estates in North Carolina. It can save time and money while ensuring that heirs receive the assets they are entitled to.
2- Keep Assets in a Trust
A trust is a framework that holds your assets, much like a bank or business account. Trusts can hold your assets to keep your estate out of probate court.
With a trust, your money, property, and bank accounts can go directly to heirs without needing court approval. In North Carolina, a trust is a good way for your loved ones not to have to go through probate court when you die.
As the maker of the trust, you are the trust grantor. The grantor names the trust beneficiaries. The beneficiaries are the heirs named in trust documents to receive money or property from the trust.
As the trust grantor, you also name a trustee responsible for managing the trust and ensuring it follows all of the rules in the trust agreement. With a living trust, the grantor can act as their own trustee while living and name a successor trustee to manage the distribution of the estate after death. While living, you can change the agreement or the assets in a revocable living trust.
However, you still need a will when you have a trust. The will lets your trustee know your last wishes.
A pour-over will can also be a helpful estate planning tool. With a pour-over will, when the owner passes, any assets left in the estate at death pour into your trust so that the estate owns nothing. When an estate owns nothing, there is no need for probate court.
You can work with an estate planning attorney to create a trust. Living trusts are a fairly common estate planning tool that simplify a complex process for all involved!
We Can Help
At Cape Fear Law, we help you with all of your estate planning needs to ensure that your estate does not require probate. We create estate plans to that ensure the best outcome for your loved ones!
Whether you’d like to understand more about the simplified probate process or want to get started with a living trust, we can help your loved ones avoid probate court. Contact us today to learn more about how we can help.