June 22, 2017
The administration of an estate under the jurisdiction of the Clerk is generally required when the decedent owned personal property in the decedent’s sole name. However, in some types of estate, a full administration may not be required. In such cases, a small estate may be appropriate or no administration at all.
Estate administration may not be necessary if the decedent’s estate consists only of “nonprobate” assets such as jointly owned property, life insurance, and retirement benefits payable directly to beneficiaries. No administration of these assets is required if benefits are paid to a beneficiary other than the estate. The following assets do not require administration of an estate or qualification of a personal representative (“PR”) (i.e., Executor or Administrator) in order to transfer title:
- Real estate owned as tenants by the entirety;
- Real estate owned as joint tenants with right of survivorship;
- Bank accounts payable on death to surviving individuals; and
- Securities payable on death to survivors.
However, unlike other jointly-owned property, some joint bank accounts cannot be closed and distributed without the appointment of a PR. For example, a PR may have to qualify in order to close out and distribute joint accounts if an estate consists solely of joint bank accounts established under N.C.G.S. § 41-2.1 and no other exceptions are applicable.
There are three principal exceptions to the requirement of formal administration available for small estates. N.C.G.S. §§ 28A-25-1 through 28A-25-5 establish the procedure for abbreviated administration of small estates, commonly referred to as “administration by affidavit.” N.C.G.S. § 28A-25-6 provides another exception to the requirement of administration by permitting a person who is indebted to the decedent to make payment of the amount owed to the Clerk in the county where the decedent was domiciled. N.C.G.S. §28A-25-7 provides another exception to the requirement of administration by allowing a landlord to remove the personal property of a tenant following the death of the tenant.
The most common informal estate administration technique for small estates is the administration by affidavit. An heir, person named as executor in the decedent’s Will or creditor of a decedent who died testate or intestate can use this procedure provided the personal property of the decedent, less liens and encumbrances, does not exceed $20,000. However, if during the administration of the estate by affidavit the personal property exceeds the maximum amount, for example because of an unanticipated refund or other unknown assets, a PR will need to qualify and administer the estate. N.C.G.S. § 28A-25-5 provides that at any time during the administration of the estate by affidavit an interested person, including the affiant, may petition the Clerk for appointment of a PR to conclude the administration of the estate. In that event, the affiant is required to deliver all assets in his possession to the PR and furnish the PR and the Clerk with an accounting.
In cases where the affiant is the surviving spouse and the decedent’s sole beneficiary, who is not disqualified under N.C.G.S. § 28A-4-2, property may be collected by affidavit when the value, less liens and encumbrances, does not exceed $30,000. The $30,000 limit does not include the spousal allowance amount. Family Allowances and summary administration will be discussed in a separate blog post.
If you or someone you know needs assistance with an estate or probate matter, please contact King Law Attorneys Isabel Carson and Kassia Walker at our Columbus, Polk County, North Carolina office for a free consultation.