After a loved one passes away, his or her estate often goes through a court-managed process called probate or estate administration where the assets of the deceased are managed and distributed. Whether your assets are large or small, the process can be very lengthy and complex.
If the estate is not automatically passed to the surviving spouse through joint tenancy, and is not held within a trust, it must go through probate. If the decedent died without a will, the estate will be distributed according to North Carolina law. The estate is subject to probate even if the deceased had a valid will. If the deceased had a will, the named executor is tasked with following the instructions outlined in the will. If there is no will in place, the probate court will appoint an administrator.
Through local court proceedings, the instructions of the deceased are interpreted so that all claims can be resolved and the assets can be transferred to the appropriate beneficiaries. There are technical components involved with probate administration. These include:
- Filing petitions to appoint personal representation and obtaining Letters of Administration
- Contacting creditors and issuing legal notices
- Following the timelines involved with filing claims and managing objections to claims filed against the estate
- Assisting executors of the will with the necessary details to handle creditors’ rights as well as how and when to distribute assets to beneficiaries
- Identifying and reviewing any lawsuits that are pending against the estate
- Selling real estate or other property to ensure the correct asset distribution or to pay off outstanding debts
- Verifying that estate taxes, gift taxes, or inheritance taxes are within appropriate thresholds
- Deducting administrative costs and taxes from the estate before distributing assets to beneficiaries
After opening the probate case with the court, the executor/administrator inventories and collects the decedent’s property. The executor/administrator then pays any debts and taxes and distributes the remaining assets to the beneficiaries as defined in the will or state laws. If the executor/administrator does not comply with their fiduciary responsibilities, interested parties can petition for the removal of the executor/administrator and hold them liable for any harm to the estate. A party may challenge any aspect of the probate administration which is known as a will contest. This can be based upon the status of the person serving as an executor/administrator, the identity of the beneficiaries, or concerns about how the estate is administered.
Probate generally lasts several months and often over a year before all the property is distributed. Aside from joint tenancy with a surviving spouse, there are some additional situations where assets in an estate may not enter probate. Property that passes to another person contractually such as an insurance policy or retirement account is not subject to probate. Contractual property might name the beneficiary, be “payable on death”, or listed as “jointly owned with right of survivorship”. As for real estate, an individual may add a joint owner to a deed by executing a life estate deed.
The property can be passed down several generations. Another example of property exempt from probate would be assets held in a trust that was created during the deceased’s lifetime. In the United States, these cases require no court action and the property is distributed privately.