I received a phone call last month from a friend. She was calling to tell me her Grandmother had passed away, and she wanted to make sure the estate was handled properly. These are difficult conversations, and they never get easier, especially when a friend or family member is involved. Every single time I'm reminded of the day when my Grandma passed; the pain I experienced in that moment. I knew she didn't have long, but it was still a devastating blow that I wasn't prepared for. Although my friend's Grandmother's death was not sudden either, the hurt and despair in her voice was unmistakable, and it was heartbreaking. I knew exactly how she felt.
When I began practicing law I found these conversations challenging, it felt sleazy to talk business with someone who was so very clearly suffering. At such a time, you would think that "talk with attorney" would be the least desirable item on their to-do list. However, as time went by, I came to learn that these conversations are a vitally important step in the grieving process for many of my clients. In the midst of such despair, these conversations are a beacon of light. The weight of grief is upon their shoulders, and now they are faced with the task of sorting through legal documents and adhering to obscure court rules and guidelines. I am in the unique position to step in during this moment of anxiety and uncertainty and lift that additional burden from their shoulders. Although these conversations will never be a pleasant part of my job, I have come to appreciate my unique ability to provide comfort and counseling in their time of mourning.
"Where's the will? Where do we take it? How do we find out what all the assets are? How do we know if there are creditors? Do we have to pay them? How do we determine which of them gets paid first? How do we split the house three ways? Do we HAVE to sell it?" Most people find themselves learning about the probate process in the aftermath of losing a loved one. This may be the understatement of the year, but that's not the best emotional environment for learning such a dense and daunting body of law. I've seen this scenario play out enough times that I created this Executor's Checklist as a handy quick reference guide to help you get started assembling documents and moving in the right direction. I have tackled the high points, but this post and Checklist are not exhaustive resources, so please shoot me a message or give me a call if you have any questions.
Because this is such a common issue, I developed a system to fix the problem before it starts. Every plan I design includes a training course for executors and beneficiaries to educate them on their respective roles. Executors and beneficiaries also receive a custom reference guide tailored to their specific role. This extra attention up front makes all the difference when life throws you a curveball later.
The big question on everyone's mind is always "do we need to probate the will at all?" Usually, the answer is yes. However, in certain instances when the estate contains only "non-probate" assets, it may be possible to skip probate administration. Such assets may include:
- Life insurance policies with a named beneficiary;
- Retirement accounts with a named beneficiary;
- Bank accounts that are payable on death to a surviving beneficiary;
- Real estate owned as tenants by the entirety;
- Real estate owned as joint tenants with rights of survivorship.
Several narrow exceptions also exist for small estates, persons owing a debt to the deceased, Landlords removing personal property, family allowances, and certain inexpensive motor vehicles.
Administration by Affidavit: This procedure may be used if the estate does not exceed $20,000 after liens, creditors, etc. (N.C.G.S. § 28A-25). Administration by Affidavit is also available if a surviving spouse is the only beneficiary and the estate does not exceed $30,000 (N.C.G.S. § 28A-4-2);
Payment of Debt Owed to Deceased: For debts under $5,000, the debt may be paid to the Clerk of Court. (N.C.G.S. § 28A-25-6)
Landlord Removal of Personal Property. If the deceased is the sole tenant of a residential rental property, the landlord may take possession of the property pursuant to N.C.G.S. § 28A-25-7. This one is more complicated than it first appears. It's not okay to just take the property, there are a number of statutory requirements to be aware of before taking any action.
Family Allowances. If family allowances meet or exceed the value of the estate, probate administration may not be necessary. A surviving spouse is afforded an allowance of $30,000, and children of the deceased under 18 years old are afforded an allowance of $5,000 (under 22 if a full-time student, under 21 if disabled or mentally incompetent.) (N.C.G.S. § 30-15,17) As an added benefit, family allowances are also shielded from creditor claims.
Transfer of Motor Vehicles. In certain qualified instances, titles to motor vehicles may be transferred outside of probate administration. This may be accomplished through the family allowance or by using Form MVR-317, a NC DMV form. (N.C.G.S. § 20-77(b))
Notice to Creditors. In some small estates, people may be tempted to forgo the notice to creditors. Sometimes this is fine. However, if any of the heirs or beneficiaries plan to sell, lease, or mortgage any of the real property within two years, a personal representative should publish the notice to creditors. In practice, it's generally a good idea to err on the side of caution and publish the notice to creditors. (N.C.G.S. § 28A-14-1) It it also possible to publish the notice to creditors without formally probating the estate. However, there are a number of rules and exceptions to be aware of. (N.C.G.S. § 28A-29-1)
For more information download the Executor's Checklist For Navigating Probate here. Keep in mind, this post and checklist are not a comprehensive list of the rules and exceptions, so please shoot me a message, give me a call, or consult with your attorney before making any decisions.