Probate is the court-supervised process over which personal assets are transferred out of the individual names into the names of their heirs or beneficiaries after death. Whether you go through probate or not will be determined by the level of estate planning. If the descendent died with no will and no other estate planning was done, his assets must go through probate. If he did proper planning and the assets were designated to go to individuals properly, then those assets will not go through probate.
Probate requires the appointment of an executor, sometimes also called an administrator. If someone has a will, naming an executor, they are called the executor. If they have no will, they are called the administrator. If they had a will but the person serving as the representative of the estate was not named in the will, the person is also called an administrator. They have different titles but essentially fill the same role.
Step one, the administrator is required to file with the court showing that they qualify to serve as an administrator. If the decedent had no will, that person is by law required to have a bond. A bond is an insurance policy equal to 125% of the value of the deceased’s personal property. This is an insurance policy to protect the beneficiaries in the event that the administrator steals money or tries to abscond with the assets of the estate.
There is the ability to waive the bond requirement for administrators. If all the beneficiaries waive the bond requirements of the administrator, or if a will exists that weighs the necessity of bond, it may not a requirement to post a bond. Unless the administrator lives outside of the state of North Carolina, then they are required to have a bond. The clerk of court has the final say, as the judge of probate in North Carolina, and can order an individual to get a bond.
Step two occurs 90 days after the administrator files the application. An inventory must be filed with the court identifying every single asset, along with its value, that was owned by the decedent that was not properly titled to go to a beneficiary nor within a trust that avoids probate. Everything else is going to go through probate.
There is a fee associated with going through probate, equal to 40 cents per $100 of the value of assets of the estate, up to the maximum of $6,000. If an individual has roughly $2 million in probate assets, they’re going to cap out at $6,000 quickly. That can be avoided with proper estate planning, which is a good investment.
Thereafter, the administrator or the estate or executor of the estate must annually file an accounting with the clerk of court. During this period, there must be constant monitoring of the assets of the estate, to the point that you’re accounting for every single penny, whether it be a dividend payment, interest payment, a refund from an insurance company, rebate from a utility company…every single penny must be accounted for and submitted to the court for approval.
The final phase of the estate administration of probate is to file a final accounting. The final accounting is the instrument required by the court once all assets have been disbursed to beneficiaries or heirs. Once assets have been distributed, receipts have been received acknowledging their share of the estate, then the clerk of court will sign off on the final accounting.
Probate can take anywhere from nine months to several years, depending on the complexity of the estate. It’s a common misconception that there’s a correlation between the complexity of an estate and the value of an estate. That’s completely untrue. In my experience, there’s no correlation between the size of an estate and its complexity. Whether it’s worth $500,000 or $500 million, the complexity of administration is determined by the planning done before death.
Proper planning will avoid, or at least mitigate, the probate process, as well as reduce the cost of probate. Not only the cost that you must pay the state of North Carolina, but the cost of hiring professionals like attorneys, CPAs, and investment advisors to help you walk through that process. With proper planning in advance, all of that should go relatively smoothly, reducing the time it takes to get assets to beneficiaries, from several years down to several months.
For more information on Estate Planning Law in North Carolina, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (704) 248-6325 today.