What is Probate and Do I Need To Worry About It?
What is Probate: Probate is the court-supervised legal process that gives one person the authority to handle a deceased individual’s estate (their assets).
Who is Involved: The deceased individual is known as the “decedent.” The person handling their estate is known as the “executor,” if named by the decedent in their last will and testament, or the “administrator,” if court-appointed because the decedent died without a will. Regardless of the title of executor or administrator, that person becomes the “personal representative” of the decedent’s estate.
What Must be Done: The personal representative collects the decedent’s assets, pays debts and taxes owed by the decedent, and distributes the decedent’s remaining assets to the people entitled to inherit them, either through the decedent’s last will and testament, or through the state’s intestacy statutes, if the decedent died without a will.
Is Probate Necessary: Not always. Typical probate assets include: real estate, vehicles, banking and brokerage accounts, household items such as furniture, art and other collectibles. However, only assets that are held in the decedent’s name alone are required to go through probate. For instance, if the decedent owned a home “jointly” with another individual or “by the entirety” with a spouse, the home will pass to the survivor automatically, without going through probate. Additionally, any assets held in a revocable living trust, as well as any asset with a named beneficiary—like retirement accounts, life insurance policies, annuities, pensions, and payable-on-death bank accounts—will also pass to the named beneficiaries automatically, without going through probate.
Importantly, North Carolina offers a special procedure for estates with a value of under $20,000, or $30,000 if a surviving spouse is entitled to inherit everything under state law. After thirty days have passed since the individual’s death, you can avoid probate by filing a special affidavit with the clerk of superior court in the county where the decedent resided at the time of death, along with some details about their assets. After this affidavit has been filed, it can be used to obtain ownership of the decedent’s assets. You can then begin paying the debts of the estate, and eventually distribute the remaining assets of the estate to the rightful beneficiaries. You have 90 days after filing the first affidavit to distribute these assets, at which time you will be required to file another affidavit stating how the assets of the estate were distributed.
If you have questions about the probate process, contact the estate attorneys at Shipman & Wright. They can answer your probate questions, handle estate administration, and draft estate planning documents for your estate that avoid the probate process.